Equity, access and resource allocation: Planning hospital services in New Zealand

Sot

Su

Prmted

Vol IX. kuo 11. pp 981-989.

Med

I” Great

0277-9536:X4

1984

$3 00 + 0 00

Pergamon Press Ltd

Brmm

EQUITY, ACCESS AND RESOURCE ALLOCATION: PLANNING HOSPITAL SERVICES IN NEW ZEALAND J. Ross BARNEIT Department

of Geography.

Umverslty

of Canterbury.

Chrtstchurch

I, New Zealand

Abstract-The to reallocate

desire to limn the growth of expenditure in the Western world has seen Increased attempts resources in the name of equity and effictency. This paper reviews recent moves m New Zealand to achieve an equitable financing and distrrbutlon of hospital resources. While a more equal distribution of resources is likely to result from the recent reforms, redistributive policies of the type being Implemented in New Zealand. which leave the basic structure of the health care system Intact, may have only a margmal impact on improvements m access to care and health status.

system and the mequahties it has generated. The third section of the paper reviews the moves to reform evident in the 1980 report on equitable fundmg, while the final discussion attempts an evaluation of the projected and expected changes in hospital board financing and access to hospital care that are likely to occur in New Zealand.

INTRODLICTION

The aim of this paper IS to describe and evaluate recent moves in New Zealand to achieve greater equity in the provision and operation of its public hospital services. In common with most other Western nations, New Zealand has experienced a rapid growth in health expenditure which now consumes almost 7”/, of GDP compared with only 4.776 in 1961 [l]. This level of expenditure 1s similar to that found m other health systems which, like New Zealand, have a substantial private sector, but 1s in excess of the level found in Britain and some of the other more publicly funded health care systems of Western Europe [2]. Most of the recent growth in expenditure can be explained either by increases in national income per capita, or by the faster than average rise in prices and costs which have been characteristic of health services compared to other sectors of New Zealand’s public economy. Nearly two-thirds of this expenditure is devoted to the building and running of general hospitals, reflecting the tendency to institutional care to dominate overall health priorities. These trends. in the light of a scarcity of resources imposed by a recession economy and a growing scepticism about the value for money of modern medicine, have prompted moves, mainly on the part of the state, to evaluate the desirability of present patterns to resource allocation. While 40years ago questions of equity of access to medical care dominated the political agenda of the founders of the welfare state. today both the effectiveness and efficiency of the present distribution of resources is being called mto question. In 1980 the report to the Minister of Health. The Equitable Distribution qf Finance to Hospital Boards [3], marked a threshold in the planning of health services in New Zealand in the sense that the growing scarcity of resources had finally forced a recognition of the need to plan health services with reference to stated priorities. Examination of these pohcy changes forms the subject of this paper. It begins with an analysis of the strategies available to the state to limit health expenditure in the hospital sector and the choices and constraints which are likei; to guide the implementation of these strategles. This 1s followed by a brief description of the evolution of the present structure of the hospital

CONTROLLING

HEALTH

EXPENDITURE

Fougere [4] has suggested that moves to limit the growth of state welfare expenditure have usually emphasised one of two alternatives. The first is to encourage an increased responsibility on the part of the private sector for the provision of health care (an inevitable consequence of limiting state expenditure), while the second involves a more effective use of public funds by reallocating resources. both sectorally and geographically, so as to meet health care needs. The first strategy, which has been the hallmark of health care policy in the United States, to some extent in Australia and which has been raised recently even in Britain, is essentially regressive. It inevitably places the greatest burdens on the poor and minorities by further limiting geographical access to services and increasing the costs of care. The well documented plight of inner city residents in the U.S.A. as a result of the reduction of services or closure of public hospitals, for example, gives cause for concern [5]. Furthermore, giving private medicine increased responsibility for providing care leaves unaltered the basic structure of the health care system with its institutional bias, high costs, unequal distribution of resources and its limited effectiveness in treating, let alone changing, the basic social and economic inequalities in Western capitalist societies. While a return to increased private provision may serve the interests of the state in the short-term, by limiting expenditure, in the long-term the consequences of such a strategy are likely to lead to increased social divisions, and possibly inefficiencies in the economy as a result of the regressive impacts of cuts in public expenditure and their implications in terms of social and geographic differences in access to care. 981

