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PRIVATE PATIENTS PROP UP PUBLIC HEALTH
Rural hospitals in Otago are relying on fees charged for primary care to top up the shortfall in funding for other public health services. It has helped to keep the lights on, but demand for those other health services keeps growing.
The main way many private and trust hospitals have been able to survive in the remote locations of Central Otago has been by leveraging the primary care aspect of their businesses.
This approach has been an effective way to allow rural communities to have access to not just primary care but acute services as well.
But it means that many communities are essentially paying for their broader health services when getting primary care treatment.
However, as demand for acute care continues to rise faster than population growth, cracks are starting to show in this approach as more and more hospitals face financial issues.
Gore provides a good example. Gore Health has seen a 22 per cent increase in its emergency department presentations since 2016, from 6,764 per year up to 8,685 presentations last year.
Over the same period the population of Gore has only increased by about 5 per cent. Still, on that basis, the equivalent of 70 per cent of the population of Gore visit the ED each year.
Despite this, funding for the emergency department has not increased with demand. In fact, the healthier the residents of Gore are, the less funding their acute health care system will get.
“Hospitals do not break even by their nature,” Chief Executive of Gore Health Karl Metzler said.
“The innovation into providing private health care is the only way we can prop up our emergency department and hospital services.”
The primary health services offered cater for about 8,500 people per year, bringing in much needed revenue for the hospital.
For the past 20 years this model has seen the wider hospital services be able to keep their doors open but staff in the acute wards know the model is starting to fail.
At Gore Hospital, Dr Fazel Mann sees the influx of patients first hand.
“The challenge here is that management is running a business, but clinicians are running a hospital,” he said.
“Hospitals do not make money. They simply cannot. They will always run at a deficit.”
Nurse practitioners or – more concerning from ASMS’ perspective – physician associates are a more common sight on the wards.
Measures have been taken to fund alternative treatment pathways to reduce costs. This has become critically important as roster gaps have become more common.
“It used to be much quieter here,” Mann says.
“I used to work on call, but now we are so busy there is no on call. We had to introduce a swing shift from 1 pm to 9:30 pm to help keep up with demand.
“We have about 16 beds but can only staff 14 of them. We have to use physician associates and nurse practitioners to get by.”
“We are unique in that we have a physician associate and a nurse practitioner working in ED,” he says. “NPs or PAs should never be covering ED by themselves, but we are short on options now.”
The ageing population also puts a strain on resources, coupled with reduced allied health services.
“We have four patients in bed right now waiting for a rest home,” Mann says. “That’s four beds costing money and tied up for people just waiting for space. One has been here more than a month. There is just not enough space.”
There is also a lack of GPs to help reduce acute demand through primary care.
Te Whatu Ora says there are currently 824 doctors working in 190 rural GP practices across the country, which works out to be about 92 GPs per 100,000 population in rural areas.
This is compared to 103 per 100,000 population in urban areas.
Gore Health is predicted to run at a large deficit this year unless things change. Metzler says the private funding model is no longer making ends meet and intervention is required.
“Even this model is starting to no longer pay its way,” Metzler said.
“Last year we ran into a deficit of $300,000, and we will likely be facing that again this year.
“The issue is the Price Volume Schedule, and how we are funded just does not keep up with increased demand and cost.
“Health care is in crisis across the region. That is the fact. We need help, the country needs help.
“We had to come up with unique solutions because we have had no other choice, but that time has run out. It is an issue no matter what electorate you are in.”
The hospital has survived by leveraging goodwill to provide the level of care expected by the community.
Similar issues are being reported in Balclutha.
Clutha Health started up to create efficiencies for health care services in town.
“About 10 to 12 years ago the GPs in Balclutha were mostly single GPs and there were diseconomies of scale associated with that model,” Chief Executive Officer Gary Reed says.
“We made the strategic decisions to take over the general practices in town to ensure that primary care remained a viable option to local residents. We put the hospital in the centre of town as that is what the community wanted, and we have run since then.”
The medical centre has 8,300 enrolled patients and will conduct about 35,000 patient consultations per year. As a result the centre can remain open 7 days a week for 78 hours total.
“For many years the Te Whatu Ora contracts have been used as loss leaders or, at best, cost neutral offerings that we have had to support with other revenue streams,” Reed says.
“We have got to find a better way of balancing the books and a better national strategy for providing health care to regions. Without additional funding it is unlikely we will be here in 12 months’ time.
“No one wants to see a repeat of Oamaru here in Balclutha, but all the regional hospitals are on life support.”
