The increasing level of corporate ownership of general practices is a ‘below the radar’ growing concern within Aotearoa New Zealand’s health system, including many general practitioners and their professional bodies.
Broadly speaking there are four main forms of general practice ownership. The largest but declining is GP-owned practices.
Then there are the corporates (private for-profit companies) whose number of practices and enrolled patients are increasing. Community based not-for-profit ownership is the third form while Health New Zealand (Te Whatu Ora) is both the fourth and smallest
Who are the corporates
There are four corporate owners. Tamaki Health Ltd is described as the biggest with 50 general practices covering 230,000 enrolled patients. Adding to its size is its ownership of the White Cross urgent care clinics.
Tamaki Health began, in 1970, as a GP owned practice (initially called East Tamaki Healthcare). Dr Kantilal Patel and his wife Ranjna Patel focussed on high-needs patients in Auckland.
Over the years the number of practices gradually expanded but its founding focus remained as its mantra. It did not become corporate owned until 2017.
Today it is the only corporate which is owned by a private equity firm (Sydney based Mercury Medical Holdings). This ownership makes it permanently vulnerable because private equity owners are in for a shorter-term profit through on-sale.
On the other hand, Tamaki Health retains much of the operational cooperative patient focus that prevailed for over 40 years prior to corporate ownership.
Green Cross Health is the oldest corporate
Green Cross Health Ltd is the oldest corporate owning 66 general practices covering 423,000 enrolled patients.
Although the company was formed in 1981, until 2014 it was only involved in pharmacy ownership (currently Unichem and Life Pharmacy). From 2014 it began purchasing general practices.
Tend Health Ltd is the newest corporate. Formed in 2020 it currently owns 13 general practices covering 80,000 enrolled patients. It is also starting to branch out into urgent care clinics.
Formed in 2010, Third Age Health Services Ltd has a narrower focus than the other corporates. It provides healthcare services to older adults residing in aged residential care facilities along with private hospitals and secure dementia units. Based in Hawke’s Bay it has 20,350 enrolled patients and owns six practices.
All the corporates are driven by the imperative to be profitable. They all promote telehealth with Tend Health arguably having the biggest profile.
Tend Health and Green Cross have the most in common as they both started as corporates from their inception.
In contrast Tamaki Health has only been corporate owned for the last eight years of its 55-year history. This does have a contrasting impact on its operating culture.
It is also reflected in its average practice size. Whereas Green Cross and Tend Health practices have on average noticeably larger enrolled populations (6,409 and 6,154 averages respectively), Tamaki Health has an average 4,600 enrolled patients per practice. [Third Age Health’s average is 3,392.]
Alarm bells over corporate ownership power
For over two years I have been ringing alarm bells over the increasing corporate ownership of the health system’s general practices.
On 12 June 2023 BusinessDesk published an opinion piece by me reporting on the results of a College of General Practitioners workforce survey: GP ownership declines; corporate ownership increases.
The survey identified that general practice owners were a declining minority of GPs falling from nearly 40% in 2014 to 31% in 2022.
Further, the number of GPs reporting that they worked in a GP-owned practice was 73% in 2015. By 2022 the number has dropped to 64%.
On the other hand, the number of GPs reporting they worked in a fully or partially corporate-owned practice has doubled since 2015. By 2022 it was 14%.
This led me to conclude that:
Whether the decline accelerates or not, the indications are that the winner will eventually be corporate ownership. Unless something of significance changes, much of general practice will be provided by relatively big, rather than small businesses. Further, it will happen by drift, in the absence of debate over whether this is a good thing.
Corporate expansion by stealth
On 29 February 2024 Newsroom published my opinion piece on expanding corporate general ownership: Corporate expansion by stealth.
Newsroom opinion piece
Much of my focus was on Tamaki Health and Green Cross Health in the context of corporate expansion into general practice ownership within a policy vacuum. I concluded that:
Whether GP-ownership’s decline accelerates or not, the indications are that the winner will eventually be corporate ownership. Unless something of significance changes, much of general practice will be provided by relatively big, rather than small businesses. Green Cross’ endeavours to concentrate its general practices in the only primary health organisation with a national mandate suggests a shift from drift to stealth.
Whether increased corporate control of general practice eventuates by either means, the absence of debate over whether this is a good thing and the presence of a policy vacuum is a bad thing.
Policy vacuum
On 2 May 2024 I posted in Otaihanga Second Opinion my concerns about how this policy vacuum enabled corporate general practice ownership by stealth: Profit-driven corporate ownership expansion is enabled.
Profiteering from health drives corporates
This stealth enabling policy vacuum led me to issue the following call:
It is time the leadership of the health system stepped up. Failure to do so is likely to lead to increasing corporate driven profit extraction dominating general practice. It would mark a transition from healthcare being a public good to a commodity.
Perverse outcome
Consequential perversity
On 6 July 2024 Otaihanga Second Opinion discussed, in the context of the experience of a Green Cross Health owned practice in Lower Hutt, a perverse outcome linked to the misuse of the capitation funding formula: Perverse outcome.
My main observation was as follows:
This leads to the critical question: why has corporate ownership led to the crisis at its latest Lower Hutt practice with its mass loss of doctors and nurses. At the heart of it is the drive of corporates for profit-maximisation.