982

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Ross BARNETT

The second strategy of determining health care priorities and reallocating resources is. m theory, more equitable than the first. However, it probably implies, if carried to its full extent. a certain amount of restructuring of the health care system. This type of strategy has been most comprehensively developed in Britain, following the implementation of the proposals of the Resource Allocation Working Party (RAWP) [6] in 1976 and has involved, not without controversy. a reallocation of hosprtal expenditure from over to underfunded regions within the country. Such redistributive strategies. given the increased spatial equity in the allocation of expenditure and the effect of this upon the distribution of resources, would appear to conform to a rational decisionmaking model on the part of the state, whereby resources are directed towards areas of greatest need and there are relatively consistent criteria developed to assess these needs. The state, therefore, is seen to be intervening in a benevolent way trying to improve health conditions by technical means [7]. Equity, however, may prove to be as illusory in practice as tt is in concept. Although apparently rational technical allocation procedures can be developed, in implementation they may essentially reflect the interests of dominant power groups in the system, which rarely include the users of services. The degree to which geographical equity is genuinely achieved IS often masked by the scale at which it is assessed, and equality in the provision of resources on a large scale (e.g. by regions or states) may still hide inequalities in access to care which result from the very processes that produced regional and sectoral inequalities in the first place. For example, Eyles er al. [7] report that while RAWP gave the appearance of allowing a shift of resources from rich to poor regions, it had the effect of disadvantaging many of the poor areas within regions, such as inner city London, where some of the worst health problems occur. By neglecting the poorly developed primary health care services and reducing the numbers of acute beds in the smaller inner-city hospitals, rather than in the prestigious teaching hospitals serving larger non-local populations, RAWP has had a largely regresstve effect on the more deprived inner city areas. Simtlarly, in the United States. the impressive redistrrbutton of hospital beds, achieved by the Hill Burton programme since 1949, has largely been to the benefit of higher income areas in poorer states [8]. While a technical need formula was devised to allocate resources among Health Service Areas wtthin states, this favoured the dominant hospitals since It was imtraily based on measures of bed supply and later on existing hospital utilisation trends. These examples illustrate that global reallocation policies, however rational, may nevertheless fail to recognise sectoral inequity and sub-regional varrations or take account of these in implementation procedures. Such reallocation policres if they achieve equity, are likely to achieve it only on the most general measures which will probably not be reflected in either equity of access or more equitable health status. The rest of this paper is devoted to examining efforts in New Zealand both to develop a rattonal formula and to ensure that It has the destred Impact on health servtces and health status.

HOSPIT’AL SERVICE INEQU \LITIES IN YEW ZEALi\ID

Hospttal services are but one part ot the complrcated orgarusatronal network that constttutes the health sector in New Zealand. Public health servrces are organised centrally and admuustered through local district offices of the Health Department. Prrmary health care is provtded largely by prrvate practmoners on a fee-for-servrce basrs. wtth ;I small government contrrbutton to the fee but complete subsidy for almost all prescribed pharmaceutrculs. Hospital services are predominantly publicly funded from the centre and admnustered through locally elected hospital boards. with a growmg private sector which receives various kinds of pubhc subsrdy Efforts to rationahse this structure have had an uncertain recent history [9], and it is within a context of fragmentation and orgamsational uncertamty that new hospital resource allocation pohcres have had to develop. The most obvious feature of hospttal resource allocation in New Zealand IS the geographic mequality in the distribution of hospital beds. Unlike Britain, with its concentratron of medical facilitres m the more populated and urbamsed South East, m New Zealand rural areas have a greater number of hospital beds per head of population than the larger predominantly urban hospital boards Thts pattern is largely a product of populatton distributtons and health priorities associated wtth a nineteenth century ‘gold rush’ economy and the development of the country’s agricultural base. Linked to this was a system of financing based on local rating. The Hospttals and Charitable Institutrons Act of 1885 empowered hospital boards to demand contrtbuttons from local government authoritres, which In turn struck a hospital rate. This system of local ratmg however established an unequal distribution of hospttal facilities since the wealthier and, at that trme. more populous rural boards inevttably spent more on hospital services than poorer ones. Although central government subsidies were provided to local boards following the First World War. the system of local contrtbutions lmgered on until 1957 by which time the basic inequities m the dtstrtbution of hosprtal services were well established. In 1957 hospttal boards were funded directly by central government and by 1967 a system of fixed maintenance grants to boards was introduced. However. the 1967 reforms resulted in little change in the hrstorrcal pattern of resources for they introduced an incremental financial allocation system which perpetuated the existing pattern of resources rather than attemptmg any major redrstrtbution. MaJor capttal works continued to be financed by loans raised m the name of the hospital board but with central government bearing the cost of both interest and repayment. An earlier paper demonstrated that although there has been a rapid Increase m the number of pubhc hosprtal beds since the turn of the century. refectmg the national growth m populatton. substantral regional anomalies rematn (Fig. I ). In an analysts of the distribution of beds and expendrture In 1976. Barnett er ui. [IO] found that under the system of tinancrng estabhshed in 1967 funds were allocated to boards

