Why DHBs should go on the chopping block

As the Government awaits the final report from an independent panel reviewing New Zealand's health sector, Otago Business School dean Robin Gauld argues that significant structural reform is needed to make a real difference

Comment: There was minimal public debate around the recent district health board (DHB) elections, and similarly limited discussion of the interim report from the Government’s health and disability system review panel.

With the new boards starting their work in December, and the panel's final report due in March 2020, there is demand for much more analysis of how our healthcare system works and might be structured.

Boards, meantime, also desperately need better ways to guide their CEOs and services, which they are meant to govern and hold to account.

But here's the problem...DHBs are now two decades old.

They have survived successive governments. They function largely in separation from one another, as geographically-based fiefdoms led by CEOs; they also own and run public hospitals.

DHBs plan and fund local services, yet primary care and general practice sit largely in the private sector, receiving public funds with some coordination through primary health organisations (PHOs).

Why no other country in the world features the DHB model is an important question. It’s time for a rethink.

These two sectors work largely independently, despite seeing the same patients. Hospitals are free; GPs charge patients.

The system is characterised by inequities and access problems, and the DHBs differ greatly from each other.

There is no method for spreading what works between districts. There is little evidence DHB boards are an effective governance model. The system is administratively clumsy. Boards are accountable to the Government, not voters.

Why no other country in the world features the DHB model is an important question. It’s time for a rethink.

The review panel gave little away in its interim report, highlighting various principles and areas of concern such as the need to bolster primary care and bring equity to the centre of policy and services delivery.

 Ideally, the panel would be well-placed to advise the following, and a bold government would implement the below:


1. Do away with the DHBs but keep public hospitals and associated services.

These services should be run by a manager who is part of a national management team. This team is required to work together, employed by and accountable directly to the centre, with all members working for and on behalf of New Zealand and its public.

The focus is national consistency, collaboration and service quality improvement. Many health systems around the world feature a chain of services working in this way.

2. Keep the PHOs.

These are needed in order to coordinate, as best as possible, the GPs and private practices that dominate community care in New Zealand.

3. Re-orient local alliances and use these as the foundation of the health system.

Since 2013, contractual alliances have been required between DHBs and PHOs in order to promote ‘whole of system’ planning. Services managers in point one above should work in an alliance with the PHOs.

Alliances should have responsibility for all planning and funding decisions, and hold the local budget. Importantly, all plans and decisions should be based on clinical considerations, not whether the DHB or PHO thinks a decision is palatable or not as with the present.

Health professionals should be empowered through the alliance, in partnership with one another and with patients, to design the system and services and allocate funds to the right points of care in the system – into community settings whenever possible and clinically-agreed.


These arrangements would spell a shift from the status quo, so may be a bridge too far, yet they should be seriously debated.

New Zealand has been at the forefront of alliance governance, and other countries are now following. What we have not done is reorient the rest of the health system to facilitate the model, nor provided proper support as other countries are.

While they await the review panel’s March report, our new DHBs will be grappling with the complex array of issues put in front of them. They would do well to focus on demanding the CEO and leadership team fully commit to the local alliance, and hold them to account for the extent of this commitment.

Without this, we can expect more of the same.

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