The Role of District Health Boards and the Division of Functions Between District Health Boards and the Ministry of Health

Memorandum to Cabinet Social Policy and Health Committee

The Role of District Health Boards and the Division of Functions Between District Health Boards and the Ministry of Health

PROPOSAL

1. I propose that:
   • DHBs will be responsible for deciding on the mix, level, and quality of
     health and disability services, within the parameters of the New Zealand Health
     Strategy, NZ Disability Strategy and nationwide minimum service coverage and
     minimum quality standards (such as the Health and Disability Code of Rights)
   • DHBs will evolve towards maximum autonomy as they become capable.

EXECUTIVE SUMMARY

2. This paper clarifies the roles of DHBs and the Minister and Ministry of
   Health, in particular how much autonomy fully capable DHBs would be expected to
   have when they perform well.
3. DHBs will be accountable to the Minister, but elected members will also be
   answerable to their local community. This contributes to Government's objective
   that local communities have greater say over health and disability services, but
   is also likely to reduce the degree to which the Minister has control over DHBs.
4. I propose that, to achieve Government's objectives of improving health and
   independence of the population and increasing community say over health and
   disability services, DHBs should have responsibility for making decisions on the
   mix, level, and quality of health and disability services. DHBs would work
   within the parameters of the New Zealand Health Strategy, NZ Disability
   Strategy, and a nationwide minimum service coverage and minimum quality
   standards. This degree of autonomy of DHBs has implications for the
   organisational form, governance and accountability arrangements.
5. The recommended degree of autonomy also has implications for the role of the
   Minister of Health. That is, Ministers would generally not intervene in the
   operations and decisions of DHBs, focusing instead on setting the broader
   direction and outcomes sought (for example, through the New Zealand Health
   Strategy and the Disability Strategy), and use reserve powers to intervene
   sparingly. If, instead, the Minister of Health is to have greater influence on
   the day-to-day decisions of DHBs, then the sector would be more centralised and
   DHBs would have correspondingly less responsibility for the health and
   independence of their populations.
6. Regardless of the envisaged degree of DHB autonomy, a key issue is whether
   DHBs evolve to that state of autonomy, or whether all DHBs will start with the
   maximum level of autonomy anticipated. I propose that the sector will evolve
   from an initially fairly regulated and prescribed environment to a state where
   DHBs have the maximum degree of autonomy envisaged. Officials will design a
   framework that sets out how fast, how far and under what circumstances DHBs get
   to the envisaged degree of autonomy. This framework would be part of the
   operating environment, and not defined in legislation.
7. Decisions flowing from this paper will inform the work on the more detailed
   division of roles between DHBs and the Ministry of Health recommended for report
   back by the end of April 2000.

BACKGROUND

8. This paper provides further advice on the role of District Health Boards
   (DHBs) and the division of functions between DHBs and the Ministry of Health
   [CAB (00) M 2/4 refers].
9. Cabinet has already decided on the objectives and functions of DHBs [CAB
   (00) M 2/4 refers]. The key issue, however, is how much decision-making
   authority DHBs should have, and what decisions are to be made by the Minister of
   Health.
10. Decision-making authority for each of the following tasks could be placed
    with the Minister, devolved to DHBs, or shared:
    • setting strategic directions and objectives for DHBs
    • deciding the level, mix and quality of services
    • deciding which providers to use
    • monitoring service performance and health outcomes
    • managing hospital and related services' assets.
11. Decisions will have implications for organisational form and governance of
    DHBs, and accountability arrangements (content and process) for DHBs. They will
    also determine what roles the Ministry of Health would have in addition to its
    current policy advice, performance management, safety and regulation, and
    ministerial servicing functions.

DEGREE OF DHB AUTONOMY IN MAKING DECISIONS ON
SERVICES

12. Cabinet has already decided that DHBs will be accountable to the Minister of
    Health for carrying out their functions within allocated funding. Through their
    elected members, however, District Health Boards will feel answerable to their
    local community. This gives the community greater involvement in decision-making
    about health and disability services, but it also transfers some decision-making
    power to DHBs away from the centre.
13. Within decisions made by Cabinet to date, there are many models for the
    decision-making role of DHBs between the extremes of a very centralised and a
    fully autonomous health and disability sector (see Figure One). At any point in
    time, the relationship between the Minister and DHBs on each of the dimensions
    or tasks may vary. My intention is to define the maximum level of autonomy
    desired for DHBs which perform well.

