Statement of Intent 2007–2010

Part 1: Introduction and Health Context

Table of Contents:

From the Minister

Part 1: Introduction and Health Context

Part 2: The Government’s Priorities

Part 3: The Ministry’s Vision and Outcomes Framework

Part 4: What the Ministry Does

Part 5: Measuring the Ministry’s Progress

Part 6: The Ministry’s Strategy: ‘Better Health for All’

Part 7: Financial Information

References

Order or download this publication

In this section:

Introduction
What has the New Zealand health system achieved?
What are the challenges?

Good health is critical to wellbeing. Without it, people are less likely to enjoy their lives to the fullest extent, their options are limited, and their general levels of contentment and happiness are likely to be reduced.’ (The Social Report 2004)

Achieving the goal of healthy New Zealanders requires a fair and functional health system as well as people making good lifestyle choices and supportive policies in other areas of Government. The Ministry's role is to lead and manage the sector, working within the legislative underpinning and the Government's high-level strategies. To create the base for the sector to advance health sector performance in 2007 and beyond, the Ministry is implementing a number of important developments, such as:

integrating national health targets to lift outcomes in key priority areas
reorientating the role of the Ministry of Health to drive ‘harder and faster’ in priority areas
reconfiguring services in priority areas within existing resources (starting with Well Child services, cardiovascular disease and diabetes).

In this Statement of Intent we provide the justification for what we plan to do, and describe how we will know if we have made progress.

Figure 1 shows the structure of New Zealand’s health and disability sector. It is essentially a devolved system in which 21 District Health Boards (DHBs) plan, fund and ensure the provision of health and disability services to their geographically defined populations. Public hospitals and the majority of public health services come under the umbrella of DHBs. Eighty-one primary health organisations (PHOs) are funded by DHBs to provide essential primary health care services to local communities. More than 200 national and local non-governmental and voluntary organisations provide not-for-profit services funded by the Ministry and by DHBs. The DHBs also fund some private providers, such as aged-care hospitals, rest homes, pharmacists, laboratories and radiology clinics.

Figure 1: The structure of the New Zealand health and disability sector

The Minister of Health has overall responsibility for the health and disability support system. DHBs play a pivotal role in blending national and local priorities to achieve gains in health outcomes. The Ministry of Health is the principal advisor to the Government on health policy and acts as the Minister’s agent in managing the formal relationship with DHBs and as an intermediary between the Minister and representatives of the sector.

The New Zealand Public Health and Disability Act 2000 requires DHBs to work to ‘enable Māori to contribute to decision-making on, and to participate in, the delivery of health and disability services’. The Ministry-sponsored governance skills development programme for DHB Maori Relationship Boards, called Te Mana Whakahiato, supports such development and is positively received.

What has the New Zealand health system achieved?
The New Zealand health system has achieved significant improvements in health outcomes for New Zealanders. Life expectancy – an important indicator of a nation’s health – has been increasing steadily for many years. A newborn girl can now expect to live, on average, 81.7 years, and a newborn boy 77.5 years. These levels represent longevity gains since 1995–97 of 2.0 years for females and 3.1 years for males.

Figure 2: Life expectancy at birth, by sex, 1950–52 to 2003–05

Source: Statistics New Zealand 2006

In the year ended June 2006, infant mortality rate was 4.8 per 1000 live births. This is an improvement from 5.5 per 1000 in the June 2005 year, and continues the decrease from 6.7 per 1000 in 1996 and 13.9 per 1000 in 1976 (see Figure 3).

Figure 3: Infant mortality rate (deaths per 1000 live births), 1961–2006 (year ended June)

Source: Statistics New Zealand life tables, 2006

Tobacco consumption in New Zealand has fallen, decreasing by almost 16 percent from 2002 to 2004 (see Figure 4), which is one of the biggest decreases in the OECD. Significantly, smoking among youth (aged 14–15 years), which is the age at which long-term habits can form, has continued to decline.

Figure 4: Tobacco consumed per adult (15 years+), tobacco products released (1970–2004) and annual tobacco returns (1997–2004)

Source: Statistics New Zealand

Figure 5: Prevalence of daily smoking (%), year 10 students, by sex, 1999–2004

Source: ASH national year 10 survey

These gains have continued in recent years, while DHB deficits have reduced and Ministry funding as a proportion of total health funding has fallen demonstrating improvements in sector efficiency and cost-effectiveness (see Figures 6 and 7).

