flowchart LR
A[More clinically necessary contact] --> B{Does funded value meet marginal cost?}
C[Scheduled payment + allowed co-payment] --> B
D[Marginal cost: clinician time, room time, admin, follow-up] --> B
B -->|yes| E[Extra contact is viable]
B -->|no| F[Waiting, closed books or higher fees]
GTPCNZ: public funding architecture report
Source-informed scaffold for primary care funding policy discussion
Executive summary
Source-confidence label: policy judgement + model scaffold.
This report explains a source-informed scaffold for primary care funding in Aotearoa New Zealand.
This is a source-informed parameterised scaffold and educational explainer. It is not a real-data calibrated forecast and should not be used to claim precise fiscal savings, hospital-demand reductions, workforce effects, or implementation impacts.
The central question is simple:
Do current funding rules allow lower-cost upstream care to expand safely before need becomes hospital demand?
The proposal is a hybrid:
- Capitation for continuity, enrolment, baseline viability and population responsibility.
- Uncapped scheduled fee-for-service for eligible primary medical activity.
- Place-based accountability so providers remain responsible for whole communities, not only easy activity.
- Item rules, clinical governance, documentation, audit and data visibility to control gaming and low-value activity.
- Equity and co-payment protections so price does not become the rationing mechanism.
Short version:
Uncapped does not mean uncontrolled. It means uncapped at the global activity-envelope level, but controlled at the item, scope, audit, clinical-governance and place-accountability level.
How the posts map to this report and dashboard
Source-confidence label: public reading map.
This section gives stable anchors for the first six public posts. It also keeps the dashboard wording aligned with the report: the public surfaces use model-generated indices, not observed outcomes.
| Post | Stable anchor | Main report surface | Dashboard surface | Status / caveat |
|---|---|---|---|---|
| 01 | Post 01 | Executive summary; comparator framing; scenario interpretation | Start here; Current state; Reference scenarios | Model-generated index, not an empirical outcome |
| 02 | Post 02 | Funding model explainer; formula appendix | Funding models module; Toy explainer | Source-informed scaffold, not a forecast |
| 03 | Post 03 | Marginal supply and the extra-contact viability threshold | Microeconomics lab | Static teaching diagram, not a measured curve |
| 04 | Post 04 | Game theory, controls and gaming risk | Game theory lab | Strategic teaching diagram, not an estimate |
| 05 | Post 05 | Current reform comparator and F0/current reform pathway | Current state; Reference scenarios | F0/current reform remains the comparator |
| 06 | Post 06 | Controlled scheduled payment and uncapping logic | Toy explainer; Microeconomics lab | Model-generated index wording stays in place |
Post 01. Are we buying hospital growth by rationing cheaper care upstream?
Source-confidence label: executive-summary framing.
Accessibility description: This post is the entry point. It links the policy question, the current reform comparator and the scenario ranking so the reader can move from the question to the model scaffold without needing the dashboard first.
This post maps to the executive summary, the current reform comparator section and the scenario interpretation section. It is the clearest place to start if the reader wants the public policy question before the technical detail.
Post 02. Fee-for-service, capitation and blended funding
Source-confidence label: funding-formula explanation.
Accessibility description: This post explains the basic funding pieces in plain English and points the reader to the formula appendix where the accounting identities are written out.
This post maps to the funding-model explanation and the appendix that lays out capitation, scheduled payment and blended funding identities.
Post 03. Marginal supply
Source-confidence label: microeconomics teaching diagram.
Accessibility description: The diagram below shows the viability threshold for one more primary care contact. If the funded payment plus any allowed charge does not meet marginal cost, the extra contact is rationed.
Post 03 diagram 1. Marginal supply threshold. This is a static microeconomics teaching diagram, not an estimated cost curve.
This post maps to the marginal-supply section and the formula appendix. It gives the reader the simplest possible microeconomics reading of the model: a safe extra contact needs a viable marginal payment signal.
Post 04. Why formulas do not solve games
Source-confidence label: game theory and controls.
Accessibility description: This post explains why incentive design matters. The same funding formula can produce different behaviour depending on provider strategy, audit strength and whether the system protects whole-population access.
