Why an inquiry?

The Government spends around $34 billion a year on health, education, and other social services, but when a number of government agencies expressed uncertainty around what was being achieved with this annual spend, it prompted the Government to ask the New Zealand Productivity Commission to carry out an inquiry into the effectiveness of social services.

New Zealand Productivity Commissioner Sally Davenport says the inquiry will look at how to improve outcomes for New Zealanders from social services funded or supported by government. It looks to improve accessibility of services, while promoting efficient use of public funds and striking “the right balance between central government support and individual, family and community responsibility”.

In doing so, the inquiry will examine the strengths and weakness of current approaches to commissioning and purchasing social services, both here and overseas. It will also look at how to improve coordination within and between government agencies and service providers and how to combine the expertise of public, not-for-profit and private sectors.

An Issues document was released in early October and submissions were received by 18 November. The draft report of the inquiry is due March 2015 with the final report due in June 2015.

Spotlight on home-based care

The inquiry focuses on a number of case studies, including home-based care for older people and services for people with disabilities.

The Issues document states that the right mix of services to achieve better home-based care services is “best worked out at a local level, and requires flexible budgets and decision makers sharing the same goals”.

Finding the right balance between centralised and devolved models for the delivery of social services is a key aspect of the inquiry.

When it comes to home-based care in New Zealand, there are various types of contracting and funding, devolved to each funder. Fee-for-service and bulk funding are the two dominating funding models.

The devolution of funding has resulted in uneven levels of services across New Zealand because of how district health boards prioritise their funding, typically prioritising provider arm funding over outsourced community funding.

Julie Haggie, chief executive of New Zealand Home & Community Health Association, says while it is important to ensure that the right mix of services is needed in each area, owing to the different population health needs in each region, there are some things that need to be nationally consistent. She cites a lack of depth in understanding of client need as the primary example.

Generally at the moment, there is no policy that requires the funding of the service to meet the needs of the people receiving that service. Some DHBs have a clearer understanding of the size and health needs of older people living in their homes, but most have little idea and poor data. This leads to the loading onto our service of support for people with very high levels of need. Needs assessment is too often lagging behind the services being provided. This problem desperately needs national leadership, so that services can be provided safely..

“We need to see more consistency in terms of funding provided for essentially the same services between regions, and we need to be clearer about whether people are getting consistency of access and reasonable consistency of service quality, no matter where they live.”

Funding models “inadequate”

Haggie says the current models of contracting and funding are inadequate for the future needs of home-based care.

“We need to look at what models are more likely to support the outcomes we need because we don’t have enough workers to cope with the demand now, let alone in the future, and that is a failure of the model.

“We need to be able to offer surety of hours. Our workers need to be more highly trained. They need to be incentivised to do so because of the financial reward, career recognition, and mobility it offers them. They and our clients’ families need access to advice and training on maintaining wellbeing, reducing injuries, self monitoring and more expert advice and linkages. That sort of leadership needs to come from the top.”

The Public Services Association (PSA) agrees. The union believes the inquiry must address workforce standards and appropriate funding levels in its inquiry.

“Fair pay and conditions remain out of reach for many support workers as providers either struggle to deliver services year after year without funding increases, or when there are funding increases, providers refuse to pass them on to workers. These support workers are among the lowest paid workers in New Zealand,” says national secretary Richard Wagstaff.

The PSA says it doesn’t want the inquiry to focus solely on cutting costs, but rather on achieving better outcomes for social service users. It believes this can be achieved by identifying existing successful arrangements and designing systems around those.

“There are some NGOs doing great work out there but we also know that there are some aspects of the current commission and purchase of services that need fixing, and in fixing them, there could be some real productivity gains to be had before we start messing around with alternative contracting arrangements.” says Wagstaff.

“We’ve seen NGOs, in many cases the natural champion for service users, being effectively gagged because of the funding arrangements in place. It’s hard to be an advocate and vocal critic of the Government when they hold the power in terms of awarding the next contract.”

There is certainly a large degree of scepticism around the way funding is currently operated.

The Issues paper talks of the benefits of introducing more flexibility into budgets and funding arrangements, but Haggie says while this sounds promising, in reality flexibility is often exploited by funders and used as an excuse to pay lower contract rates to community providers. She describes this problem as endemic in New Zealand across many community services funded by DHBs.

“Providers under bulk funding situations have reported that after accepting capped bulk-funded contracts, they are then put under pressure to accept increasing proportions and numbers of clients who have very high support needs all within the original contract price.”

