Background
13. This paper advises on a more detailed service-by-service division of roles between District Health Boards (DHBs) and the Ministry of Health [CAB (00) M 11/1A]. The focus is on the ultimate division of roles, not that during the transition.

14. It also covers report-backs on the development of Mäori service capability, national and tertiary services, disability support, services for DHB cooperation, and Ministry of Health accountability arrangements in respect of funding providers directly [CAB (00) M 2/4, M11/1A (4) and M11/1A(3) refer].

15. Advice on potential services for cooperation is limited to the planning and funding-related functions of DHBs, which includes needs analysis, prioritisation, co-ordination, entering into agreements with providers, monitoring providers, and making payments. It excludes DHB back-office functions or service delivery related functions (for example, information technology and procurement of supplies) as those matters will be covered in the DHB Establishment project.

16. Decisions to date on the role of DHBs and the Minister of Health are that:

    1. DHBs will be accountable for funding or providing services which ensure the best health and independence outcomes for their populations, within available funding. DHBs will decide, therefore, on the mix, level, and quality of health and disability services within nationwide guidelines

    2. initially the DHBs' environment will be highly regulated and prescribed but DHBs will move to a high degree of autonomy according to specific criteria and processes

    3. the Minister of Health will play a strong role by setting (in consultation with DHBs) the strategic direction and outcomes sought, national minima and guidelines, and by using reserve powers to intervene in DHBs sparingly.

17. Concerns have been raised by groups in the sector that, for some services, it would be inappropriate to place planning and funding responsibilities with individual DHBs, and that these are better placed with a regional group or a central organisation. The main reasons put forward are that:
    1. some services are provided nationally or regionally (for example, tertiary services and telephone helplines). Some local services are provided by national organisations (for example, IHC, Family Planning and Plunket). Providers are concerned that they will face additional administration costs if they have to have complex contracts with many DHBs

    2. some services require a lot of coordination. For example, some public health activities need a consistent approach or co-ordination between districts (for example, screening, and buying and storing vaccine)

    3. some services are very costly (relative to a DHB's budget) and the need is very unpredictable or rare (for example, multiple organ transplants or epidemics). Officials have identified that this can make it difficult for some DHBs to manage within their budgets

    4. parts of the disability sector feel that DHBs will not be an appropriate funding agency for DSS, because disability support is different from health care, and that DHBs may marginalise and underfund disability support services because they have a narrow medical focus

    5. some small DHBs may find it difficult to plan services that require specific expert knowledge

    6. capability in funding and providing health and disability support services in Mäori, Pacific, and mental health, and in disability support services is developing. Groups in the sector are concerned that progress may be jeopardised if action is not managed coherently across the whole sector.
18. However, splitting planning and funding responsibilities for some services from DHBs could:

    1. create confusion on which agency is accountable for improving health and independence of a DHB's population, the DHB or another agency

    2. introduce greater potential for cost-shifting between multiple funding streams, for example by redefining secondary services as tertiary services, or chronic personal health conditions as disabilities

    3. introduce a conflict of interest between the Ministry of Health funding services and funding and monitoring DHBs

    4. put in place barriers to local service coordination

    5. reduce responsiveness to local needs, preferences and opportunities.
19. Unintended consequences could include poorer decisions on service levels and mix (so that people do not receive the best services for their circumstances) and budget overruns. The advantages and disadvantages of the potential options are therefore assessed in accordance with the following framework.

20. The starting point is that each DHB will be responsible for planning and procurement of all health and disability support services (within the parameters set by the Minister of Health). This is consistent with previous decisions that gave:

    1. DHBs an unambiguous accountability for funding the best mix of health and disability support services for their populations, within budget

    2. local users and communities a greater say over health and disability support services.

21. Unavoidably, these arrangements go hand-in-hand with some providers having to deal with more than one DHB - for example, about 15% of current secondary and tertiary services discharges from a HHS pertain to people from other HHS areas; more than half of these 'cross-boundary flows' occur between the Greater Auckland HHSs. Each DHB must understand and pursue local needs and preferences, and will need the skills and resources to do so. This does not mean that DHBs should aim to deliver all services themselves: DHBs will need to closely collaborate in relation to certain services.

22. The Minister of Health will use accountability arrangements and policy to coordinate service planning. For a small number of health and disability support services, planning and funding functions are better undertaken regionally or centrally by a DHB collaborative arrangement (such as a funding team working on behalf of some or all DHBs) or in some cases by the Ministry of Health. There is no systematic way, however, to identify what the best option is without being able to compare actual proposals for DHB collaborative arrangements with the alternative of direct funding of specific health and disability services by the Ministry of Health.

23. While DHBs must closely collaborate on certain services, this may be onerous, particularly for smaller DHBs. There will also be scope for conflict when it comes to agreeing on allocation of budgets. These matters could draw DHBs' attention away from other areas for improvements in health and independence and reducing disparities. Responsibilities will only be devolved to DHBs in accordance with the DHB development framework, setting out the criteria and process by which individual DHBs will move to the maximum degree of autonomy [CAB (00) M 11/1A].

24. Alternatives to DHBs being responsible for funding-related functions will considered if there are highly compelling benefits, which will clearly outweigh the risks, according to the following criteria:

    1. consistency with Treaty of Waitangi principles

    2. benefits from concentrating planning and funding services

    3. benefits from planning and funding different services together

    4. significant reduction in contract or negotiations costs

    5. improved coordination within the sector or with other sectors

    6. significant benefits from standardisation or quality control

    7. management of fiscal risk to the Crown.

25. The division of roles should contribute to the Government's objectives for the health and disability support sectors - improving the health and independence of the population, reducing disparities, and improving community participation in health and disability support - in the most effective and least-costly manner. This means that arrangements should be based on the needs and preferences of users of health and disability services and local communities, not historical delivery patterns or the convenience of providers, DHBs or central agencies.

26. Service delivery patterns will change as the result of technological advances and consumer expectations. In addition, during the transition to DHBs more specific information will come to hand. Decisions flowing from this paper, and the principles that underpin these, will provide a guide to the detailed allocation of current HFA tasks during the transition.

TYPICAL PROBLEMS AND TYPICAL SOLUTIONS

27. The issues in paragraph 16 are addressed in turn under the following headings:

    1. single services which cover the populations of more than DHB

    2. services which are costly and unpredictable

    3. disability support services

    4. service areas which are developing.