Primary Health Organisation
Primary Health Organisations (PHOs), in New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

, are health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...

 providers that are funded on a capitation
Capitation (healthcare)
Capitation, is a method of paying health care service providers a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care, per period of time....

 basis by the New Zealand Government via District Health Boards. They are usually set up as not-for-profit trusts, and have as their goal the improvement of their population's health.


In the early 1990s, general practitioner
General practitioner
A general practitioner is a medical practitioner who treats acute and chronic illnesses and provides preventive care and health education for all ages and both sexes. They have particular skills in treating people with multiple health issues and comorbidities...

s (GPs) were joining together to form independent practitioner association
Independent practice association
An independent practice association is an association of independent physicians, or other organization that contracts with independent physicians, and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis...

s (IPAs). They did this to better negotiate with the purchasers of healthcare at that time.

Prior to the introduction of PHOs, general practitioners were paid using a fee-for-service
Fee-for-service is a payment model where services are unbundled and paid for separately. In health care, it gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care...

 model. For every person that went through their door, the GP received a set amount of money from the state. For some time, the Government had been trying to introduce a capitation model, that is, give practices a set amount of money depending on the population they served. The formation of the voluntary IPAs gave the Government an important stepping stone to introduce capitation-based funding.

The Government introduced PHOs, which were similar to the IPAs, in 2001, with the first PHOs being formed in July 2002. There were 81 PHOs by 2010 but some have since merged.

Structure and goals

A PHO is set up as a not-for-profit organisation with both community and provider representation. They maintain a list of their enrolled populations for which they get funding. PHOs include not just GPs and nurses, but also other health providers.


Primary Health Organisations are allocated funds depending the characteristics of their enrolled population (this is called capitation).

The PHO receives a set amount of money from the District Health Board for every member, depending on their age, sex, ethnicity and socioeconomic status. They are also allocated funds for health promotion, individuals with special care requirements, as well as for rural practice.

Health care providers that are part of PHOs also have the right to charge fees to their patients for each visit. PHOs may also receive funding through contracting with the Ministry of Health, District Health Boards or other organisations such as Accident Compensation Corporation
Accident Compensation Corporation
The Accident Compensation Corporation is a New Zealand Crown entity responsible for administering the Accident Compensation Act 2001. The Act provides support to citizens, residents, and temporary visitors who have suffered personal injuries....

(ACC). Usually these contracts are to provide specific services or to pass on additional subsidies to target patient groups (over and above ordinary capitation subsidies).

This policy costs the Government more money to implement, and the expected proportion of each GP visit paid by the Government is higher than it has been previously. This means that generally New Zealanders can expect to pay less for a visit to the doctor.

Perceived advantages

Benefits for individual patients
  • Overall lower fees
  • Wider range of services

Benefits for the population as a whole
  • Encouragement of rural practice
  • Increased emphasis on preventative measures
  • Services tailored to the needs of the communities PHOs serve

Benefits for general practices
  • Steady and predictable stream of income
  • Better use of nurses (previously, a doctor had to see a patient for a practice to get paid by the Government)

External links

North Island PHOs

Management services / Primary Care Networks:
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