This is the explicit game-theory section. The report is not only asking what the formula pays; it is asking how providers, commissioners and patients respond when the rules change.
| Provider strategy | Weak controls | Strong controls |
|---|---|---|
| Select easy or profitable contacts | High short-run revenue, weak access, high gaming risk | Limited upside, audit exposure, lower gaming payoff |
| Serve the whole population | Moderate revenue, lower gaming risk, better access | Highest alignment between payment, access and legitimacy |
Post 04 diagram 1. Qualitative payoff matrix for the primary-care incentive game. This is a static game-theory teaching table, not an estimate.
flowchart TB
A[System sets schedule, scope and audit rules] --> B{Provider best response}
B --> C[Expand access and accept harder cases]
B --> D[Cherry-pick easier activity]
C --> E[Better access and legitimacy]
D --> F[Higher gaming risk and weaker access]
F --> G[Need stronger controls]
G --> A
Post 04 diagram 2. Best-response loop and controls stack. This is a static game-theory teaching diagram, not an empirical model.
This post maps to the gaming-risk discussion, the controls section and the place-accountability argument. It is where the report makes the strategic logic explicit.
Post 05. Current reform pathway
Source-confidence label: comparator surface.
Accessibility description: This post keeps the current New Zealand reform pathway visible as the comparator. It is not a straw man, and it is not a blank slate.
This post maps to the current reform comparator section and the F0 scenario. The report keeps current reform in view so the reader can compare the public scaffold against the real policy path.
Post 06. What I mean by uncapping primary care funding
Source-confidence label: controlled scheduled payment.
Accessibility description: This diagram shows the controlled version of uncapping. The payment can be uncapped at the activity-envelope level while still being constrained by item rules, co-payment limits, scope, audit and place accountability.
flowchart LR
A[Eligible primary care activity] --> B[Scheduled payment]
B --> C{Do controls still bind?}
D[Item rules, scope, audit, place accountability and fee limits] --> C
C -->|yes| E[Uncapped but controlled]
C -->|no| F[Price increase rather than access gain]
Post 06 diagram 1. Controlled uncapping threshold. This is a static microeconomics teaching diagram, not a forecast.
This post maps to the uncapping explanation and the formula appendix. It reinforces the point that uncapping is a payment design choice, not a permission slip for uncontrolled billing.
1. What this report is and is not
Source-confidence label: claim boundary.
This report is a public explanation of a model scaffold. It can compare policy logics, identify assumptions and guide stakeholder validation.
It is not:
- a government-endorsed policy position;
- a business case;
- a calibrated fiscal forecast;
- a prediction that any scenario will reduce hospital demand by a precise amount;
- a claim that fee-for-service alone is better than capitation.
The formal boundary is in the model card and claim-boundary documents on this site.
2. The current reform pathway is the comparator
Source-confidence label: public document + policy interpretation.
A weak critique would pretend New Zealand is doing nothing. That is not the argument.
The current reform pathway already includes capitation reweighting, a primary care access target, the National Primary Care Dataset, digital access work, urgent and after-hours care, Primary Health Organisation accountability work and separate appropriation structures.
The hard question is whether that pathway changes the supply game enough.
A capitation formula can improve how funding is allocated across enrolled populations. It does not necessarily create a strong marginal payment signal for the next clinically necessary appointment, procedure or urgent episode. That is the gap this model explores.
flowchart LR
A[Current reform pathway] --> B[Capitation reweighting]
A --> C[Access target]
A --> D[National Primary Care Dataset]
A --> E[Digital, urgent and after-hours care]
B --> F{Tested gap}
C --> F
D --> F
E --> F
F --> G[Does marginal supply expand enough?]
Figure 1. Current reform pathway used as the comparator. This is a public-policy map, not a model result.
3. Why capitation can be fair and still constrain supply
Source-confidence label: economic theory + model assumption.
Capitation pays a fixed amount for an enrolled person or population. It can support continuity, population responsibility and budget predictability.
But when demand rises, the next appointment still takes clinician time, room time, nursing time, documentation, risk, follow-up and administration. If the marginal payment for that extra work is weak, the system may ration through waiting time, closed books, short consultations, co-payments or hospital overflow.
This is not an argument against capitation. It is an argument against expecting capitation to solve every problem.
flowchart TB
A[Enrolled population payment] --> B[Baseline responsibility]
B --> C[Continuity and planning]
B --> D[Fixed or weak marginal revenue]
E[Rising need] --> F[More appointments, calls, follow-up and risk]
D --> G{Extra contact viable?}
F --> G
G -->|yes| H[Supply can expand]
G -->|no| I[Waiting, closed books, higher fees or hospital spillover]
Figure 2. The marginal payment gap. This is a conceptual microeconomics diagram, not an estimate.
4. What uncapped scheduled fee-for-service means
Source-confidence label: policy judgement + ACC analogy.
This is not a proposal for uncontrolled billing.
