PHOs

27 September 2003

Questions and Answers on Promary Health Organisations.

What is primary health care?
Primary health care covers a broad range of out-of-hospital services, although not all of them are Government funded. It aims to improve the health of the people in communities by working with them through health improvement and preventative services, such as health education and counselling, disease prevention and screening.
Primary health care includes first level services such as general practice services, mobile nursing services and community health services targeted especially for certain conditions, for example
maternity,
family planning and sexual health services,
mental health services and dentistry,
or those using particular therapies such as physiotherapy, chiropractic and osteopathy services.
Chronic diseases, such as diabetes are best managed by primary health care services so that complications can be prevented or mitigated.
What is the Primary Health Care Strategy?
The Primary Health Care Strategy was launched in February 2001 by Health Minister Annette King.
It builds on the population health focus and the objectives of the New Zealand Health Strategy and the New Zealand Disability Strategy and outlines how a different approach to primary health care will improve the health of all New Zealanders through:
a greater emphasis on population health,
health promotion and preventative care;
community involvement;
involving a range of professionals and appropriatness of services;
improving co-ordination and continuity of care;
providing and funding services according to the population's needs as opposed to fee for services when people are unwell.

What is a Primary Health Organisation (PHO)?
PHOs are the local provider organisations through which District Health Boards (DHBs) will implement the Primary Health Care Strategy.
The essential features of PHOs are set out in the Minimum Requirements released by the Health Minister in November 2001.
PHOs will aim to improve and maintain the health of their population and restore people's health when they are unwell. They wili provide at least a minimum set of essential population-based and personal first-line general practice services
PHOs will be required to work with those groups in their populations (for example, Maori, Pacific and lower income groups) that have poor health or are missing out on services to address their needs
PHOs must demonstrate that they are working with other providers within their regions to ensure that services are co-ordinated around the needs of their enrolled populations
PHOs will receive most of their funding through a population needs-based formula (capitation)
PHOs will enrol people through primary providers using consistent standards and rules
PHOs must demonstrate that their communities, iwi and consumers are involved in their governing processes and that the PHO is responsive to its community
PHOs must demonstrate how all their providers and practitioners can influence the organisation's decision-making
PHOs are to be not-for-profit bodies with full and open accountability for the use of public funds and the quality and effectiveness of services.

What is the Government's high-level direction for the Primary Health Care Strategy?
The agreed high-level direction is as follows:

Subject to the availability of funding, the public share of primary health care funding will be substantially increased over the next 8-10 years
Over time, as PHOs are formed, they will be funded according to the needs of their enrolled populations to provide more effective and affordable care with a population health focus
As this happens, reliance on the Community Services Card (CSC) will be progressively reduced
As the CSC will still be needed for a number of years, measures will be implemented to improve its take-up in the meantime.

What funding is available for the Primary Health Care Strategy?
The Government has committed just over $400 million over three years to begin implementing the Primary Health Care Strategy. <
Where has the new funding been directed?
The Government's priorities for the new primary health care funding (in order of priority) are:
High needs populations: Extra funding will be made available to PHOs covering very deprived populations in order for them to have low fees for all their patients, provide services to ensure care gets to where it is most needed, include services to improve and maintain health as well as restore health, and to move to fairer funding allocations on a population needs basis.
Adjust subsidy for children under 6 : The General Medical Services subsidy for children under six years was adjusted in July for inflation since 1997.
Progressively lower cost of access to primary health care: As more funding becomes available from 2003/04, it will start to be applied to extend free or low cost access to primary health care services through PHOs. The priorities will be reducing costs for school-age children and individuals with high health needs participating in Care Plus.
Sustainable rural services: Measures have been introduced to help implement the Primary Health C&re Strategy in rural areas and to retain and recruit the rural health care workforce. This represents a $32 million commitment over three years.
PHOs across thecountry: Primary Health Organisations are being encouraged to set up across the country; they will be funded according to their enrolled population to provide a range of population based services to improve and maintain health as well as treatment services: and to address health inequalities.
Improvements to CSC and HUHC: A range of measures will be introduced to improve take-up of Community Services Cards until such time as increased funding means cards are no longer needed. Improvements to the High User Health Card will also be implemented.
Pharmacy co-payments: From October 1 2003 prescription fees will be reduced to a maximum of $3 for children aged between six and 17 enrolled in interim PHOs, and for patients of all ages enrolled inAccess PHOs.
Adjustment to retain value: From July 1 2003 all PHO capitation rates will be increased by 2.52 per cent in line with the Government's commitment to retain the value of the contract.
Nursing workforce development: Primary Health Care nursing scholarships have been established to assist nurses working in the primary sector to gain post-graduate qualifications. About 180 nurses were allocated scholarships earlier this year, with a second round of scholarships occurring later in the year. In another nursing initiative, eleven primary health care innovative models were selected from more than 130 proposals. Nearly half of the models, aimed at reducing fragmentation and duplication of nursing services, have already been implemented..

