Health Report
Stocktake of PHO Governance Arrangements

Purpose of health report

Concerns about the extent of community involvement in Primary Health Organisation (PHO) governance and ownership have been raised in a number of fora. This report responds to your request for information on PHO governance arrangements.


Executive summary

The Ministry has conducted a stocktake of PHO governance documents which it has sourced on line from the Companies Office. The documents obtained were analysed by legal form and a number of indicators considered to be illustrative of PHO-community linkages.

Thirty three PHOs are registered under the Companies Act 1993, 36 registered under the Charitable Trusts Act 1957, and five registered under the Incorporated Societies Act 1908.

Eighteen of the PHOs surveyed have constitutions that place no requirement on the organisation’s governance structure to include community, consumer, Māori, or heath service provider/practitioner representation. Only nine of the constitutions specifically provide for consumer representation. Forty out of the 74 specifically provide for practitioner representation. Forty five provide for Māori representation and 45 provide for community representation. Only five of the PHOs have constitutions that provide for meetings to be held in public. Several constitutions named the organisation providing management services.

A number of PHOs were found to have common shareholders or joint settlers in the case of charitable trusts. Owners of groups of PHOs are Procare Health Limited, Southlink Health Inc, Pinnacle Inc, and Healthwest Limited. The use of common directors raises the potential for conflict of interests.

Minimum requirements for PHOs were published in November 2001. Amongst other matters these cover community, consumer and practitioner/provider involvement in governance arrangements. The minimum requirements are silent on the issue of PHO ownership.

The recent establishment of PHOs, and the need for greater community involvement in the governance/decision making arrangements to ensure that all in the community are being well served, has raised the issue of control over the provision of primary care services to the community. In addition to the issue of control, some PHOs are struggling at the moment with a range of issues including how best to direct and lead the independent and privately owned for profit practices associated with the PHO.

The governance and control concerns noted above point to a number of issues.

• Weaknesses in the governance arrangements in some PHOs and how best to address these, including whether the current minimum requirements relating to PHO governance arrangements should be replaced by requirements that are more precise and address a wider range of issues such as directors/trustees with conflicts of interest.
• The need to better position PHOs to lead and encourage their providers to work towards achieving PHO set objectives, including how to strengthen the currently perceived weak relationship between some PHOs and their providers.
• The extent to which PHOs can be viewed as NGOs under the Government’s partnership relationship.

DHBs are contractually responsible for PHO performance. It is suggested that these issues should be discussed with DHBs, and a further report submitted to you on completion of these discussions.

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Health Report - Stocktake of PHO Governance Arrangements (Word, 198 kB)
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Primary Health Care Strategy