Scenario 1. Low DHB autonomy (local implementation of central decisions)

14. In this scenario, DHBs' prime role would be to consult with the community,
    and then provide input into the New Zealand Health Strategy and funding
    decisions. The Minister sets out the detailed mix, level and standard of
    services DHBs will fund or provide. DHBs implement these detailed decisions. The
    more capable DHBs would have a role in deciding how to do this: that is, whether
    to 'make or buy' services. There would be a strong emphasis on national service
    frameworks, protocols and guidelines. Overall, the Minister of Health would have
    a significant role in what DHBs do from day-to-day (see Table One below).
15. The role of the Minister of Health, assisted by the Ministry and in
    consultation with the DHBs, would be to:
    • define strategic directions (for example, the NZ Health Strategy with health
      goals and targets and sector performance standards, and the Disability Strategy)
    • define the detailed mix, level and quality of services DHBs will fund or
      provide
    • define the operating environment (the administrative rules for DHBs, such as
      user-charges regime, rules around raising private finance, and any limits on
      entering into arrangements with private providers)
    • define national service frameworks, protocols and guidelines
    • enter into funding agreements with DHBs
    • exercise reserve powers (such as the ability to direct DHBs, or appoint a
      commissioner in case of repeated performance failures).

    DHBs are likely to be small organisations, in comparison to the scenario that
    follows, but with a larger Ministry of Health.

Scenario 2. High DHB autonomy (local decision-making within central
parameters)

16. In this scenario, DHBs would have as much responsibility for making
    decisions on the mix, level, and quality of services as they are capable of
    carrying out effectively and efficiently. DHBs would decide - based on local
    needs analysis and strategic planning and in consultation with the Minister and
    the community - on the mix and level of services and the quality of those
    services to achieve the NZ Health Strategy and local priorities. The Minister
    would fund DHBs to deliver on agreed service intentions and performance measures
    including minimum quality standards, such as the Health and Disability Code of
    Rights and existing minimum quality standards, but DHBs would have considerable
    flexibility about the use of funds. Accountability documentation would
    eventually tend to focus on outcomes, but is likely to contain agreed output and
    process targets/goals (See Table One below).
17. Under this scenario, decision-making power is placed as close to the
    community as is effective and efficient, and the Minister (or Ministry) of
    Health only carries out functions on behalf of, or instead of, DHBs if the
    centre can do things better than DHBs could. For example, the Ministry could
    facilitate DHBs with standardisation of processes and there may be some health
    and disability services that are better co-ordinated or funded from the centre
    or regionally, such as some tertiary services, specialised mental health
    services, services provided by single national providers, and some public health
    services.
18. The role of the Minister of Health, assisted by the Ministry and in
    consultation with the DHBs, would be to:
    • define strategic directions (for example, the NZ Health Strategy with health
      goals and sector performance standards, and the NZ Disability Strategy)
    • define a nationwide minimum service coverage and minimum quality standards
      (the scope and detail of this service coverage will influence the degree of DHB
      freedom)
    • define the operating environment (the administrative rules for DHBs, such as
      the extent of user-charges, rules around raising private finance, and any limits
      on entering into arrangements with private providers)
    • enter into funding agreements with DHBs
    • exercise reserve powers (such as the ability to direct DHBs, or appoint a
      commissioner in case of poor performance).

    DHBs are likely to be
    larger organisations, in comparison to the first scenario, but with a smaller
    Ministry of Health.

