Around the world in 80 months: the health system in the 1990s. (Annex I).
The most interesting part of the experiment was separating purchase from provision. It had some positive outcomes: (1)
-- Improved information on the costs and use of services, enabling better allocative choices.
-- Better mechanisms to manage fiscal pressures.
-- More emphasis on primary and preventive care.
-- Improved access by Maori (2) and more equal access and quality of care across the country.
-- Emergence of new providers and innovations in service delivery, such as associations of primary-care providers and greater use of community organisations to deliver services. For example, the number of Maori service providers rose from 23 to 240 from 1993-98.
-- Greater reliance on evidence of effectiveness in purchase decisions.
-- Investment in public hospitals.
The main drawbacks have been:
- While productivity has improved in some areas -- for example, the average length of stay in acute care has fallen to one of the lowest levels in the OECD -- productivity gains have overall been disappointing.
- Limited competition among service providers.
- Worsening relationships among health groups.
- High transaction costs, at least initially.
- Reduced public confidence.
Perhaps the major problem was the bilateral monopoly between hospitals and purchasers. Public hospitals have an effective monopoly on acute secondary and tertiary services, and contestability for provision of services existed only at the margin, even in the cities where geographical monopoly was less of a problem. This was compounded by the government "owning" both the buyer and the sellers, with its implicit guarantee affecting negotiating positions and the incentives to finalise contracts. Significant productivity gains remain difficult to extract unless the problem of monopoly provision is tackled, although clear goals and accountability arrangements were found to be helpful.
(1.) See Ministry of Health (19991 and Report of the Health and Disability Steering Group (1997).
(2.) Ministry of Health (1999).