Figure 6: Combined District Health Board deficit trend, 2001/02 to 2006/07

Figure 7: Departmental funding vs total health spending

Internationally, the New Zealand health system compares well on a number of measures. Across the Organisation for Economic Co-operation and Development (OECD) there is an association between national wealth, as measured by gross domestic product (GDP), and life expectancy, and between GDP and the proportion of GDP that is spent on health. New Zealand has a somewhat better life expectancy than would be expected from its GDP, and spending on health is slightly lower than expected, illustrating the cost effectiveness of the health system (see Figure 8).

Figure 8: Deviation from GDP-based predictions of life expectancy at birth and of total health expenditure, OECD countries (except Luxembourg), 2002

The New Zealand system also compares well on other measures of efficiency, such as health spending per capita and length of stay in acute care (see Figures 9 and 10).

Figure 9: Health spending per capita in 2004 in selected OECD countries, adjusted for differences in cost of living

Source: OECD health data 2006 presented by Commonwealth Fund 2006

Figure 10: Average length of stay for acute care in selected OECD countries, 2004

Source: OECD health data 2006 presented by Commonwealth Fund 2006

Our health system also compares well on measures of access, such as access to medical care when sick (see Figure 11).

Figure 11: Access to medical care when sick or needing attention, in five countries, 2004

Source: Commonwealth Fund International Health Policy Survey, 2004. The survey took place in the second quarter of 2004

Notes: Random, representative samples of people aged 18 years and over were surveyed in each of the five countries. Survey participants were interviewed by telephone. The sample size was over 1400 for each of the participating countries.

The New Zealand system is also concerned with building on the considerable gains already made in Māori health. Major gains in Māori provider and workforce development have begun to strengthen Māori infrastructure and leadership. For example, the number of Maori health and disability providers has grown significantly, from about 20 in 1992 to 185 in 1995, 210 in 1997 and to the current number of approximately 240. In terms of primary health care, there are 15 Māori-led PHOs of the 81 PHOs. After an initial focus on establishing providers, the focus since the late 1990s has been on consolidation, with an emphasis on strengthening organisational capacity and quality. There is evidence that Māori providers are increasing access to care for Māori and that Māori providers are out-performing other providers in terms of their organisational/governance/ management, ethnicity profile of staff (the proportion of Māori doctors working within Māori providers was higher than in other providers), and utilisation of community health workers.¹ Māori remain under-represented in the New Zealand health workforce in almost all areas of the sector. Despite the low proportion of Māori in the health workforce, numbers are increasing. For example, the proportion of active nurses and midwives who are Māori increased from 3.7 percent in 1992 to 7.5 percent in 2004.

These achievements have occurred because the New Zealand health system innovates, particularly at the community level.

What are the challenges?

Chronic disease

Chronic diseases impose a significant burden on disadvantaged populations. Better prevention and management of these diseases at a population level, and in primary health care/community settings among groups at greatest risk, will contribute directly to reducing inequalities in outcomes. To achieve this we need to act on a continuum that includes reducing risk and disease management.

Nutrition, physical activity and healthy weight play a critical role in maintaining health, reducing premature deaths and preventing chronic diseases, such as cardiovascular disease, diabetes and cancer.
Tobacco smoking will result in the deaths of about 5000 people this year, about 1500 of whom will be in middle age.
Diabetes affects about 200,000 people in New Zealand, but only half of these have been diagnosed. The prevalence of diabetes in Māori and Pacific populations is around three times higher than among other New Zealanders.
Cardiovascular disease (CVD) is the leading cause of death, accounting for around 40 percent of all deaths. The burden of CVD is again greatest among Māori and Pacific peoples.
Cancer is the next leading cause of death in New Zealand. There are significant inequalities in cancer outcomes for Māori and Pacific peoples, and cancer incidence is increasing.
Nearly 47 percent of the population are predicted to meet criteria for a mental disorder at some time in their lives, 39.5 percent have already done so, and 20.7 percent have had a disorder in the past 12 months. Māori and Pacific peoples have a greater burden due to mental health problems, when adjusted for age and socioeconomic disadvantage.
In any year 8 percent of the New Zealand population will experience a depressive disorder and 20 percent will experience a depressive disorder at some stage in their lifetime. Approximately 500 people die by suicide each year, and there are 5000 hospitalisations for suicide attempts. Māori, males young people and those living in deprived areas are over-represented in suicide mortality statistics.