Equity, access and resource allocation

983

Fig. 1. Pubhc beds (non psychiatric) per capita, 1981 (Populations adjusted for cross boundary patient flows).

largely on the basis of their existing bed supply and not on the basis of population or other measures of need. The base allocatlons established in that year therefore confirmed existing inequalities and the system has had a high degree of continuity. This has been especially true with respect to the more privileged boards with high numbers of beds per head of population and high rates of hospital admission. The system of incremental budgeting, therefore, tended to ignore the question of relative needs and this has been particularly true since 1974 when population, the primary determinant of need, was eliminated as a variable m the allocation formula, only to be replaced in the following year by a series of weighted patient throughput measures [IO]. As Cooper [l l] has suggested. however, this inevitably built a ‘snowballing’ effect into the allocation system since boards with more beds and high rates of utilisation of services got more funds which in turn could be used to provide additional services, thus increasing the already unequal distribution of resources between regions [12]. The adoption of patient throughput measures, therefore, provided an unsatisfactory measure of relative needs because variations in admisslon rates tend to be as much a reflectlon of varying management practices and the relative supply of beds between boards than of demographic. social, or health status characteristics of the population. This pattern was readily apparent in both 1976 and 1981 (Table 1). The unequal distribution of public beds is partly compensated for. however, by the growth of private hospitals which almost doubled their share of the total bed supply between 1956 and 1981 (10.9-18.6%). Most of this growth has occurred in the largest cities and in

other areas with fewer public beds per head of population. However, the issue of the private sector remains problematical not only because access to care is based on the ability to pay and not need, but also because “the interests that benefit from the existence of the (publicly subsidised) private system also have a hand in the generation of problems in the public system” [13]. For instance, the existence of high fees in the private sector inevitably means that doctors’ services are drained off from the public sector irrespective of the level of demand. Davis [14], for example, found that where there is a high proportion of beds in the private sector the number of people waiting for admission to an occupied public sector surgical bed was at least double that of areas where there were no private surgical beds, however only a modest correlation existed between these two variables in 1981 (r = 0.50).

THE POPULATION BASED FORMULA

By the late 1970s there was sufficient concern in the health community over the funding of hospital services that the Advisory Committee on Hospital Board Funding was set up by the Minister of Health. In 1980 the Committee recommended that a population based funding system be introduced, accompanied by the development of service planning guidelines [3]. The population based approach to health resource allocation is best documented in the work of the Resource Allocation Working Party (RAWP) in England [6]. The RAWP formula, based on the demographic structure of the population served, inev-

984

J Ross BARNETT Table capita,

I

Relatmnshlps between pubhc hospital mamtenance &xatmns. admIssIon rates per pubhc and prwate beds per cqta and ‘need‘ variables. 1976 and 1981 (29 hospital boards)

Public beds per capita 1976 1981

Pubhc mamtenance allocatrons per cqxta$

Pubhc adrmwon rates per captta$

0.776* 0.822’