One means of achieving this overriding objective is the use of the capitation funding formula for general practice in a way that was not contemplated by its designers.
Further:
In essence, capitation is per capita funding of practice enrolled patients supplemented by age and gender factors.
The more the number of enrolled patients, the greater the funding revenue to the corporate owner. The big variable is the length of patient consultations.
The shorter the consultation, the greater the patient throughput, the greater the number of enrolled patients, the greater the ring of the metaphoric cash register, and the greater the work pressures and dissatisfaction of the GPs and nurses.
And now we have corporates positioning to extend their influence on Primary Health Organisations. But that is another post. Look out for it; just saying!
Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Otaihanga Second Opinion
Can vouch that Tamaki Health is bad for the consumer. Took over both Leabank and Manurewa clinics here in South Auckland (6 doctors), closed Leabank and transferred all those patients to Manurewa Health Care. But with only 3 doctors. Wait time for an appointment is now 3 weeks. Quality of doctors has gone down (well trained and earnest but not empathic – strict 15 minute consultation time).
Corporate bloated entity with a lot of self congratulation on their Facebook page but very little on customer satisfaction. Urgent appointments done by video link. Or hours upon hours wait at urgent medical clinics.
Tamaki Health seems more interested in patient turnover (and get a higher rte of government funding per hour in a poor area). Hence they take over surgeries in the areas where health subsidies are in place and people choice to pay for a doctor is limited. Monopoly practice by purchasing clinics in subsidised health care areas and closing clinics to minimise costs yet gather a greater slice of the state health subsidy in poorer areas.
Hence why I have been campaigning for this for the last 11 years
https://www.facebook.com/groups/171564126882442/permalink/1706466090058897
In the absence of simple nationalization, if we had a left-wing party in this country they’d at least push for health cooperatives jointly owned by the primary care physicians involved, instead of these dangerous corporate clinics leaching off the public purse and the goodwill of doctors and nurses alike.
Those nations that support cooperative organization like Iran have had some good successes with such a public-private partnership model, which let individual clinics control the things that they needed to, while not burdening primary care doctors with the need to micromanage every single management and accounting decision which might better be dealt with by more specialized managers.
There’s this two term labour minister of finance who was once a commercial pig incarcerator who’s area of expertise was in artificially fertilising mother pigs to have piglets for us to eat and all that was undertaken within windowless sheds on unheated concrete floors. I’ve been to one of those sheds similar to the one I refer to and the smell of a desperation for a merciful death coming from those animals is palpable.
Roger douglas is that man and I use the term ‘man’ advisedly and who is the nucleus of all that bedevils us today.
Everything that’s wrong about our modern AO/NZ is his doing. He had help, of course and they, are as guilty as he is. AO/NZ should, in the interests of accuracy be renamed ‘Roger’ because we’ve become the embodiment of his vile work. Aotearoa / Roger.
There are good people who come here with the very best intentions to augment change and to make improvements to our lives and lifestyles but they all get to a point where they’re suddenly up against an impenetrable wall, a force field of hopelessness and defeat. The wages contracts act and the dissolution of unions while burying our primary industry farmers under inexplicable debt should be clues to their intentions.
Before we try to improve, reverse, amend, repair, project, discuss etc we must first throw ourselves into reverse and go back to rogers time and surgically remove his influence on us. We must bare all and strip roger down to his undies to understand how such a wretched little man could do so much harm to we lot. We good, hardworking Kiwis with great hearts and clean souls who’ve only [tried] to do ‘good’ under the circumstances.
We have to go back and remove roger from our AO/NZ and wipe the slate clean of neoliberalism. It’s an evil that must be bleached from our lives and our economy and urgently. I can see plans being hatched to remove the Crown and The Treaty from our politic and that can only mean two things. Firstly, the scum who did this, all of this to us will walk free and secondly we’ll loose Sovereignty of our AO/NZ to roger and his mates.
I see this
Palestinian statehood: ‘We came to the conclusion that this wasn’t the right time’ – Peters
https://www.rnz.co.nz/news/political/574319/palestinian-statehood-we-came-to-the-conclusion-that-this-wasn-t-the-right-time-peters
After blatant slaughter and starvation, after the butchering of children and their mums, dads and pets on their homelands Peters is saying ” We came to the conclusion that this wasn’t the right time. ” re Palestinian statehood.
That, is the kind of politic that’s on offer and yet we still expect fair deals.
A very interesting article. Ian is absolutely right when he points to “increasing corporate driven profit extraction dominating general practice,” marking “a transition from healthcare being a public good to a commodity.” The rapidity with which this is happening is indeed alarming.
But general practices run by the doctors themselves as small businesses or partnerships, while infinitely preferable to the corporate model, is not the answer either. In fact it because they have existed legally as private enterprises that the door was left open to traditional general practices being taken over by corporate raiders. The working of the basic law of the concentration and centralization of capital is inexorable. The big fish swallow the smaller ones. As the general rate of profit falls and opportunities for profit-making diminish, big capital looks to invade more and more spheres that in the past it might have been content to leave to small or family businesses – or to the state.
The real answer is to abolish private medicine altogether. Really make it into “a public good.” Let all doctors be employed by the community at a decent salary commensurate with their training and experience. That way they could follow their calling without having to count the takings.