Is our primary care sector headed for collapse?
Monday, 12 August 2024
New Zealand’s general practices say they’re struggling to stay financially viable due to mounting costs, years of chronic underfunding and increasing workloads. Meanwhile, Health NZ is scrambling to find ways to cut $1.4 billion from its budget. What does this mean for our primary care sector? Mariné Lourens reports in the first of the series Fractures on the Frontline into challenges facing general practice.
Without more funding and support for general practices, the New Zealand health system is headed towards “an unpleasant complete collapse within the next two years”.
This was the warning of interim General Practitioners Aotearoa chairperson Dr Buzz Burrell in an open letter to Lester Levy, the recently appointed commissioner of Health NZ Te Whatu Ora.
If you are a GP or a patient who would like to share your experience of primary health care please email reporters@press.co.nz
“We are in an extended Winter of Discontent in healthcare,” Burrell wrote. “The figurative rubbish is in the streets as unrest among healthcare workers increases by the day, and EDs overflow with people desperate for healthcare that could be provided in the community if only there was enough funding and enough GPs.”
Burrell says he is not catastrophic; predicting the health system could collapse within two years is “actually optimistic”.
“It is happening already. We are not looking at a perfect system and [warning] it won’t stay perfect for long. It is very imperfect already. We’re already replacing ED doctors with telehealth, it is happening right now.”
What would a ‘complete collapse’ look like?
Burrell says it means fewer people would be able to see their GP meaning more people would go to the emergency department. “The emergency department would literally throw its hands in the air saying the number of people lined up inside and outside the department have exceeded our capacity.
“And then people will be dying who shouldn’t die, either inside the hospital walls or outside the hospital waiting to be seen.”
He believes GPs “are completely overworked, undervalued, unsupported, and disrespected”, and there is no way to right the ship without adequate funding.
His comments echo those of numerous sector leaders and general practitioners who for years have been warning the primary care sector is crumbling under the pressure of chronic and continued underfunding.
A member survey by General Practice Owners Association of Aotearoa New Zealand (GenPro) about a year ago showed 35% made a loss in the previous quarter of the financial year, and 88% were concerned about their future financial viability.
In its latest funding review last month, Health NZ announced a 4% increase in capitation funding and a 7.76% increase in co-payments, resulting in a combined 5.88% total revenue increase.
This was despite warnings from the primary care sector that a double-digit increase was needed to keep general practices sustainable.
The result is that many are running at a loss or near-loss, and most have no choice but to hike patient fees in an attempt to keep their head above water.
How are GPs funded?
General practices are mainly private businesses that receive a proportion of their income from the Government through capitation funding. The amount a practice receives is based on the number of enrolled patients, not on the number of times a patient sees a GP.
Capitation funding covers about 2.5 visits per patient a year on average, but high-needs patients can visit a lot more.
Capitation funding can encourage primary healthcare providers to focus on preventative care to keep people well and avoid unnecessary doctors visits. However, one of the main criticisms of the model is that it does not make provision for the various factors that can increase a patient’s healthcare needs like chronic or complex health problems, comorbidities, ethnicity, and socio-economic deprivation.
Patient fees, which are known as co-payments, are the fees patients have to pay out of their own pocket when seeing their GP. These payments differ between practices, but the average price across New Zealand is $55.
Co-payment increases are capped by the Government, but general practices can apply for an exemption.
A third (and lesser) funding stream for general practices is from “flexible funding” provided to primary healthcare organisations (PHOs) to fund wraparound services for example health promotion or chronic care management.
As part of the capitation funding, the Government has subsidised funding streams aimed at increasing access to healthcare, especially for high-needs communities.
For example, practices who agree to see children under the age of 14 free of charge, or accept lower patient fees for community service card holders, will get more government funding. Additionally, practices that serve at least 50% high needs patients or people living in high deprivation areas can opt in to the Very Low Cost Access Scheme (VLCA), which means extra funding for these practices in return for agreeing to maintain fees within lower thresholds.
A ‘failed system’
Capitation funding was first introduced in 2001 and many feel it is no longer fit for purpose. “We need a new funding model that will tackle inequity and truly recognise all drivers of demand and complexity,” Porirua GP and General Practice New Zealand (GPNZ) chairperson Dr Bryan Betty says.
“The funding needs to wrap around a lot more factors to calculate what a patient would actually require.
“A high-needs patient coming into our practice [in Porirua] is funded essentially the same as a low-needs patient walking into an upper-middle class practice in Auckland. But if they’ve got diabetes, heart disease, high blood pressure, mental health problems, and social and housing issues, that is not reflected in the funding. That’s the problem, the capitation system is not nuanced enough.”
Betty describes the subsidised funding schemes as “band-aids” that had been put on the primary care system over the years to try and make it more accessible and reduce costs.