0 543’ 0 559*

Pubhc beds Per Capltdg

-0.530* -0.534*

-0 -0

6661 706*

-0 642’ -0 657’

‘Need’ variables Pop&wont 1976 1981

-0 503f -0 473’

-0 599: -0 628’

-0 605* -0 524*

0 323 0 463*

0 149 0 300

0 198 0 174

282 191

-0 683’ -0 490’

Pubhc surgical wamng hsts per capaa. 1976 1981

-0 548* -0302

-0 -0

Per cqxta -0 642’ -0 657*

Private beds per capax. 1976 1981

S.M.R.. 1976 1981:

PW‘UlZ beds

-0 622’ -0 669’

-0 -0

123 182

0 418* 0 333

*Significant at P = 0.050. tPopulatton totals have been adjusted for cross-boundary patrat flows :Standardlsed mortahty ratlo IS the average of annual SMR’s for 1976-1980 BExcludes psychwrlc

itably identified some regions as overfunded and some as underfunded against a ‘norm’. Debate has continued on both the technical aspects of the formula [I 5, 161 and the policy questions surrounding implementation in a tight financial environment [7, 17, 181. Under population based funding, the maintenance allocations to hospital boards in New Zealand are derived from two sources. From the total available funds a small proportion (7.u:) is earmarked for allocation for specific purposes (e.g. service costs of teaching, ‘long stay’ psychiatric patients), and the rest is designated as the ‘population grant’ to be allocated through a population based formula. The formula adopted by the Department of Health 1s used to calculate the expected utilisation of hospital beds locally, based on national utilisation rates and local population characteristics [19]. The steps of the formula are outlined in Fig. 2 and are based on estimates of crude population for each hospital board. broken down by both age (0- 14, I5-44,45-64,65 + ) and sex and by hospital utilisatlon rates for each of these age/sex groups. Expected bed days are then calculated for three separate groups of patients: obstetric; mental illness/mental handicap and the general or remainder of the population (non-obstetric, nonmental illness/mental handicap). The national utilisation rates or bed usage for each age/sex group is applied to the population of each board, producing an expected level of utilisatlon based on national norms (step I). The second stage of the formula weights the general and obstetric populations to take account of local variations in need. In the case of the obstetric population the expected utllisation of bed days in the female 15-44 age group IS further adjusted by the

local Standardised Fertility Ratio (SFR) while the total general bed days are similarly adjusted by a board’s Standardised Mortality Rate (SMR) (step 2). Both SFR’s and SMR’s are calculated using five year moving averages to reduce the effect of annual variations in birth and death rates particularly in the smaller boards. These weightings are followed by two further adjustments to account for the effects of cross-boundary flows into the private sector (step 3). The net bed days due to travellers, moving to both general and mental hospitals are added to the expected bed day equivalents for each group in each board, while the number of days spent in private general, maternity and mental hospital beds are subtracted. The first of these calculations favours the larger. more specialized, urban boards with net gains of travellers, while the concentration of private beds in such areas means that fewer funds are available for public hospitals m the allocation formula. At three stages in the formula adjustments are also made to account for differences in the costs of providing alternative forms of care: adjustments to expected bed use for the lower costs of treating the elderly in long-term care, both publicly and privately (steps la and 3b); an adjustment for the lower costs of treatment in the private sector (which IS made before private general bed days are deducted from public general bed day equivalents) (step 3b). Finally, mental illness/mental handicap bed days, which exclude ‘old long stay’ patients (i.e. those admitted before I April 1975), are adjusted to account for the lower costs of mental health care (step 3~). All beds are therefore adjusted to become general bed day equivalents and are added together (step 4) to mdlcate the amount of hospital care a board might be

Equity.

access and resource allocation

I (a)

985

EXPECTED

BED USE

Expected bed days for ;- hospital board 1 based on national age/sex bed occupancy rates (general obstetric and mental I/H populations)

(1)

NEED General bed days yelqhted by SMR for hospital board 1

COST

Obstetric bed days weighted by SFR for hospital board 1

DIFFERENTIALS

Cost ad]ustme"ts for: la-b1 long-term care of the elderly (public a"4 pr1vate1 (b) private se,ZtoT care (cl mental I/H care

