Leaders of health industry bodies have raised concerns about the financial stability of pharmacies, GPs, rest homes, dentists and community and disability support workers, Marc Daalder reports

Even as the healthcare industry is mustering its forces to fight Covid-19, many groups are worried they may not survive the financial fallout.

Representatives of pharmacies, GPs, rest homes, dentists and disability support workers fronted the Epidemic Response Select Committee on Wednesday to warn they aren’t receiving the support they need from the Government. With decreased patronage and in increase in costs related to Covid-19 prevention, many healthcare businesses are worried they may go under.

Financial pressures increasing

Kate Baddock, chair of the New Zealand Medical Association, which represents all doctors, said that while medical students and hospital doctors had been affected by Covid-19, “very importantly, the greatest impact has been on general practice”.

“We turned around general practice from being essentially a face-to-face consultation business to becoming virtual overnight. Within 48 hours, we had 100 percent face-to-face turning into 90 percent virtual consultations. As part of that, of course, there have been both cost implications and revenue implications,” she said.

“This was because of that information that came out from Italy about waiting rooms being a place where Covid-19 was being spread in the community. We took that so seriously, that it was extremely important that we did not risk our patients in that setting. And so it was the ‘stay at home’ message, but what we hoped was that it wouldn’t also be a ‘please do not contact us’ message, but in fact that’s what happened.”

Baddock said people had stopped going to the GP for fear of getting Covid-19 or because they didn’t want to burden their doctors. That has led to a serious gap in revenue for many practices, which supplement the capitation payments they receive from the Government with copayments from patients.

Other health businesses are also struggling with decreased patronage. 

“For community pharmacies to continue performing their vital role for patients, it is critical to ensure that the sector has ongoing stability and financial sustainability during these extraordinary times and into the future,” Andrew Gaudin, CEO of the Pharmacy Guild of New Zealand, told the select committee.

“Community pharmacy was already under significant pressure before Covid-19, with professional workforce sustainability issues together with financial viability pressures. These challenges have been amplified and complicated by Covid-19. Put simply: Community pharmacy is on the front line of the Covid-19 response, but we haven’t been properly supported by the Ministry of Health and District Health Boards, whether that be sourcing the right personal protective equipment to keep our staff and our patients safe or ongoing financial support that recognises the cost pressures we are under.

“Our community pharmacies have incurred significant costs to make their pharmacies safe for their staff and the public while also seeing their sales and prescriptions fall significantly,” Gaudin said.

Disability support organisations have also struggled in the lockdown environment, despite being belatedly classed as essential workers and being able to perform their duties.

“The disability sector entered the pandemic already in the midst of well-documented and longstanding funding shortfalls. In the current circumstances, the cost of ensuring that an essential service such as these continues to provide safe and quality support for disabled people is significant. Now we have a significant proportion of providers who are financially exposed,” New Zealand Disability Support Network chief executive Garth Bennie told the committee.

“Some are already eyeing their next payroll with mounting anxiety and further undermining the resilience of an already financially stressed sector is bound to have impacts in terms of quality and safety.”

Dental practices are forbidden from engaging in non-essential work and must often secure their own PPE because they are generally not government-funded, New Zealand Dental Association president Katie Ayers told the select committee.

“The cost to purchase the PPE to treat just one patient is approximately $80. It’s not fair to expect patients to pay this surcharge on top of the fee for the emergency – ie, unplanned – treatment they require. Yet, dental practices cannot sustain this process either,” she said.

“Dentists working in their own businesses collectively employ 8000 to 10,000 support staff. Private dental practice is estimated to be a $1.8 billion industry and at present, less than 5 percent of dentists are providing even limited clinical services in their communities. The fact that dental practice has effectively ground to a halt is having a large and sustained effect on the New Zealand economy.

“While dental practices have essentially dropped to no income at all, payments still need to be made for staff wages, rent, hire purchases, registrations, insurance and so on. So, unlike the medical profession, which we understand has had a 50 percent drop in income, these small businesses have had no financial assistance from the Government other than the wage subsidy,” Ayers said.

“A survey of the financial impact on members undertaken three days ago found that more than half of members will have to borrow or refinance to ensure sustainability of their practice. While 60 percent of dentists were able to pay their March accounts, only one third are able to pay their current accounts and while 12 percent have already made staff reductions and redundancies, another 45 percent are expecting to do so in the very near future.

“Already, some dental practices are facing bankruptcy. When routine dentistry is allowed to recommence, some practices will not be able to reopen their doors.”

Ardern defends Government response

When faced with these concerns at her press conference on Wednesday afternoon, Prime Minister Jacinda Ardern defended the Government’s funding of community care organisations, pharmacies and general practices.

“What I’d point out for the likes of pharmacies, the likes of GPs, support has been provided to them,” she said.

“In fact, $45 million to date has gone into general practice to support them during the Covid response. That’s for everything from supporting the virtual consults they’ve been doing, for additional costs as a part of testing, and also they have been eligible for the wage subsidy. So, we have recognised the costs they’ve faced and we have worked hard to try and support them as well.”

However, many of the industry bodies that fronted the select committee expressed dissatisfaction with their interactions with Government over funding.

“While we are now involved in regular discussions with government officials, we have yet to see clear acknowledgment of the need for ongoing viability funding for community pharmacies,” Gaudin said.

“The challenge to keep community pharmacies open has not been addressed nearly urgently enough. Given the reduced revenues and increased costs they are facing, many community pharmacies could be forced to close, leaving communities without vital access to pharmacy services.

“It needs attention immediately. We thought it needed attention three weeks ago. We’re pulling our hair out.”

Bennie, who represented disability support groups, said they had received conflicting advice from the Ministry of Health.

“The Ministry advice was not to apply for wage and leave subsidies for the period covered by the Alert Level 4, where surety of contracted funding was provided, and that reimbursement for extra Covid-related costs would be provided, including the costs of backfilling staff who were stood down on paid leave,” he said.

“Many of our providers lost up to 30 percent of their staff when the Level 4 lockdown started due to the age of the workforce and their health profile. However, the process for and the timing of reimbursement for costs is still unknown. No money has gone out the door and leave subsidies cannot be paid retrospectively.

“Additional costs at Level 3 are likely to be similar to Level 4. There is no assurance of any funding for additional costs under the Alert Level 4 apart from the Government’s essential workers leave subsidy. The delays and confusion over reimbursement for additional costs under Alert Level 4 and the absence of any assistance under Alert Level 3, apart from the leave subsidy, is set to create significant financial difficulties for many providers.”

Even rest homes, which have seen stable income but an increase in costs, are unclear on how the Government will provide financial support.

“I think for us it’s not so much the drop in income but the increase in costs, above business as usual, that are most pressing for our industry at the moment. I would think [income is] pretty stable, but our cost base is much higher,” Simon Wallace, the chief executive of the New Zealand Aged Care Association, told the select committee.

“We have dealt with [the Government] cooperatively on our funding proposal, but unfortunately the details of that haven’t been communicated to us well. The $26 million that was announced on Saturday, we have no detail as to what that actually covers.”

Marc Daalder is a senior political reporter based in Wellington who covers climate change, health, energy and violent extremism. Twitter/Bluesky: @marcdaalder

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