Achieving changes in risk factor profiles such as smoking, obesity and physical inactivity requires approaches which modify the social and health environments to support individuals to make and sustain healthy life choices. The ways in which the health and disability sector makes its services accessible, the quality of the provision, and how easy it is to traverse the care pathway also play a role in health inequalities. All of these can be improved. There are also opportunities to minimise the impact of disability and illness.

Child and youth services

Even though child health status in New Zealand may be improving, generally it is not as good or improving as fast as that of many other OECD countries. Within New Zealand there are large disparities in health status between population groups. Tamariki Māori, Pacific children and children from low-income families and whānau are experiencing comparatively poorer health outcomes than the overall child population.

Good child health is important for children and families, and is vital for good health in adulthood. A number of the risk factors for many adult diseases – such as diabetes, heart disease, and certain mental health conditions such as depression – arise in childhood. Poor child health and development also have an adverse impact on broader social outcomes, including family violence, crime and unemployment. Many of these conditions are intergenerational, in that unrecognised and untreated, many child victims will go on to repeat the cycles of disadvantage and illness in their own lives and those of their children.

The proportion of fully immunised at age two years has improved from less than 60 percent in 1992 to 77.4 percent in 2005 (Ministry of Health 2007), but there is still a long way to go. Māori were significantly less likely to be fully immunised at age two years (69 percent) compared with European/others (80.1 percent).
Internationally, the prevalence of mental health problems with clinical impairment in children and young people has been found to be around 15 percent (Ramage et al 2005).
Alcohol-related harm has been identified by the World Health Organization as one of the leading causes of morbidity, mortality and disability in the Western Pacific Region, being the third largest risk factor in developed countries such as New Zealand. Alcohol-related harm also increases health inequalities by impacting more significantly on Māori and Pacific peoples, youth and low socioeconomic groups.
Unintentional injury remains a cause of 36 percent of deaths in children under four years of age.
Dental decay is slowly increasing in prevalence and severity in five-year-olds, and there are significant disparities between ethnic groups. In 2004, 52 percent of all five-year-olds in New Zealand were caries free, but for Māori the rates were significantly lower at approximately 30 percent (Ministry of Health 2006a).
The 2002 New Zealand Children’s Nutrition Survey (children aged 5 to 14 years) (Ministry of Health 2003a) found that 16.4 percent of five- to six-year-old boys and 21.8 percent of five to six-year-old girls were overweight, and 8.7 percent of five- to six-year-old boys and 6.7 percent of five- to six-year-old girls were obese.
There is a statistically significant declining trend in ambulatory-sensitive admissions (primary health care avoidable hospitalisations) for children aged under five, however admission rates are higher for Māori and Pacific children.

Figure 12: Ambulatory-sensitive admissions, children aged under 5, 2000/01 to 2005/06

Elective services Elective services are hospital services for patients who do not need immediate hospital treatment, including assessments, investigations and operations. Elective services are a service area where treatment can be delayed, or access restricted. Even though people undergoing elective operations represent less than 20 percent of total hospital admissions, this is an area that generates considerable public comment, and concern over the level of access to these services. It is often used as an indicator of the overall quality and effectiveness of the health system.

Although elective surgery volumes fluctuate from year to year, trend information shows clearly that the total numbers of hospital discharges (case-weighted, ie, adjusted for complexity) have steadily increased since 2001/02. Reducing elective surgery waiting times is a challenge for health systems internationally, as demand for elective services grows with technological advances in medicine and longer life expectancies.

Primary health care

As many countries worldwide are recognising, harnessing the potential of the primary health care sector to prevent chronic disease, identify people at risk of developing chronic diseases, and provide ongoing treatment, management and co-ordination services is vital to achieving our goals of improving health outcomes and reducing health inequalities (Ministry of Health 2006b).