Advantages and disadvantages in options on the degree of DHB
autonomy

19. A single set of criteria has been applied in assessing the advantages and
    disadvantages of the options. The criteria are:
    • clarity of accountability to the Crown and to the community
    • transparency of decision-making
    • consistency with the Treaty /relationship with Maori
    • efficiency (including transactions and administration costs)
    • equity of access (including nationwide consistency)
    • management of fiscal risk to the Crown
    • public confidence.
20. The comparison of the main advantages and disadvantages of the options shows
    that, as decision-making authority is shifted along the spectrum from the centre
    to the DHBs, it:
    • decreases the Minister's role in detailed decisions if DHBs perform well,
      and increasingly emphasises the Minister's role as strategic direction setter
    • decreases the leverage of the Minister of Health, but increases the role and
      responsibility of the Board and the ability of the community to be involved in
      decisions about local services
    • increases DHB staff and infrastructure (and reduces the size of the Ministry
      of Health) and the need for co-ordination across districts which may increase
      the costs over a system where activities are carried out centrally, but also
      increases the likelihood that services are tailored to local needs and
      preferences and are better co-ordinated within districts
    • decreases the likelihood that there is nationwide consistency in who gets
      what for all health and disability services, but increases the likelihood that
      the service mix reflects local values and is targeted at local needs
    • reduces central control over detailed fiscal management but increases local
      awareness of, and responsibility for, making trade-offs within a budget.
21. In each case, governance and accountability tools can be used to mitigate
    the identified risks:
    • the risk that there is unchecked variation in the health and disability
      services which people could expect by DHB can be mitigated by continued
      development and publication of a nationwide minimum service coverage and minimum
      quality standards, in consultation with all DHBs, and so identifying where DHBs
      can or cannot vary the range and level of services they fund or provide
    • the risk of increased administrative and transactions costs can be mitigated
      by setting up common services agencies (for example, information technology or
      property maintenance), or having the Ministry carry out some analytical and
      contracting tasks on behalf or instead of DHBs.
22. Under both scenarios, the Minister is likely to face tensions with the local representatives on the Boards of DHBs. The governance report back covers some means to mitigate that political risk.

Table 1 Low DHB autonomy High DHB autonomy

23. I recommend that DHBs should have responsibility for making decisions on the
    mix, level, and quality of health and disability services, within the parameters
    of the New Zealand Health Strategy, Disability Strategy and nationwide minimum
    service coverage requirements. This means that, once DHBs are fully established,
    the Minister of Health would focus on the strategic direction and the health
    outcomes that the DHBs are to achieve, rather than the decisions over how to
    achieve those (see Figure Two).

Detailed division of
roles between DHBs and Ministry of Health

24. I propose that once Cabinet has made decisions about the desired degree of
    autonomy for DHBs, officials will complete the next phase of working through who
    will define services in more specific service areas, such as tertiary services,
    services delivered by nationwide providers, mental health, disability support
    and public health services. The exact division, however, of service funding
    roles between DHBs (individually or jointly) and the Ministry of Health is
    likely to emerge over time as DHBs become established.
25. I recommend that Cabinet direct officials to report back by the end of April
    2000 with in-principle advice on a more detailed service-by-service division of
    responsibilities. This timetable will allow work to proceed on the report back
    on funding arrangements due on 30 June.

THE ROLE OF DHBs IN OWNING CROWN HEALTH ASSETS

26. There is always a tension between the Crown's interest as a funder of
    services and that as the owner of provider organisations. Managing within a
    defined budget means that spending more on services means less is available to
    spend on or invest in assets (and vice-versa).
27. Cabinet decided that "The current Hospital and Health Services, their
    assets, liabilities and services will be part of the District Health Boards"
    [CAB (00) M2/4 refers]. Concerns are that:
    • DHBs may be biased toward hospital-based services when they make decisions
      about the mix of primary care and community-based services and hospital-based
      services
    • DHBs may overinvest or inappropriately run down their assets. These concerns
      may materialise when a District Health Board does not face the full cost of
      using its own hospital facilities (for example, if there were no capital charge
      or it could defer maintenance).
28. Within the limits of Government's policy direction, there are a number of
    mechanisms which could be used to ensure transparency in how any tension between
    funding and ownership interests is managed. These are:
    1. accountability mechanisms that provide distinct reporting lines for funding
       and ownership responsibilities
    2. establishment of separate committees of the Board responsible for primary
       care and hospital governance (as agreed by Cabinet)
    3. structural arrangements that separate funding responsibilities and ownership
       responsibilities.
29. Mechanisms under (a) will be covered in the report-back on accountability
    arrangements, (b) will be the subject of a further report-back as recommended in
    the accompanying Governance paper, and (c) will be determined and approved as
    part of the DHB establishment process (see paragraph 32).
30. The degree of freedom a DHB may have in making decisions on their assets
    (for example, the extent to which they can borrow or sell assets) may not
    necessarily be the same as the degree of freedom a DHB would have on funding
    decisions.

EVOLUTION OF DHB AUTONOMY

District Health Boards are part of a complex, dynamic and evolving
system

31. The design of the sector must take into account the dynamic nature of the
    health and disability sector where factors, such as evolving social preferences
    epidemiological trends and technological innovation, are likely to increase the
    demand for, and increase the efficiency and effectiveness of, local control.