(2)

t FLOWS

I-

Welghtlng for Geographic and Sector-al Flows

(b) Add "et general bed days due to lnterboard flows (general and mental I/H)

(3)

Substract number of days spent I" private general, maternity and mental hospital beds

FINANCIAL

ALLOCATION

Equity allocatlO" for hospital board 1 based on expected bed day

Fig. 2. Method of calculatmg equitable allocations (modified

expected national Technical

to provide norms.

for

its population,

based

on

considerations

In New Zealand, as elsewhere. the questions which have caused most concern have been related to the appropriateness of population measures and the weightings attached to them. There are difficulties in determming the ‘correct’ population. The confidence in estimates of population declines with the time elapsed from the previous census and the size of the hospital board unit. Five yearly censuses are helpful in this regard, and the particular problem for New Zealand lies in the wide variation in the size of boards, the smallest being under 3000 and the largest over 80.000. The ‘true catchment’ which accounts for

(4)

from Spencer et al. [19].

services provided to patients outside their own board area is established by adjusting for flows between boards. This is a procedure used elsewhere [6] but it was felt necessary to account for the presence of the significant private sector in New Zealand by the same method [3], which has policy implications, discussed below. A major problem in developing an equitable formula lies in the way m which it is weighted to reflect relative ‘need’ for hospital care. Weighting by hospital utilisation rates for particular age/sex categories has immediate appeal: the data is readily available and implies some confirmation that those who are getting care are the ones who really need it and mce cersa. However, weightings based on current utilisation reflect existing practices not all of which may

.I.

986

Over - funded -30 -20

-40 L

South Otago Ashburton

Ross

I

Equity 0

-10

I

I

BARNET?

/

I

II

Under - funded 10 20

I

95%

I

Confidence

30 llmlt

Eh

West Coast L

Morlborough

II

19+82 Posltlon relative to eqwty

cn

Otago

m

-&

Wel llngton Vincent Nelson Southland Wolkato North Canterbury Palmerston North Walpawa Taranaki Cook Taumarunu Wonganul Wolrarapa Bay of Plenty Auckland Hawke s

Bay

Northland South Canterbury Waltakl Tauronga Thames Dannevlrke

I

-40

Fig. 3 Percentage

change

1

-30 Percentage

in actual

I

I

-10 -20 change needed

allocatIon

be desirable and which have grown up as part of a funding system which the new formula is trying to change. As an obJective method of weighting for ‘need’ current utilisation rates are clearly inadequate, but in policy terms there is a certain perverse logic in practice which is discussed below. Of more interest is the attempt to find weightings for ‘need’ which are independent of supply and which reflect the health status of the community. In New Zealand, as in most other places, there are no measures of morbidity independent of utilisation. and standardised mortality rates and standardised fertility ratios are used as proxies. Apart from the technical difficulties of using SMR’s m small populations there are conceptual problems in using mortality as a measure of the need for hospital care. Mortality rates measure death, not disability, and as Cooper [I I] pointed out conditions that people die of are not necessarily those which require long term or expensive care. At the time of the RAWP discussions there was debate about the question of SMR’s as proxies for the need for health care [20,21] and alternatlve approaches such as health surveys or the use of socio-economic indicators was suggested [22]. Patterns of mortality, however, are closely related to both ethnicity [14] and social class [23] in New Zealand and as such may be a useful indicator of the presence of populations in need of care. Since the first report of the Advisory Committee on

requned

I

I I

-10 in allocations

/

I

,

I

-30 -20 to reach equity

to reach equity (source. Sutton [26]).

