Govt’s funding for 24/7 virtual clinic should spur debate on ownership

As soon as prime minister Christopher Luxon promised to make access to GP visits easier, the answer would always be an online service. 

It was the only way Mr Luxon could deliver on his promise with the political speed required. 

His former health minister, Shane Reti, might have cautioned him against big spending solutions that appear to produce quick results in health, but he got the boot. 

Dr Reti’s replacement, Simeon Brown, will be grateful for a solution that comes with a quick tally. Measuring the number of people seeing a clinician online is easy to record; determining whether that visit made any difference to their health outcomes is another issue. 

There is so much about the announcement by Mr Brown yesterday that needs a second look that I’m not sure where to start.  

Of course, the sector will be grateful for more funding to attract nurses into primary care and more primary care positions to help NZREX candidates complete their registration requirements. The latter is not a new initiative; the former comes with new funding, but the primary care sector will ultimately struggle to retain nurses while Health New Zealand Te Whatu Ora pays its nurses more. 

Primary care is the heart of our health system. It has finally made its way onto the radar of the current tranche of politicians

Some general practice organisations have been effusive, others more measured in their response to the primary care package. Everyone is after details, which we are assured will be forthcoming. 

In the meantime, nothing is as straightforward as it might appear in a post-Cabinet media briefing.  

The investment of an additional $285 million in performance-based funding over three years – over and above whatever is decided for the 2025/26 capitation increase – begs the question: where has this money come from? According to the prime minister, it has been budgeted for within the Te Whatu Ora budget. 

But it is likely it also flags an end to Budget funding for comprehensive primary care teams. Those team members will probably need to be part of the activity towards achieving the new performance measures and funded out of the performance funding. 

It also raises the question of what’s happening with the proposed revised capitation formula if a substantial sum goes into performance funding rather than addressing ethnicity, morbidity and age-related factors in practice populations. 

And does the pivot to performance funding mean we can expect another low increase for capitation for 2025/26? 

But back to the proposed 24/7 online medical service staffed by New Zealand-registered clinicians, some working overseas. 

First up, you could be forgiven for thinking the country doesn’t already have a number of established extended-hours doctor consultation services run by PHOs and private businesses, including the Government-funded rural telehealth service Ka Ora.  

In the post-Cabinet media briefing, Mr Brown was asked how the new service would differ from Healthline. It would be better resourced, he said, and would be able to provide prescriptions and order lab tests, "not just providing advice".  

The proposed service will charge in line with current services – free for under 14 and reduced costs for Community Services Card holders – so it is unclear what advantage it offers over existing services. 

I would like to know that the recruited New Zealand-registered clinicians, some from abroad, have recent primary care experience in New Zealand and are culturally safe. A new government service should not exacerbate existing health inequity. 

I also would like to know that this new service will not draw staff and revenue away from existing strapped practices. 

There is a bigger picture to consider, one I had been pondering earlier in the day this announcement was made. That is general practice ownership.  

More specifically, I was thinking about the lack of interest by recent governments in the drift towards more corporate ownership of general practice. 

In the past, I assumed that small margins in general practice would be sufficient to limit corporate interest. But I was imagining the deterrent in the costs associated with delivery of comprehensive general practice services as required by the PHO contract. 

With the $100-million National Telehealth Services contract up for grabs this year, it got me thinking again about corporate drift.  

I even started thinking about whether we could measure such a phenomenon and what we would measure. Did it matter whether a practice was predominantly clinician-owned or not? And what defines “clinician”? What about clinicians who own more than one practice? What about non-clinicians who own just one? What about community trusts? What about PHOs? 

What about the difference between our current “regular” corporates? Third Age Health and Green Cross Health are listed companies with varying clinician involvement in practice ownership. Tāmaki Health was born out of clinician ownership but is now owned mainly by private equity firm Mercury Capital. Tend Health is privately owned, by mostly non-clinicians.

All these corporates have skin in the game of online services, as does the country’s biggest insurer, Southern Cross, through its joint venture CareHQ. 

But mention the telehealth services contract and Tend is the first name that pops up. And that’s not surprising as Tend has made no secret of its desire to disrupt general practice and, according to an article on its website, become the country’s “largest healthcare provider within the next decade”. It started five years ago. 

Tend is owned by some of the folk who founded My Food Bag. It launched with a digital focus and one physical clinic – the owners had already figured out you cannot survive without access to government funding and so it acquired more practices and enrolled more patients. 

In the article, co-owner Cecilia Robinson says she does not “necessarily subscribe to the narrative that healthcare is entirely underfunded in New Zealand”. The problem is “we’re not good at generating productivity and outcomes from how we spend”. 

Such sentiments are music to the ears of Mr Brown and Mr Luxon. 

We don’t have details of what the user-pays 24/7 online practice will be required to deliver, what the contract will be worth, and whether it will be part and parcel of a revamped National Telehealth Services contract. 

But it is likely a successful bid will have more than one party. Or is it?  

Tend board member Lee Mathias was part of the team that memorably won the contract for Auckland’s community laboratory testing without being encumbered by owning a laboratory. Labtests was set up after the contract was won. 

In the pharmacy world, a number of requirements ensure clinician ownership or influence in pharmacy. For example, a company can only get a pharmacy license if pharmacists own more than 50 per cent of the company’s shares, and a company can’t own more than five pharmacies.  

But back to my original point – does it matter who owns health services if they achieve improved health outcomes? 

Of course, it matters. For a country the size of New Zealand, we need to “own” our health services in whatever form that might take. We need local resilience with various organisations that clinicians want to work for. 

We need to protect against the prospect of wholesale closure when services fail and against ownership offshore that fails to consider our unique populations. We need services invested in achieving equity in health outcomes for Māori, Pacific and rural communities.

We need to ensure the patient sits at the system’s centre, and when bad stuff happens, those in charge are called to account. Currently, clinicians are held to account by their registration bodies and the Health and Disability Commissioner. At the company level, it is not so personal. 

Primary care is the heart of our health system. It has finally made its way onto the radar of the current tranche of politicians. 

The Government needs to get proactive regarding practice ownership – one way or the other, thinking about what works for our communities and what doesn’t – rather than allow a continuing drift to become a fait accompli. With a potential $100 million contract sitting in the wings, now might be the time to get started.