DHB transition to the envisaged state of devolution

32. A distinction can be made between the degree of devolution to DHBs during
    the initial establishment and developmental stage and the prudent degree of
    devolution in relation to the performance of established DHBs. Given the
    evolutionary nature of the sector and the likely differences between DHBs, it
    may be difficult to distinguish between developmental and established DHBs. An
    important first step will be to define a formal process for establishment of
    DHBs which addresses issues such as internal structural arrangements (see
    paragraph 29) and the initial level of DHB autonomy. I propose that Cabinet
    directs officials to report back on this process.
33. Regardless of the degree of devolution that is envisaged for DHBs, there is
    a key issue whether DHBs evolve to a state of autonomy, or whether all DHBs will
    start from the envisaged degree of autonomy. The main arguments for starting
    from a point where DHBs have maximum autonomy are that it:
    • gives DHBs control over, and thus clear responsibility for, their
      performance
    • shows trust in DHBs and their staff
    • avoids the possibility that responsibility may not be devolved at all (which
      would lead to disillusion in DHBs and reduced community involvement).
34. I propose an evolutionary approach where the DHBs' environment is initially
    fairly regulated and prescribed and is then progressively relaxed to a state
    where DHBs have the desired degree of autonomy. Advantages are that it:
    • helps manage the substantial health outcome risks of under-performance by
      inexperienced Boards
    • avoids the potential that some DHBs have expectations placed on them which
      they will fail to meet (which would be demotivating)
    • allows for the inevitable variation among DHBs in developing their
      capability to carry out the full range of roles.
35. It is important that DHBs and the Minister share expectations about what is
    required to be successful, fully capable DHBs. The Ministry of Health, in
    consultation with officials, will develop and publish a detailed DHB development
    framework by November 2000, which sets out criteria and the process for moving
    toward autonomy. This will clarify how fast, how far and under what
    circumstances DHBs can expect to reach the maximum level of autonomy
    anticipated. The timeline allows the framework to be in place when the
    Transitional DHBs begin operations. The report-back on accountability
    arrangements will include an outline of this framework.
36. In addition, it will be important that the DHBs are resourced to be able to
    develop their organisations to a state of maximum devolution, and that the
    Ministry of Health (with the HFA and CCMAU) will support DHBs in doing so.

Varying DHB decision-making authority in response to performance
concerns

37. Another fundamental issue is to what extent the Minister can vary the degree
    of decision-making authority, once DHBs are fully operational. The Minister of
    Health may, from time to time, wish to negotiate more detailed expectations.
    That is, the Minister would reduce a DHB's autonomy by being more specific about
    what services a DHB is expected to deliver and/or what processes to use). This
    may be the case if a DHB does not have the capability or if down the track its
    performance drops below an acceptable standard.
38. The Minister can do this by introducing far greater detail in funding
    agreements which the Minister would, from time to time, enter into with DHBs,
    and by providing the Minister reserve powers, such as the ability to direct DHBs
    and other means of influencing the Board (as set out in the report-backs on
    governance and accountability arrangements).
39. The ability to vary the degree of DHB autonomy has the following advantages:
    • it allows for differences in DHB roles and capability - some DHBs may
      develop a wider range of capabilities than others
    • it provides a reward to DHBs (in the form of increased autonomy) for good
      performance and a sanction (in the form of Ministerial intervention in DHB
      operations) where there are serious performance concerns.
40. The main disadvantages are that responsibility may not be devolved when DHBs
    have the capability (leading to disillusion in DHBs and reduced community
    involvement), and that it may give rise to missed opportunities for increasing
    responsiveness of services.
41. The performance management framework which form part of the DHB
    accountability arrangements being designed will seek to mitigate such risks.