A scheduled fee-for-service stream would mean that eligible primary medical activity can be paid when it is delivered, without a fixed global activity ceiling. The controls sit elsewhere:
- item definitions;
- provider eligibility and scope;
- clinical necessity;
- documentation rules;
- audit and unusual-pattern detection;
- co-payment protections;
- place-based population accountability;
- data reporting;
- quality and safety governance.
The Accident Compensation Corporation analogy is useful because ACC already uses rules-based treatment payments, provider eligibility, contracts and regulation. It is not a complete template for illness-based primary care.
flowchart LR A[Eligible clinical activity] --> B[Scheduled item price] B --> C[Provider scope rules] C --> D[Documentation] D --> E[Audit and unusual-pattern checks] E --> F[Place accountability] F --> G[Payment follows eligible activity]
Figure 3. Uncapped but controlled. The activity envelope is not globally capped, but the item, provider, documentation, audit and place rules still bind.
5. Why place-based accountability matters
Source-confidence label: red-team finding + policy judgement.
A fee-for-service stream can improve marginal supply, but it can also encourage cherry-picking. Providers may select easier, shorter or more profitable contacts unless the system protects hard-to-reach populations, rural communities, complex patients and people with high unmet need.
That is why place-based accountability is not optional. A national benefit schedule should sit beside responsibility for whole populations.
6. Scenario results from the scaffold
Source-confidence label: model scaffold.
The table below uses source-informed model-generated indices. These are not observed New Zealand outcomes.
| Rank | Scenario | Name | Hybrid viability | Supply generation | Hospital pressure | Gaming risk |
|---|---|---|---|---|---|---|
| 1 | F4 | Full hybrid upstream architecture | 77.26 | 55.66 | 61.61 | 27.30 |
| 2 | F3 | Uncapped medical FFS + place accountability | 62.51 | 40.10 | 74.36 | 30.76 |
| 3 | F2 | Uncapped scheduled medical FFS | 56.40 | 40.38 | 75.86 | 39.10 |
| 4 | F9 | Place-based commissioning only | 54.26 | 14.33 | 79.07 | 30.35 |
| 5 | F8 | Scope-enabled supply only | 52.96 | 21.29 | 78.25 | 36.22 |
| 6 | F7 | Ambulance and urgent alternatives only | 52.74 | 14.33 | 72.31 | 35.75 |
| 7 | F0 | Current reform pathway | 52.24 | 15.43 | 78.07 | 34.04 |
| 8 | F1 | Capitation reweighting only | 50.37 | 14.11 | 79.91 | 35.45 |
| 9 | F6 | ACC activity constraint shock | 50.11 | 13.87 | 80.21 | 35.35 |
| 10 | F5 | Uncapped weak-control model | 46.11 | 37.25 | 77.18 | 70.64 |
xychart-beta title "Reference scenarios: hybrid viability index" x-axis ["F4","F3","F2","F9","F8","F7","F0","F1","F6","F5"] y-axis "Model-generated index" 0 --> 100 bar [77.26,62.51,56.40,54.26,52.96,52.74,52.24,50.37,50.11,46.11]
Figure 4. Static scenario rank plot. Scores are model-generated indices, not observed New Zealand outcomes.
xychart-beta title "Supply generation index by reference scenario" x-axis ["F4","F3","F2","F9","F8","F7","F0","F1","F6","F5"] y-axis "Model-generated index" 0 --> 100 bar [55.66,40.10,40.38,14.33,21.29,14.33,15.43,14.11,13.87,37.25]
Figure 5. Static supply-generation plot. This shows scenario logic under assumptions, not measured supply.
Interpretation rule: the chart compares relative scenario logic under assumptions. It does not predict real-world effect sizes.
7. What the scaffold suggests
Source-confidence label: model scaffold + policy judgement.
The scaffold points to four patterns:
- Capitation reweighting improves allocation, but may not solve marginal supply.
- Uncapped scheduled fee-for-service improves the marginal supply signal.
- Uncapped activity without strong controls is high risk.
- The strongest scenario is the full hybrid: capitation, scheduled fee-for-service, place accountability, urgent/ambulance alternatives, scope-enabled supply, data, audit and performance measures.
8. What would change my mind
Source-confidence label: falsification framework.
This argument should lose force if evidence shows that:
- capitation reweighting plus the access target materially improves appointment supply without an activity-sensitive stream;
- unmet primary care access does not predict emergency department, ambulance or admission pressure;
- scheduled fee-for-service mainly produces low-value activity rather than needed access;
- PHO pass-through and intermediation are already transparent, rapid and low-friction;
- co-payment protections cannot prevent inequity under an activity-sensitive stream;
- place-based accountability cannot coexist with scheduled benefits.
9. What needs to be tested next
Source-confidence label: research plan.