“The problem with that system, and I think it is a failed system, is that those [subsidised schemes] have not kept up with costs at all in terms of complexity.”
He explained patients from lower socio-economic communities often flock to VLCA practices because of the lower patient fees, but because they might have higher healthcare needs, the workload for these practices go up exponentially while the funding does not.
At some point it is no longer financially viable, and some practices may have no choice but to start restricting patient access, Betty says.
This could be in the form of no longer accepting new patient enrolments, opting out of low-cost schemes, or deliberately enrolling patients with low health needs.
Betty says while he is not aware of many GPs opting out of subsidised funding schemes, there is “a lot of talk about it”. Many GPs feel morally obligated to continue to accept community services card holders and zero-fee under-14 patients, but are “caught between a rock and a hard place” because of the financial impact.
“It is sort of like a pressure cooker and the pressure is really building. It is very much creaking around the edges at the moment,” he says.
Martin Hefford, director of Health New Zealand’s living well division, says a technical review of capitation funding is under way, “supported by an external advisory group, which includes expertise from general practice”.
“The review is expected to be completed late August 2024. The outcome of this review will inform both Health NZ operational commissioning and Ministry of Health policy options. Using this work, Health NZ and the ministry will explore what adjustments to capitation may be required.”
He acknowledges the cost pressures GPs are facing amid a growing demand for their services. “Health NZ is facing the same pressures,” he says.
GPs close their doors to new patients
A recent study published in the New Zealand Medical Journal (NZMJ) said an estimated 79% of general practices had closed enrolments at some point between January 2019 and August 2022.
GenPro, which represents general practice owners, estimates about half have closed their books.
A woman in the Wellington region, who did not want to be named, told The Press she and her husband returned to New Zealand in March after living in Australia for three years only to find the general practices they were enrolled with previously were no longer accepting new enrolments.
“We tried several practices in our area - and some out of area - and were turned away repeatedly. We are both New Zealand citizens, and my husband is type 1-diabetic and needs scripts for insulin on a regular basis. When asking what my husband was to do if he required insulin, he was met with no answer other than ‘I don’t know’.”
She says they finally managed to secure a GP through someone they knew in the sector after a stressful two months. “I think that was pure luck on our part that we actually knew someone who could help us. I appreciate another person who doesn’t know someone in the sector would not be so lucky.”
Betty says it is estimated that over 250,000 people are not enrolled with a general practice. “A lot of practices are feeling that with the increase in [patient] complexity, comorbidity [and] the demands the system is placing on them, there is a point where practice becomes unsafe and healthcare delivery starts to degrade, so they need to actually restrict patient numbers in order to compensate for that.”
One Christchurch GP, who spoke to The Press on condition of anonymity, says they are in the “difficult position” of having to consider whether opting in to subsidised funding streams is still financially viable.
“[Opting out] of these will have significant impacts on vulnerable populations and I personally would rather not, but at the end of the day I don’t see any other industry not increasing prices to match costs,” they say.
Another Christchurch GP, who also did not want to be named, says the structure of the capitation funding model incentivises practices to enrol a lot of patients and not deliver good services to them because practices are funded according to the number of enrolled patients.
“Capitation has had its day, really. It is just not adequate for how complex patients are now and how much more we [GPs] are expected to do.”
Burrell says besides the fact that general practices are “stupidly underfunded”, the capitation funding system simply does not work. “It is calculated on an assumption that the average patient will see their doctor two and a half times per year. That figure was arrived at erroneously 20 years ago, and it's been annually proven to be woeful underfunding.”
The Ministry of Health’s 2022-23 health survey showed the average person visits their GP 2.4 times a year. However, this number is higher for females and older people. People aged over 75 visit their GP on average 3.75 times a year, while women aged between 55 and 74 visit their GP an average of 3 times a year.
Numerous studies have shown that for every $1 invested in primary care, roughly $13 is saved in downstream costs.
“There is a wealth of evidence [showing] if you have a robust working general practice primary care sector, you take pressure off hospitals, people stay well longer and you get a huge return on investment,” Betty says.
“Hospitals are really important, but they do a different thing in the system. We’re missing where actually a lot of the focus should be [and that is] on general practice where 96% of the population actually get their medical care in this country.”
Burrell says over the last three or four decades, various governments have resisted funnelling money into primary care as it doesn’t make for dramatic photographs and catchy headlines and doesn’t win votes.
“The approach to healthcare in New Zealand is almost like investing in panelbeaters and tow trucks to address the car crash problem. If only we could have a less political view of health.”
In his open letter to Levy, Burell points to the “overused analogy” of the relationship between ambulances, cliffs and fences.
“The even more sensible metaphor would be to live far away from the cliff, with little need for ambulances.”