THE CROWN'S RELATIONSHIP WITH MAORI

42. Maori expect that, in addition to requirements to consult, sector
    arrangements continue to increase Maori participation in health and disability
    services. This expectation reflects Government's commitment to
    self-determination for whanau, hapu and iwi and to fulfilling its obligations as
    a Treaty partner. Among the key objectives are to:
    • ensure a flexible environment that reflects the diversity of Maori
    • ensure Maori participation at all levels of the sector
    • improve the performance of mainstream health organisations in relation to
      Maori health gain and Maori preferences
    • improve Maori consumer confidence in (and therefore use of) health and
      disability services in the sector.
43. Increasing the degree of DHB autonomy increases the likelihood that health
    and disability services are responsive diverse Maori needs and that there can be
    local approaches and solutions. But it also puts greater distance between the
    Crown and Maori, which may be interpreted as weakening the Crown's Treaty of
    Waitangi obligations.
44. Risks associated with a greater degree of devolution will be addressed
    through governance and accountability arrangements. This includes ensuring
    equitable Maori representation on the Board and its committees as well as
    building from the partnership arrangements already in place at the HFA Board and
    operational levels: these structures and agreements (memoranda of understanding
    and deeds of partnership with local Maori leadership) can either be transferred
    to DHBs or form a model for new partnership arrangements.
45. Over time these arrangements have the potential to evolve into stronger
    governance and purchasing functions for Maori in relation to Maori health gain
    and services within the District Health Boards. The flexibility principle allows
    other solutions to emerge over time which may be more appropriate. None of these
    options should be precluded. The proposals in the accompanying paper on Maori
    partnership issues are capable of being adopted regardless of the degree of
    devolution the Government envisages for DHBs.

CONSULTATION

46. The following agencies were consulted in preparation of this paper: the
    Health Funding Authority, Crown Company Monitoring Advisory Unit, Department of
    the Prime Minister and Cabinet, The Treasury, Te Puni Kokiri, and the State
    Services Commission.

FINANCIAL
IMPLICATIONS

47. Full identification of one-off costs and ongoing fiscal impacts of the
    proposed structural changes will be reported by 31 March 2000 [Cab 00 M2/4
    refers].
48. The net financial implications of proposals in this paper relate principally
    to the level of investment needed to equip DHBs with the required capability and
    ongoing transactions (including monitoring and co-ordination) costs and
    administrative costs. These include costs and savings from:
    • changes in the nature, quantity, and frequency of agreements between DHBs
      and providers, and between DHBs and the centre:
    • more collaboration and common service agencies may reduce transactions costs
    • coordination costs may be greater in a more devolved sector
    • 22 DHBs will increase overall monitoring costs (assuming the nature and
      scope of Crown health assets monitoring activity stays largely unchanged)
    • changes in administrative costs in terms of the number of staff and
      infrastructure required by DHBs, and the size of the central administration (the
      sum of the Ministry of Health, HFA, CCMAU).

LEGISLATIVE IMPLICATIONS

49. The legislation required forms part of the New Zealand Public Health
    Services and Health Reforms (Transfer and Transitions Provisions) Bill.

COMPLIANCE COSTS STATEMENT

50. The proposals do not have compliance costs implications beyond those
    identified as part of financial implications above.

REGULATORY IMPACT STATEMENT

51. A Regulatory Impact Statement is attached.

HUMAN RIGHTS IMPLICATIONS

52. The proposals do not have Human Rights Act 1993 implications.

PUBLICITY

53. Publicity on matters related to this paper is managed as part of the
    Communications Strategy that forms part of the wider work on health and
    disability change.

CABINET:

1. agreed that the objective is that District Health Boards (DHBs) will have
   responsibility for making decisions on the mix, level, and quality of health and
   disability services, within the parameters of the New Zealand Health Strategy,
   Disability Strategy and nationwide minimum service coverage and safety standards
   (such as the Health and Disability Code of Rights and existing minimum quality
   standards);
2. agreed that the DHBs' environment will initially be highly regulated and
   prescribed but will then be progressively relaxed as each DHB is progressed
   towards the maximum envisaged degree of autonomy;
3. agreed that the role of the Minister of Health, assisted by the Ministry of
   Health and in consultation with the DHBs, will be to:
   1. define strategic directions for the health and disability sector;
   2. define nationwide minimum service coverage and safety standards;
   3. define the operating environment;
   4. enter into funding agreements with DHBs containing the DHB-specific agreed
      performance targets;
   5. exercise reserve powers (such as the ability to direct DHBs or appoint a
      commissioner in case of repeated performance failures [SPH (00) M 6/4 refers];

REPORT BACKS

4. noted that an outline of the DHB development framework is part of the 30
   March 2000 report-back on DHB accountability arrangements to the Ad Hoc
   Ministerial Committee;
5. agreed that the Ministry of Health, in consultation with officials, report
   to the Minister of Health by November 2000 with a detailed DHB development
   framework, setting out the criteria and process by which individual DHBs will
   move to the maximum degree of autonomy;
6. directed the Health Sector Development Officials Group to report back to the
   Ad Hoc Ministerial Committee by 30 June 2000 on the process for establishing
   DHBs, addressing issues such as internal DHB structural arrangements and the
   initial level of DHB autonomy;
7. directed the Health Sector Development Officials Group to report back to the
   Ad Hoc Ministerial Committee by the end of April 2000 with in-principle advice
   on a more detailed service-by-service division of roles, to inform the 30 June
   2000 report back on funding arrangements.