How are PHOs being established
A small amount has been made available to help PHOs to get established, particularly small ones.
What will happen to the Community Services Card?
The Community Services Card will be phased out over the next 8-10 years.
As it will still be needed by many people over the medium term, improvements will be made to make it more effective.
Improvements will include measures to:

Increase the numbers of people who get the card automatically rather than having to apply
Simplifying the process for low-income people to gain a card
Making it easier for providers to determine whether an individual has a card.

What initiatives are planned or underway to improve the take-up of the CSC?
They include a greater promotion of the card, via Maori and Pacific Island networks, as well as employer and union representatives, streamlining the application process and greater automation of assessment of entitlement.
The Ministry of Health is also continuing to fund a free telephone service for providers to verify patients' card status.
What about changes to General Medical Services subsidy (QMS)?
From October this year all under 18s in all PHOs will receive low cost health care. " '
How are PHOs different from Independent Practitioner Associations?
PHOs must meet a set Of minimum requirements that do not apply to IPAs. Many IPAs would already meet some of these requirements but few would meet all of them at this stage. Several IPAs are considering making the changes necessary to become a PHO while others are supporting the establishment of PHOs localty. PHOs are also expected to develop as multi-disciplinary teams (eg doctors, nurses, Plunket, pharmacists etc).
When did the first PHOs begin operating?
TaPasefika Health Trust and Te Kupenga O Hoturoa, in tne Counties Manukau District Health Board (DHB) region, were established in July 2002.
How many PHOs are up and running?
From today, 47 PHOs have been established, covering a population of approximately 1.7 million New Zealanders.
What are the formulae that have been developed to fund PHOs?
There are two: Access and Interim.
How will the Access formula work?
It will allow all those enrolled with an Access PHO to be charged low patient fees, or access free care, and there will be no need to use CSCs.
In the first instance, the Access formula will be available only for PHOs (or practices/clinics within PHOs) serving populations with high concentrations of NZ Deprivation Decile 9/10 and individuals with high health needs.
( editor note - this is a MoH information sheet and it should be noted that to be elegible for access funding half of the PHOs enrolled population must be either Maori , Pacifiuc Island or low income earners.
Also the controlling committee must have at least one Maori member )
What about the Interim formula?
Until there is enough funding for all PHOs to be on the Access formula, an Interim formula will apply to other PHOs/practices.
The Interim formula will continue to use CSC status both for determining funding and setting patient fees. It includes additional funding for a range of new functions such as health
Over time, as funding allows, the per capita amounts in the Interim formula will be increased towards the levels in the Access formula. This will start in 2003/04 with increases for all school-age children, and for individuals with high needs.
What are the key factors of the two formulae?
Both the Access and Interim Formulae recognise ethnicity and deprivation, alongside age and sex, as key determinants of population need, and both provide increased funding for HUHC-holders. Weightings for ethnicity and deprivation will target extra funding to improve access for high need populations through, services such as clinics on marae or employing community health workers.
PHOs will need to satisfy their DHB on how the extra access funding will be used.
What alternative funding approaches have been proposed and why?
Following concerns expressed by some GP groups two PHOs are trialling an add-on to the Interim formula that will give extra funding for people with high health needs. Called 'Care Plus', this will provide low cost access for people with high needs until Access funding levels are available throughout New Zealand.
The key criterion is likely to be that the person is expected to need at least two hours of clinical contact time in the coming six months. This need for care might be indicated in a number of differed ways including that the person is:

Suffering from two or more chronic illnesses
Has a track record of heavy utilisation of primary care (six visits in the past six months to primary care or an Emergency Department)
Has a track record of acute hospital admissions (two non-surgical acute admissions in the past year)
Has a terminal illness.
About six percent of the population will come into this category.
All 'Care Plus' patients will have a care plan developed for them, including quarterly reviews to check on health status, treatment, medications and so on. The care will be able to be delivered flexibly, using GPs and other members of the PHO team. Capitated funding will facilitate that.
How much will it cost New Zealanders to visit PHOs?
All people enrolled with 'Access' PHOs will have low patient fees.
Although charges will vary, many Access PHOs may be able to offer free care for children under six.
School-age children will be charged less than $10 while most adults will pay in the order of $10-$15.
Each Access PHO will agree maximum patient fees with its DHB.
In 2003-04, patient fees for under-18s will start to be reduced for people enrolled with PHOs funded under the Interim formula.

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