Decentralizing resource allocation: early experiences with district health boards in New Zealand

Objectives: In New Zealand in 2001., a system of purchasing health services by a centralized purchasing agency was replaced by 21 district health boards (DHBs) which are responsible for both providing health services directly and for purchasing services from non-government providers. This paper describes the processes associated with the allocation of health resources in the decentralized system and considers the extent to which four of the government's stated objectives are likely to be achieved. Methods: Two rounds of interviews with national stakeholders and senior DHB personnel plus case studies in five districts which included key informant interviews, observation at board meetings and document analysis. Results: The re-structuring of the health sector in New Zealand appears to have simultaneously enhanced and inhibited the achievement of government objectives. Local decision-making has encouraged greater local responsiveness and new funding arrangements have allayed concerns about inter-regional equity. The system is less commercially oriented than it was during the 1990s and collaboration between DHBs is improving. However, the combination of increased integration of purchasing and provision within DHBs and the focus on financial deficits in the early years appears to have inhibited the development of partnership relationships between DHBs and non-government providers, and of longer-term funding arrangements for high quality providers. Non-government providers perceive that DHBs have a tendency to favour their own providers when allocating contracts. Conclusions: Decentralized decision-making is starting to make some inroads towards achieving some of the government's objectives with respect to resource allocation and purchasing.