REGULATORY IMPACT STATEMENT

Objective

1. The policy objectives are:
   • to improve the health and independence of the population and reduce
     disparities
   • to improve health and disability service delivery
   • to increase community say over health and disability services
   • to encourage a collaborative health and disability sector
   • to reduce administrative costs.
2. The objective of this paper is to clarify the roles of DHBs and the Minister
   and Ministry of Health, and in particular how much autonomy fully capable DHBs
   would be expected to have when they perform well.

Statement of the problem and the need for action

3. Given the objectives and functions of DHBs, the issue is how much
   decision-making authority DHBs should have, which decisions are to be made by
   the Minister of Health and which decisions are shared.
4. Clarity on what degree of autonomy is envisaged for DHBs will assist in the
   more detailed division of roles between DHBs and the Ministry of Health.

Feasible options to achieve desired objectives

5. The paper sets out two main scenarios between the extremes of a very
   centralised and a fully autonomous health and disability sector. The key
   differences are in:
   • whether the Minister of Health or DHBs decide on the detailed mix, level,
     and quality of health and disability support services:
   • whether DHBs evolve to a state of autonomy, or whether all DHBs will start
     from the maximum degree of autonomy envisaged by Ministers.

6. The proposals are that:
   • DHBs will be responsible for deciding on the mix, level, and quality of
     health and disability services, within the parameters of the New Zealand Health
     Strategy, NZ Disability Strategy and nationwide minimum service coverage and
     quality standards (such as the Health and Disability Code of Rights and existing
     minimum quality standards)
   • DHBs will evolve towards the maximum desired degree of autonomy.

Non-regulatory measures

7. The proposal defines the Minister of Health's role and this must be included
   in the New Zealand Public Health Services Bill. No satisfactory non-regulatory
   mechanism exists which would achieve this.
8. The degree of autonomy for DHBs flows from the Minister of Health's role.
   Achievement of the maximum desired level of autonomy and the specification of a
   development path do not require regulatory measures.

Regulatory measures

9. A definition of the Minister of Health's role must be included in the New
   Zealand Public Health Services Bill to ensure clarity of roles and
   responsibilities in the publicly funded health and disability sector.

Statement of the net benefits of the proposals

10. The comparison of the main advantages and disadvantages of shifting
    decision-making authority along the spectrum from the centre to the DHBs, shows
    that it:
    • decreases the Minister's role in detailed decisions if DHBs perform well,
      and increasingly emphasises the Minister's role as strategic direction setter
    • decreases the leverage of the Minister of Health, but increases the role and
      responsibility of the Board and the ability of the community to be involved in
      decisions about local services
    • increases DHB staff and infrastructure (and reduces the size of the Ministry
      of Health) and the need for co-ordination across districts which may increase
      the costs over a system where activities are carried out centrally, but also
      increases the likelihood that services are tailored to local needs and
      preferences and are better co-ordinated within districts
    • decreases the likelihood that there is nationwide consistency in who gets
      what for all health and disability services, but increases the likelihood that
      the service mix reflects local values and is targeted at local needs
    • reduces central control over detailed fiscal management but increases local
      awareness of, and responsibility for, making trade-offs within a budget.
11. On balance, the benefits of allowing DHBs to move as close to full autonomy
    as possible, subject to certain nationwide minimum requirements, are expected to
    be greater than the disadvantages.
12. The benefits of DHBs evolving over time to the maximum state of autonomy
    envisaged are that it:
    • helps manage the substantial health outcome risks of under-performance by
      inexperienced Boards
    • avoids the potential that some DHBs have expectations placed on them which
      they will fail to meet (which would be demotivating)
    • allows for the inevitable variation among DHBs in developing their
      capability to carry out the full range of roles.
13. The disadvantage is that it:
    • introduces a risk that responsibility may not be devolved at all (which
      would lead to disillusion in DHBs and reduced community involvement).
14. On balance the advantages from an evolutionary approach outweigh the
    disadvantages.

Consultation

15. The following agencies were consulted in preparation of the Cabinet paper:
    the Health Funding Authority, Crown Company Monitoring Advisory Unit, Department
    of the Prime Minister and Cabinet, The Treasury, Te Puni Kokiri, and the State
    Services Commission.