Haggie favours alliance contracting, as it “gets away from the ‘take it or leave it’ approach”. Alliance contracting essentially assumes that organisations can achieve better things by working together.

The Issues paper poses questions around the use and effectiveness of “client-directed budgets”. While these are now embedded in disability support, it is not clear whether they are the answer in aged home-based support.

Haggie says homecare agencies working in the disability scene have found that client-directed budgets work brilliantly for some clients, but not for others. This would be even more marked in relation to the support of older people, who are more likely to be in a position of declining health and have less direct carer support than those living with disabilities. She is keen to watch how Australia gets on with client-directed budgeting before taking the plunge here.

“In the meantime, there is much that needs to happen in New Zealand to ensure more consistency of funding and easier access to needs assessment. Restorative and rehabilitative care also relies on the client setting and working towards their own goals, using home support to do so, and that requires a culture change for organisations, workers and clients.”

Scope for better integration

Another aspect the inquiry looks to improve is the level of interagency cooperation and how the public, private and not-for-profit sectors work together.

Haggie believes there is more scope for collaboration between GPs, pharmacies, needs assessment agencies, hospitals, DHBs, and homecare providers. She says homecare providers are often not included or valued in conversations about population health, particularly when that is driven by clinicians.

Service integration is a key focus in the inquiry’s Issues document.

Integration can take various forms, including linkage, coordination and full-model integration. Haggie sees benefits for integration in some areas of home and community support services. For example, she points to “huge potential” for community support workers to play a greater role in supporting wellbeing in the community, which would require linkage to, or coordination with, health promotion and public health training.

The Issues document highlights health alliances – networks of primary health service providers and DHBs that deliver integrated services – as a good example of moving services from hospitals to the community by supporting self-care and community care. However, like the DHBs, each of the nine health alliances operates quite differently. While some might have good connections with home support agencies, in general referral to home support is directed via some form of needs assessment process.

There are a few models in New Zealand where there are more collaborative linkages between primary care, community care and secondary care, such as Canterbury’s Community Rehabilitation Enablement & Support Team (CREST) and Waikato’s Supported Transfer and Accelerated Rehabilitation Team (START) programmes. In these, doctors can refer directly and there are good relationships between homecare agencies and primary practices.

But Haggie thinks more is needed.

“What we need is integration that can really make a difference: that means integration of needs assessment, community nursing and allied rehabilitation, homecare, and community respite, with strong linkage to primary care via quality IT and relationships developed through cooperative structures.”

Contestability – raising or lowering the bar?

The Issues document explores the notion of contestability and questions its worth in the context of providing good outcomes for social services. The tendering process for contracts makes the home-based care sector highly contestable. While Haggie says she can understand the need for service reviews and contestability, she has some reservations.

Haggie makes the point that for the past eleven years there has been no contestability on price. In every service review that included a tendering process, the price has been set prior to the review, by the funder either as a capped bulk amount or a set hourly figure.

This typically leads to a “study for the exam” approach, as Haggie says, one that stifles innovation, and limits quality as providers are forced to aim for the lowest common denominator.

Further, the base numbers or case mix identified by funders for the tendering process, has at times been a long way from the actual numbers. Haggie says in more than one case this has caused considerable dispute, as the funder, with no more funding, puts the pressure on the provider to take on more risk and cost.

Innovation important but consistency crucial

Haggie’s point, that contestability “stifles innovation”, is right on topic. The Issues paper asks for examples where government contracts restrict the ability of social service providers to innovate, or where contracts are so specific they result in poor outcomes for clients.

In the context of the homecare environment, Haggie says she knows providers would like to be able to innovate in ways they can support client wellbeing, and would like to have this flexibility within their contracts.

“There is a place for simple homecare support. But there is also great potential for us to assist in reducing injury, promoting wellbeing and supporting families to care for themselves and their family members, with the idea that we can reduce the amount of homecare we need to provide on an individual level.”

However, while innovation is important, Haggie’s main hope for her sector is to achieve consistency and accessibility within the system. She thinks policy needs to be strengthened in a number of areas, particularly around interRAI and needs assessment. She points out that there are long delays for needs assessments in some areas, and that many clients miss out. Where providers are able to undertake a needs assessment there is much more efficient matching of need to support, she says.

“We need an evidence-based approach, to ensure that we are tracking our population needs, and actively addressing them.”

Ultimately, it comes down to improving coordination within and between government agencies and service providers. It is hoped the Commission’s inquiry into social services will deliver this for the home-based care sector, so it might achieve the consistency, accessibility and fair approach to funding that it currently hankers after.


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