Hospital Board funding there has been considerable effort to review the formula and seek a widened debate on its content and application. It was not considered possible or appropriate to weight the formula for the special problems encountered by boards, such as low density or dispersed populations. difficult terrain or special *at risk’ populations [24]. The main components of the formula. therefore, remain the age-sex structure of the population of the area, with a mortality weighting. Implementation of the formuiu There appears to be acceptance at both political and administrative levels that the formula IS fair, practical and not too complicated [25]. This IS an important first step although there 1s concern about the way in which moves towards equity will affect individual boards. In order to reduce uncertainties. efforts have been made by the New Zealand Department of Health to improve the reliability of input data and to take account of the sensitivity of the formula. This has led to the removal of the two smallest boards (Mamtoto and Waiapu) from the population based funding system and the establishment of ‘tolerance zones’ for each board’s allocations which allows changes to be expressed as a range rather than an actual amount of percentage (Fig. 3). The tolerance zone. described by Sutton [26] is calculated on the basis of the size of the board and changes individual variables which can cause in the

987

Equity. access and resource allocation fluctuations [27]. This procedure is important because it increases the acceptability of the formula to hospital boards by establishing a 95”, confidence interval which allows an assessment of whether a board is likely in subsequent years to move from being considered overfunded to underfunded or vice versa (e.g. Taumarunui or Waipawa). The formula method was first applied to allocations in the financial year 1983: 1984 and it was proposed that boards which were overfunded should begin to move immediately towards equity. with this to be accomphshed within SIXyears. The details of the rate and amount by which allocations will be reduced is at the discretion of the Health Department and depends partially on the kinds of planning initiatives taken by boards to tackle problems of financral restraint. Unlike the situation m Britain at the time of the implementation of RAWP, there has been no commitment to the provision of some growth even for overfunded boards, and the expectation is that funds for bringing underfunded boards to equity will be derived from reduced allocations to overfunded boards. Boards which are underfunded will not receive increased allocations as of right.. but only after they have prepared service development plans which are approved by the Health Department. These plans would be expected to show how boards intend to develop services which are consistent with national policy guidelmes. An important adjunct to the implementation of the formula has been the provision for boards to carry forward a limited amount of over or underexpenditure on an annual basis, for approved purposes. This allows some flexibility. particularly when a shift in resources IS required from one area of activity to another. especially when this is associated with new capital projects. ‘Bridging grants’ can also be made available on a short term basis to assist in establishing new services which would then be maintamed from the population-based allocation.

IMPACT

OF THE

FORMULA

The effect of the formula must be assessed in terms of the outcomes expected from its application. The first and most obvious desired outcome is equity in allocations to boards, and it is likely that this will be achieved within the decade, mamly because there has been no commitment to growth money for overfunded boards. Equity m allocations. however, does not ensure equity in access to services based on need. particularly in a hospital sector where there is considerable local autonomy in decision-making. It is important to try to assess whether the new allocation procedures are likely to contribute towards equity either In supply and balance of services or. more important. in terms of health outcomes. Equirl. 111uccess to hospital beds The supply of hospital services is measured in bed numbers and it is likely that the formula will promote greater equity m thus sense. The formula provides a clear mcentive for hospital boards to reduce bed numbers to below the level ‘expected’ in an area. based on national norms. Overfunded (i.e overbedded) boards are likely to adopt a bed reduction

strategy to meet target allocations, leadmg to greater equity m bed supply. As hospital boards are relatively small gross sub-regional mequities are unlikely to exist, however it is possible that a rationalisation of beds will result in the closure of peripheral mstitutions to the disadvantage of rural commumties. While the system of population based funding is likely to promote greater equity m the total supply of hospital beds between board areas, financial adjustments for flows into the private sector means that equity of access to care is unlikely to be achieved. Under the formula, funds are diverted away from boards where there are private beds on the basis that these are beds which the board would otherwise have had to supply itself However, hospital boards have no control over the development. type or use of private beds which are seldom used to meet high priority health needs. Boards with private beds in their area are therefore disadvantaged in the sense that a strong profit-oriented private sector means that fewer funds are available for public hospitals. Thus implementing the formula will, as Fougere suggests, “probably serve to bolster the market allocation of hospital services on the basis of ability to pay and undermine their welfare state provision on the basis of need.. Coupled with the currently open ended provision of subsidy to the private sector, and already tight budgetary control in the public sector, implementing this policy is likely to achieve a shift towards the distribution of hospital care through market arrangements”

