The Health System Reforms enforced in 2003 is seriously flawed, placing human lives at great risk, according to new research.
Dr Shomi Shin, a PhD student at Massey University School of Economics & Finance has found that funding issues encouraged smaller and rural hospitals to keep patients who are seriously ill within their health boards instead of transferring them to bigger hospitals.
“People with more complicated health conditions are being transferred from smaller regional hospitals to the larger tertiary hospitals less often since the health reforms of 2003,” she said in her report.
Paucity of funds
Her research also found that tertiary and teaching hospitals are under-funded for their level of expertise and workload and that reforms introduced 11 years ago have had a huge impact on the health system.
According to Dr Shin, prior to the reforms, smaller hospitals routinely transferred the most complex cases to specialists at tertiary hospitals but the pattern changed with the ‘Population-Based Funding Formula’ introduced in 2003.
“Sicker patients are less likely to be transferred because the new system gives non-tertiary District Health Boards incentives to keep patients in their districts to retain the funds. If you transfer patients, you have to pay the other provider for the treatment from the funds you received,” she said.
Some exceptions
Her research also found that though more complex cases were less likely to be transferred, the more fatal cases (people with higher mortality rates) were still transferred to the tertiary hospitals.
Therefore, non-tertiary district health boards seem to selectively treat severe but non-fatal cases, she said.
As a part of her research, Dr Shin analysed data relating to the Population-Based Funding Formula, which provides lump sums to hospitals, based on their population mix.
“Larger hospitals were being under-funded, not because fewer complex cases were being sent to them but because the Population-Based Funding Formula does not directly reimburse providers for the complexity or volume of cases they receive. Some ethnic groups (Māori and Pacific) used the health system in excess of their population share,” she said in her report.
Innovation and Economics Professor Christoph Schumacher, who supervised Dr Shin’s work, said that this was the first piece of research which showed that larger hospitals are under-funded.
