With the government of the day increasingly concerned
with poorly managed public hospitals and growing waiting
lists [16], it set up a second independent review. The
Hospital and Related Services Taskforce was chaired by a
prominent businessman and advocate of market-oriented
reforms, Alan Gibbs [16]. The resulting ‘unshackling the
hospitals’ Report noted similar issues to those raised in the
Health Benefits Review, and went on to argue that significant
efficiency gains could be made throughout the hospital
sector, were the level of efficiency attained by certain
services be achieved throughout New Zealand. The Report
also argued that many of the incentives faced by New
Zealand hospitals were inappropriate—most particularly
that the incentives on AHBs were to support their own
services as opposed to ensuring the most cost-effective
provider delivered care.
This Report drew particularly on theories of managed
competition [17]—i.e. economic thinking about how best
to harness markets in health care, given the economic
characteristics of health services, such as adverse selection,
moral hazard, information asymmetries, and imperfect
markets [18]. The report recommended the introduction of
a purchaser-provider split, through the establishment of six
locally-elected Regional Health Authorities acting as purchasers
representing consumers. The Regional Health
Authorities would buy services from both publicly and
privately owned providers, with providers being paid for
the value of the services they provided and hence making
‘massive efficiency gains’ [10].