The next step is not a more complicated scaffold. It is testing the load-bearing assumptions:
- marginal supply response to scheduled benefits;
- unmet primary care to emergency department and ambulance conversion;
- co-payment and equity effects;
- provider-scope expansion and safety;
- PHO pass-through and transaction-cost effects;
- ambulance alternative-disposition effects;
- Accident Compensation Corporation activity-stabilisation effects;
- rural in-person supply response.
10. Conclusion
Source-confidence label: policy judgement.
The current reform pathway may be necessary. It may not be sufficient.
The strongest policy question is not whether capitation or fee-for-service is morally superior. It is whether the funding architecture lets safe upstream care expand before unmet need becomes hospital demand.
Uncapped does not mean uncontrolled. It means scheduled, rules-based, audited, clinically governed and place-accountable.
Appendix A. Public funding formula forms
Source-confidence label: public formula forms + accounting identities.
The formulae below use publicly available funding descriptions and rate schedules. They are not a complete operational model of every PHO contract, pass-through rule, final coefficient or local practice fee. Where the public source gives only the structure, the notation is deliberately written as a transparent accounting identity.
A1. Capitation
Health New Zealand’s capitation rates page describes capitation as payment by enrolled population rather than visit count, and publishes annualised rate tables from 1 July 2025.
\[ \text{Capitation}_{p} = \sum_{i \in E_p} r(a_i, s_i, h_i, q_p) + \sum_{k \in A_p} \text{AddOn}_{k} \]
Here (p) is the practice or enrolled provider population; (E_p) is its enrolled population; (r(a_i, s_i, h_i, q_p)) is the published annual rate for person (i), varying by age band, sex, high-use-health-card status and practice/payment category; and (A_p) covers eligible add-on streams such as health promotion, access funding, Care Plus, immunisation administration, rural workforce retention, management services, very-low-cost-access support, zero-fees support, Community Services Card support and contingent capitation.
The marginal point is:
\[ \frac{\partial \text{Capitation}_{p}}{\partial \text{Visits}_{p}} \approx 0 \]
Once the enrolled population and eligible add-ons are fixed, an extra clinically necessary contact usually adds workload before it adds revenue.
The Ministry of Health capitation reweighting page says the revised formula considers age, sex, multimorbidity, rurality and socio-economic deprivation, with implementation expected from 1 July 2026 subject to negotiation. A cautious public-form notation is:
\[ \text{FutureCapitation}_{p} = \sum_{i \in E_p} f(a_i, s_i, m_i, u_i, d_i) \]
where (m_i) is multimorbidity, (u_i) is rurality or distance from urban areas, and (d_i) is socio-economic deprivation. This is the published structure, not the final coefficient table.
A2. Scheduled fee-for-service
ACC provides a public example of scheduled activity payments. The Accident Compensation treatment-cost regulations set amounts ACC is liable to pay or contribute for specified treatment, and ACC publishes a medical practitioner, nurse practitioner and nurse cost schedule.
\[ \text{ACCContribution}_{v} = B(g_v, c_v, a_v) + T_{\max(v)} + 0.5 \sum_{t \in O_v} T_t \]
Here (v) is a covered treatment visit; (B(g_v, c_v, a_v)) is the base visit contribution by provider group, card/dependent status and age category; (T_{(v)}) is the most expensive eligible treatment item at the visit; and (O_v) is the set of other eligible treatment items for different injuries at the same visit.
The policy analogy is not to copy ACC exactly. It is that eligible services can be priced in advance, paid when delivered, documented and audited.
A3. Blended funding and viability
The Health New Zealand annual primary care funding page describes current primary care funding as including capitation, contingent capitation, performance-based funding, co-payment settings, minor planned care and immunisation funding. A simple blended identity is:
\[ \text{PracticeFunding}_{p} = \text{Capitation}_{p} + \text{ProgrammeFunding}_{p} + \sum_{j \in S_p} P_j q_{pj} + \text{PatientCoPayments}_{p} \]
where (S_p) is the set of scheduled eligible activities, (P_j) is the scheduled public payment for activity (j), and (q_{pj}) is the quantity of activity (j) delivered by practice (p).
For access, the practical question is whether one more safe contact is viable:
\[ \text{ExtraContactViable}_{j} \iff P_j + C_j \geq MC_j \]
where (C_j) is the allowed or actual patient co-payment and (MC_j) is the marginal cost of providing the extra contact.
Co-payment protection is therefore part of the formula, not a side issue:
\[ \text{PatientCharge}_{j} \leq \text{AllowedFee}_{j} \]
If an activity payment is added without charge controls, the reform can become a price increase rather than an access improvement.