Anatomy of a crisis: Layer cake of woe built on workforce and funding shortages

By Martin Johnston

For some GPs, the crisis in their profession is visible in their loss of faith in the health system. For others, it might be the hard financial facts of their suddenly unprofitable practices.

But crisis it is.

What else can it be when once-stable businesses are forced to rely on cash injections from their GP-owners to keep paying the bills, or satellite clinics shut temporarily because sick or on-leave staff have no replacements, or the mounting financial losses mean no one will want to buy you out?

The negatives are stacking up dangerously. Patients reportedly often wait weeks for a routine appointment, a third of general practices are closed to new patients, more than half of GPs under 55 report burnout, more than a third of GPs plan to retire within five years, and the number in training is fewer than needed.

These are markers of stress in general practice. They result in delayed diagnoses and increased flows to overcrowded hospitals which, stressed themselves, are progressively increasing their access thresholds.

How did it come to this, when everyone in general practice is working so hard?

National Hauora Coalition clinical director and specialist GP Ranche Johnson says iwi-owned and other Māori practices too have been topped up by their owners.

“The amount of work required for our high-needs populations with multiple health conditions and multiple inequities due to other determinants of health just can’t be sustained with the current capitation model,” says Dr Johnson.

At Hamilton-headquartered Te Kōhao Health, a provider of health, education, social and justice services, co-owner Lady Tureiti Moxon says even with the new equity funding for Māori patients, the charitable company’s medical clinic needs subsidies from other parts of the operation.

Māori healthcare providers carry a heavier load than average because of their high Māori enrolment and high rates of chronic illness and complex presentation among Māori, Lady Tureiti says.

It’s tempting to consider the pandemic a financial crisis moment for general practice. Once three years of government COVID-19 services purchasing – some $900 million – ended this year, long warned-of troubles suddenly came to a head.

GenPro chair and specialist GP Angus Chambers instead prefers to explain it as a gradual erosion, a thousand compounding cuts. Dr Chambers’ list of factors includes the general practice workforce shortages, the feminisation of the GP workforce (which he applauds), an ageing population that needs more care, the growing range of medical tests, devolution of hospital services without funding, an out-of-date capitation formula and extra time spent on compliance.

GenPro was a signatory to the General Practice Leaders Forum letter and 20-point plan to Te Whatu Ora national commissioning director Abbe Anderson in June. The leaders said current funding levels would only worsen workforce and cost pressures.

Dr Anderson has in several forums acknowledged primary and community care are underfunded, but says more money isn’t necessarily the answer because the current system isn’t achieving equity. The comments have been interpreted by some in general practice as disrespectful to the sector and an indicator that Te Whatu Ora doesn’t understand it.

Capitation rose 3 per cent last year and 5 per cent this year – not enough, sector leaders say, to keep up with rising costs. Government health agencies point out there have been higher increases in vaccination funding, the new equity money and funding for comprehensive primary care teams.

Hospitals can’t cope because we can’t deliver and we can’t deliver because we can’t cope

The Primary Health Care Strategy 2001 set the scene for PHOs and widespread use of capitation from 2002. A media release from the health minister at the time, Labour’s Annette King, said the benefits would include more coordinated care, with more attention paid to how to keep healthy and avoid disease.

Virtually all practices nationwide eventually opted in to a system that makes their enterprises something different from truly free enterprise.

The first and most obvious restriction is the ability of the Government to disregard the sector’s input into the supposed “negotiating” forum, the PHO Services Agreement Amendment Protocol (PSAAP). This has happened for two consecutive years, with the Crown imposing a funding increase of its own choosing. (PSAAP is currently inactive while a misunderstanding over its future is sorted out.)

Second, the Government exercises significant control over copayments through its fees review process, based on annual analyses of sector cost increases commissioned from Sapere Research.

Dr Cunningham says Northland was an early starter on capitation but was left on lower rates for a time when the system went nationwide; this depressed his practice’s copayment increases.

Bush Road was not admitted to the Very Low Cost Access (VLCA) scheme that began in 2006, but competes to an extent with practices that were admitted and therefore get the scheme’s higher funding in return for lower, capped fees. With Bush Road excluded, it needs to charge more but would be uncompetitive if it did so.

In 2006, the capitation system entered its first review after persistent concerns about the absence of ethnicity and deprivation weightings from First Contact funding.

A group of experts recommended these weightings be used in a revised system based on updated utilisation data. Then health minister Pete Hodgson ruled out any changes.

The system’s second major review, headed by now-retired specialist GP Peter Moodie, was done in 2015. Many of its 19 recommendations were intended to target government funding more towards those with higher health needs. It urged reallocating VLCA money to individual patients, regardless of their practice, based on ethnicity, deprivation and Community Services Card (CSC) status. Copayments should be regulated only for patients eligible for low fees, and practices should be free to charge non-high-needs patients “a fee commensurate with service”, the working group led by Dr Moodie said.

National Party health minister Jonathan Coleman didn’t implement the funding recommendations.

In 2018, Labour health minister David Clark introduced a CSC subsidy in return for low, capped fees, a scheme now in most practices. Dr Clark also extended the age of the free care scheme for children so it applied to under-14s (following the extension to under-13s in 2014).

His other main contribution was promising in 2017 a primary care funding review. That morphed into the Heather Simpson-led Health and Disability System Review. The final report of the Simpson review panel didn’t directly address primary care funding – funding was excluded from the panel's terms of reference - but it urged it be ring-fenced and that there be a move away from the PHO Services Agreement.

A full review of primary care funding hasn’t eventuated.

Current health minister Ayesha Verrall recently outlined a work programme that includes a look at primary care funding from late this year.

But a review of capitation, which looks and smells pretty close to a full review, was commissioned from Sapere and released last year. Among its explosive findings was that, on average, practices needed a 9 per cent income increase just to break even. High-needs practices, depending on the increased service level desired by decision-makers, would need 34 per cent to 231 per cent more capitation.

Health officials, when asked about implementing the report’s findings, said it was a “technical” paper and simply part of the bigger picture of primary care. However, it has produced the Māori and Pacific equity top-up.

Workforce shortages are a vexed issue for general practices. Headaches abound: the persistent disparities that exist between practices’ nurse and doctor pay and that of their Te Whatu Ora counterparts; the lure of even higher Australian salaries; the insufficient number of GP trainees.

The Coast to Coast Health Care network of clinics, based in Wellsford north of Auckland, has not been immune. “We’re struggling financially but we are keeping our head above the parapet,” says co-owner and specialist GP Tim Malloy.

“We are recruiting aggressively around the world and it’s going to cost us a lot of money…it’s not sustainable,” Dr Malloy says.

“Every practice is one doctor retiring or moving to Australia away from collapsing.”

New for Coast to Coast is the need for contingency plans for temporary closure of individual clinics in times of insufficient staffing. The Matakana, Waipu and Paparoa clinics have been closed at times. Dr Malloy, former RNZCGP president, continues to advocate for a doubling of medical school places, a much bigger increase than has been promised as a result of the recent pre-election political bidding war.

As a younger doctor, he was proud of the health system, but now, he’s not sure anyone in general practice is proud.

“I can’t recall a time like this when we were so demoralised,” he says. “In my opinion, the health system is close to collapse.”

Dr Malloy is aware of a number of cases in which people have been either significantly harmed or have died due to system failure.

“Hospitals can’t cope because we can’t deliver and we can’t deliver because we can’t cope,” he says.