Education And Debate

New Zealand's health reforms: a clash of cultures

BMJ 1997; 314 doi: (Published 28 June 1997) Cite this as: BMJ 1997;314:1892
  1. Andrew Hornblowa, dean
  1. a Christchurch School of Medicine University of Otago PO Box 4345 Christchurch New Zealand,
  • Accepted 3 February 1997


To reshape a health system without due regard for cultural imperatives is to risk failure, as has proved to be the case with New Zealand's health reforms of 1993. New Zealanders take pride in their claim to be the first to introduce a universal healthcare system, in 1938, as part of a post-depression welfare state. The recent, market oriented health reforms proved a major challenge to long accepted values and assumptions underlying the universal and freely accessible public health system established 50 years ago. In response to public opposition and polarisation of clinical and commercial cultures, the new coalition government is planning to remove the commercial and competitive basis of the reforms.

The 1993 health reforms

The health reforms were announced in the minister of health's green and white paper of July 1991.1 Before the health reforms hospital care was coordinated by 14 area health boards financed according to a population based funding formula. Some hospital services were (and still are) available privately, but as health insurance contributed only 6% to total health expenditure private hospital care was restricted effectively to such areas as elective surgery. In primary care, general practice consultations carried various government subsidies, though the value of these subsidies had been reduced steadily and markedly over a decade or more.

At the core of the health reforms was the establishment of a purchaser-provider split, which introduced the mechanisms of the market into a publicly funded health system. The government claimed that this would increase effectiveness and efficiency, improve access to care, create greater flexibility in the use of services, reduce waiting time for prioritised services, and better integrate primary and secondary care. It was considered that restructuring public hospitals as businesses would provide the necessary tension and incentives to enhance performance.

The reforms were implemented in July 1993. The Ministry …

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