As at 1 April 2006 81 PHOs had been established, with a combined enrolled population of 3,909,791 million New Zealanders. The estimated total New Zealand resident population at 1 April 2006 was 4,118,918, indicating that 95 percent of all New Zealanders were enrolled with a PHO.

By July 2007 the funding roll-out will be complete and all New Zealanders will be able to access affordable primary health care services. The Ministry needs to improve the existing policy settings for fees and to introduce new mechanisms for maintaining low fees to ensure that those with the highest need are receiving improved access.

Currently, the primary health organisation (PHO) funding formulas are not allocating resources in keeping with the relative need of population groups for health services. There are other, broader issues the Ministry must also consider, such as the balance between funding for packages of care to achieve outcomes versus funding for episodes of care. There is currently wide variation in PHO resourcing, infrastructure, community involvement, and progress towards achieving population health goals. While some PHOs are successfully implementing the Primary Health Care Strategy, others are not.

Health of older people
New Zealand’s population is ageing. By 2020 the population’s age distribution will have a significantly increasing proportion of older people, and this is projected to continue to increase until 2040. Whereas life expectancy compares well internationally, independent life expectancy is about 13 years less than life expectancy.

Figure 13: New Zealand population, by age group, 1940–2100 (projected)

Source: The Treasury 2006

In the 2006 Census, the proportion of the Māori population aged 65 years and over has increased from 3.4 percent in 2001 to 4.1 percent in 2006.

People are not only living longer, but they are entering residential care with more complex conditions than previously. International evidence suggests that integrated care and home care are more cost effective than institutional care (Ministry of Health 2005c). The economic evaluation, Assessment of Services Promoting Independence and Recovery in Elders (ASPIRE), found that, although the cost of the new services evaluated was more than the cost for usual care, they increased the amount of time spent in the community relative to usual care over a 12-month period by decreasing the time spent in residential care, and people lived longer (Auckland Uniservices 2006).

Infrastructure
The health workforce is the sector’s largest resource and accounts for approximately 70 percent of public health expenditure every year. The general ageing of the population will have a significant impact on the health labour force – not only on demand but also (critically) on supply. Although New Zealand has always had a significant migrant-derived workforce, the international shortage in skilled health workers is a concern, both currently and over the long term. With fewer workers available, health delivery will need to become less labour intensive through changing work practices, supporting individual care, and the use of technology. We will need a different health workforce capable of working in new ways to meet increased demands.

Knowledge underpins improvements in the health system, and this raise the issues of what information is needed and how to get it to decision-makers (increasingly individuals and community bodies) in a way that will enable action to protect and promote health for the best population, community and individual health outcomes, including reducing inequalities.

Measuring changes in efficiency requires robust measures of outputs, outcomes and inputs. This is more critical in a sector such as health, with fewer and/or weaker price signals that influence many decisions in the economy.

Value for money
Government expenditure on health continues to increase as a proportion of total government expenditure. In 2006/07 Vote Health is $11 billion, 21 percent of total government expenditure and around 7 percent of GDP. The Treasury has predicted that health could consume 12 percent of GDP by 2050, growing in importance compared with education and other social services (excluding superannuation) (The Treasury 2006). The net value of DHBs at 30 June 2006 was $1,895 million, the total turnover was $9,185 million, and they incurred a net deficit of $44 million.

Well-performing, cost-effective health systems like New Zealand’s constantly seek out and exploit opportunities to improve further. Demonstrating value for money and ongoing improvement in overall system performance will remain important to governments in future decades as a means to manage demand for, and justify levels of expenditure on, health care services. The focus is on outcomes. Figure 14 illustrates the many opportunities in the health system to improve value for money and reduce wastage.

Figure 14: Value for money – the relationship between expenditure, inputs, outputs and outcomes

Source: The Treasury

Improving Māori health
The Māori population has increased by 30.0 percent in the past 15 years, up from 434,847 in 1991 to reach 565,329 in 2006 (an increase of 130,482). Māori life expectancy at birth was more than eight years less than non-Māori in 2001, for both genders. The major sources of death were all chronic diseases. Ischaemic heart disease was the leading cause of death for both Māori and non- Māori. Māori had higher mortality rates than non-Māori in cardiovascular disease, stroke, heart failure, rhuematic heart disease, heart disease, ischaemic heart disease. For many cancers the rate ratio for Māori compared with non-Māori is higher for mortality rates than for registration rates. This suggests that Māori with cancer may be more likely to die from their cancer than non-Māori. Māori prevalence of diabetes is two-and-a-half times higher than non-Māori.

