Inter-district flow transfers : health and economic impacts : a thesis presented in partial fulfilment of the requirements for the degree of Master of Business Studies in Economics at Massey University, Albany, New Zealand

Abstract

As part of the introduction of the New Zealand Public Health and Disabilities Act in 2000, the introduction of the Population Based Funding Formula led to a change in the flow of funds for transfer patients. Prior to the PBFF, for the years 2000-2003, healthcare events were contracted on a fee-for-service basis and thus were borne by the DHB of treatment. From 2003 onwards, the cost of transfer patients followed the transfer back to their DHB of domicile. This study replicates and extends work done by Shin (2013) in assessing the impacts of this change in funding flows on the level of transfer and patient health outcomes. I use OLS and logistic modelling to empirically assess these effects and draw conclusions as to the effectiveness of the policy change and any potential efficiencies that are gained. I find evidence of a focus in the probability of transfers after the change in funding, where the overall probability of transfer decreases and the probability of transfer to tertiary DHBs increases. Additionally, patient outcomes demonstrate a concentration effect whereby after the policy is implemented, the pool of transfers is less diluted by low severity patient transfers and thus displays poorer health outcomes on average for the transfer group. The concentration of health outcomes suggests that the transfer decision is being considered more carefully now that costs are aligned to the DHB of domicile. A novel addition to this research is the analysis of regional DHB pairs. The analysis of five secondary-to-tertiary transfer flows provides insight into the necessity of a decentralised healthcare system in New Zealand and is mostly consistent with the analysis at the national level. Overall, the introduction of Inter-District Flow transfer funding has increased the efficiency of the transfer mechanism and enabled a more streamlined redistribution of funds to tertiary providers. This is an important finding because it reinforces the necessity of the transfer mechanism, specialist providers and local provision in a healthcare system such as New Zealand’s.