New Zealand's 'integrated performance and incentive framework': Will it drive a 'whole of system' approach to health service design?

Robin Gauld, Professor of Health Policy, Director, Centre for Health Systems
Department of Preventive and Social Medicine, University of Otago, Dunedin, New Zealand 

Governance for integration 

Robin GauldNew Zealand’s health system shares many similarities with the NHS. It is largely tax funded, public hospitals predominate and are free of patient charges, while private GPs receive government subsidies with a key difference that there is always a patient co-payment to see a GP. Like the NHS, hospitals and GPs work mostly separately from one another, meaning New Zealand has also long grappled with integration.

Since mid-2013, a new governance model that aims to support integration has been required. In recent articles[1] [2] [3] I have described this in more detail. In essence, the government adjusted the national contract that each of New Zealand’s 20 District Health Boards (DHBs) (local commissioning organisations that also run public hospitals) signs with one or more of 30 Primary Health Organisations (PHOs) (which coordinate primary care and GP services in a geographic area). This contractual adjustment now requires an ‘alliance’ between corresponding DHBs and PHOs. Essentially, this is intended to drive a ‘whole of system’ approach to service design, with a particular focus on integration of local workforce, organisations and service delivery, but also to get hospitals and GPs working collaboratively on what the system should look like from a patient perspective.

What incentives for alliances?

Other than it being difficult to argue against such goals (and, of course, many would posit that certain professionals and organisations will always work to patch protect rather than work for the greater good of the system and patients), what incentive is there to deliver on the government’s aspirations? The answer lies in the so-called ‘Integrated Performance and Incentive Framework’ or IPIF. This has been under development for several months, initially in the hands of a group of expert advisors to the government. The IPIF has been subject of workshops around the country in order to ensure consultation and the involvement of key sector representatives and health professionals in the developmental process. It is now undergoing further work within the Ministry of Health to ensure that, when it does go live (anticipated for sometime in 2015), it is fit for purpose. In this regard, the government wants to get the IPIF right rather than to simply slot it in place and then deal with unintended consequences. There are good reasons for wanting to get it as right as possible.

First, the IPIF is designed to assess ‘whole of system’ performance. This has meant developing measures for this as well as those which will drive integrated service delivery and inter-organisational collaboration. Such measures presently include, for example:

  • the percent of the budget spent on hospital care vs primary care (to stimulate hospitals to better support GPs and assist them to do some of the work that presently requires a referral to a specialist outpatient clinic);
  • the time taken and saved for particular types of patients to move through the ‘end to end’ pathway of care with an aim of building ‘lean’ processes (such as for patients referred by a GP for a particular specialist procedure);
  • an effective governance arrangement for driving system integration (a functional Alliance Leadership Team composed of health professionals and managers)

Second, the government and New Zealand health sector need to be sure that data used for IPIF measurement are reliable. Especially so as the IPIF will be used to apply financial incentives – hence, use of the term ‘incentive’ in its title. Presently, some data collection processes, such as patient experience measures along the lines of the North American HCAHPS hospital experience surveys, are in their infancy and only being piloted as I write this. Yet patient experience will be central to the IPIF.

Third, it is expected that the IPIF will, as noted, be used to compare regions with one another and reward better performers. The Final Report of the Expert Advisory Group[4] lists a series of different performance levels which includes ‘breakthrough’ regions that will have considerably more freedom from central government to ‘innovate’ locally in ways that otherwise would require central approval (a bit like Foundation Trust status in the NHS). At the other end of the spectrum are regions who face potential threat of central government intervention perhaps by way of a ‘commissioner’ (an appointee brought in to take charge of an ineffective alliance and lack of progress towards organisational and service integration).


[1]  Gauld, R. (2014). What should governance for integrated care look like? New Zealand's alliances provide some pointers. Medical Journal of Australia, 201(3), 267-s268.



[4]  Integrated Performance and Incentive Framework Expert Advisory Group. (2014). Integrated Performance and Incentive Framework. Expert Advisory Group Final Report. Wellington: Integrated Performance and Incentive Framework Expert Advisory Group.