Review of the population based funding formula completed

News article

22 December 2015

A five yearly review of the population based funding formula (PBFF) for district health boards (DHBs) has been completed and will be incorporated into DHB’s 2016/17 Funding Advice.

The funding formula is a technical tool used to help equitably distribute the bulk of district health board funding according to the needs of each DHB’s population. The formula takes into account the number of people who live in each DHB catchment, their age, socio-economic status, ethnicity, and sex. It also has mechanisms to compensate DHBs who service rural communities and areas of high deprivation.

The funding covers a range of health services including primary care, hospital and community care, health of older people, and mental health.

The review recommended no structural changes to the overall model but proposed several changes, including to the rural adjuster to better reflect DHB population and geography.

In 2015/16 the PBFF distributed a total of $11.7 billion to DHBs. DHBs will not receive less funding as a result of the review.

Background

Individual DHB funding allocations are never reduced and are increased year on year, with the review determining a DHB’s share of overall funding and annual growth rate in funding.

The formula is reviewed every five years. The latest review is based on 2013 Census data and was delayed due to the Census being postponed as a result of the Christchurch earthquakes.

The review was overseen by a Technical Advisory Group (TAG) with members from DHBs, the Ministry of Health, and Treasury. Sapere Research Group was also commissioned to undertake an independent review of the adjustment mechanisms in the formula.

An independent audit was undertaken into the review and found no issues with the accuracy of the work. A full technical report will be released in early 2016. 

For more information on the review see Population-Based Funding Formula

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