[41. An equitable

balance

qf services

The potential exists for other than geographical inequities and it is possible that imbalances between particular types of services could develop. For example, it would be tempting for overfunded boards to reduce expenditure in care areas which are considered low status and have low public visibility without regard to priority needs. Similarly, underfunded boards might be under pressure to develop services, in response to powerful special interest groups, not necessarily In line with national policy. Some central control, however, over the transition towards equity in New Zealand is expected to ensure that service consequences are consistent with national priorities. Bevan [ 181 noted that this guidance on ‘how to ration’ was absent from RAWP implementation procedures, creating difficultres for some authorities. The New Zealand Health Department is developing guidelines for the provision of particular types of clinical services (e.g. paediatrics, surgery, mental health, etc.) at various levels (e.g. local, regional, national) [28]. In addition hospital boards are expected to prepare service development plans so that central decisionmakers can be assured that proposals are in line with national policy. It is anticipated that the central discretion retained over some allocation decisions and the ‘carry-over’ facility will ensure a high level of compliance with guidelines and planning procedures. In addition hospital boards are likely to perceive some aspects of formula funding (more local discretion, predictability in allocations) to be beneficial to the development of better local planning and management approaches.

J Ross BARNETT

988 Impact

ofhealth

status

The final test of any health resource allocation policy is whether it makes any difierence to health. In this case the test of ‘need’ is the SMR and It can perhaps be inferred that one of the objecttves of equitable funding is to reduce disparities in this measure. Acheson [29] points out that ‘need’ should be defined in relation to the procedures available to meet it and the resources that permit those procedures to be used. However, patterns of mortality indicate complex relationships between lifestyle, social structure and health status which could hardly be modified by any action within the mandate of hospltal boards. Most of the possible interventions which would contribute to improvements in mortality are likely to originate outside the hospital sector, which suggests that there is limited potential for improvements in SMR’s arising from resource allocation policies that exclude primary health care. public health and health promotion services. or fail to Integrate these in some way.

CONCLUSION This paper has reviewed recent attempts to achieve an equitable financing and distribution of hospital resources in New Zealand. The New Zealand expertence to date has a lot m common with the difficulties of reallocating facilities and personnel in other developed countries where the pattern of hospital resources is strongly entrenched as a result of hlstorlcal inertia, local autonomy and a certain political acqmescence to the medical status quo. Hospital expenditure is a heavy burden on the welfare state and there is, on the surface at least, evidence of a desire to plan and control this expenditure more effectively. Moves towards reform in 1980 confirm that there is a desire both to achieve certain rationality in the allocation of funds and the effectiveness with which they are used. However, the 1980 reforms also must be seen as a means whereby the state, faced with recession and increasing budget deficits, seeks to control the growth of health expenditure. but at the same time maintains a certain social and political stabtlity through redistrtbutmg resources to ‘deprived’ regions in the name of equity. While such policies will promote equity of Inputs of resources, equity of access to hospital care is unlikely to be achieved. This is made likely by the probability of a return to a greater private market provision of care particularly m the larger urban boards whtch are techmcally classified as overfunded and whose public hospitals and less affluent patients are disadvantaged by limttations in public expenditure, partly as a result of the concentration of prtvate beds. Furthermore, the 1980 reforms left the basic structure of the health care system intact. with its strong focus on producer autonomy, maldistribution between specialities, organisational fragand an increasingly strong and unmentation, restrained private sector. Seen in this light the new allocation system can only be viewed as a partial attempt to produce greater equality of care. While It may be an important mlttative in Imposing a more rattonai approach to

planning tt is confined to only one aspect health system and ignores the fundamental which lie behind the geographic and social mequalities in health status. Combating these involve a more radical restructuring of both services and of society and the economy.

of the forces class would health

and It remains to be seen the extent to whtch the former. at least. will be pursued in the next few years. Acknowledgements-The author acknowledges the asststance of P S. Barnett m the preparation of thts paper Thanks are also due to L. A. Malcolm. Health Plannmg and Research Unit. Chrtstchurch. who kindly provided the I98 I data on financtal allocattons

REFERENCES I Tatchell

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