He Korowai Oranga (Minister of Health and Associate Minister of Health 2002) seeks to support Māori-led initiatives to improve the health of whānau, hapu and iwi. The strategy recognises that the desire of Māori to have control over their future direction is a strong motivation for Māori to seek their own solutions and to manage their own services.

Although Māori participation in the health sector has increased significantly over the last decade, there is an ongoing need to ensure Māori are, and remain, actively involved in key leadership and strategic decision-making roles. To achieve this involves DHBs establishing, maintaining and putting into practice (at strategic and operational levels) relationship arrangements with iwi and Māori communities. It also requires Māori participating meaningfully and effectively in decision making forums as members of a DHB board, or as participants on other statutory or advisory committees, or as board members with primary health organisations.

Capable and competent Māori health workers are pivotal to providing appropriate care to Māori and their whānau. This includes mainstream health services utilising examples of innovative evidence-based models in order to reach and provide for Māori and their whānau. Adequate numbers of capable and competent Māori health workers will also help to improve access to services and the effectiveness of mainstream and Māori provider services.

Challenges to reducing inequalities
There is considerable evidence, both internationally and in New Zealand, of significant inequalities in health between socioeconomic groups, ethnic groups, people living in different geographical regions and males and females (Acheson 1998; Howden-Chapman and Tobias 2000). Research indicates that the poorer you are the worse your health. In countries with a colonial history, indigenous people have poorer health than others. Reducing inequalities is a priority for government. The New Zealand Health Strategy acknowledges the need to address health inequalities as ‘a major priority requiring ongoing commitment across the sector’ (Minister of Health 2000).

The recent publication in a series on disparity, Decades of Disparity III: Ethnic and socioeconomic inequalities in mortality (Ministry of Health and University of Otago 2006), analysed the roles that ethnicity and socioeconomic position play in shaping health inequalities. It found that health inequalities are not fully explained by socioeconomic position, and that ethnicity has an impact on health even after socioeconomic position is taken into account. The authors also suggested that discrimination can contribute to structural inequalities in society.

Health inequality is distributed unevenly throughout New Zealand. Using the 2001 Census and mortality data for the same year, analysis conducted by the Ministry has found that the range of life expectancy at birth was approximately 5.0 years across DHBs’ usually resident populations, but approximately 28.5 years across neighbourhoods (from 64.4 to 93.0 years). DHBs varied widely in a ‘health inequality index’ (HII) from 50 percent more to 60 percent less than New Zealand as a whole, a 2.5‑fold range (Ministry of Health 2005b).

Figure 15: DHB life expectancy (LE) at birth versus health inequality index (HII), 1999–2003

Note: ‘Standardisation’ in this context refers to normalisation of HII (health inequality index) and life expectancy estimates so that both variables are measured on comparable scales – multiples of their respective standard deviations (Z scores).

An intersectoral focus
Policies external – or not easily amenable – to health sector intervention can affect how the health system achieves its overall vision of ‘Healthy New Zealanders’.

A whole-of-government approach is critical to ensuring whānau and communities are better able to take control of the circumstances affecting them and to improving the health and wellbeing of whānau. For Māori whānau to participate fully in New Zealand society, co-ordinated and effective service development across all sectors must be in place to ensure equitable access to resources and services.

Other sectors also benefit from a well-performing health sector. A healthy population supports the achievement of economic and non-health social goals. Good health is critical to human capital, supporting job productivity, the capacity to learn and the capability to grow intellectually and physically. A high-performing health system can also contribute to New Zealand’s ability to attract and retain labour and capital.

< From the Minister | Part 2: The Government’s Priorities >

Footnotes
1 Māori Providers: Primary Health Care delivered by doctors and nurses The National Primary Medical Care Survey (NatMedCa): 2001/02 Report 3, June 2004