New research from Massey University shows smaller hospitals "seem to selectively treat" patients with complicated health conditions in order to benefit from population-based funding.
School of Economics and Finance student Dr Somi Shin examined the impact of the 2003 health system reforms for her doctoral research, which saw population-based funding applied.
Shin found non-tertiary hospitals once routinely transferred the most complex cases to specialists at tertiary hospitals.
But since the reforms were introduced, smaller hospitals became more likely to keep their complex cases to avoid paying for treatment that occurred at another hospital.
"What this means is that sicker patients are less likely to be transferred since the health system reform in 2003," she said. "We think that is because the new system gives non-tertiary district health boards incentives to keep patients in their districts to retain the funds.
"If you transfer patients, you have to pay the other provider for the treatment from the funds you received."
Palmerston North Hospital is a provider of secondary and primary care, and some lower level tertiary services.
However, Shin found people with higher mortality rates were still transferred, "so non-tertiary district health boards seem to selectively treat severe but non-fatal cases".
She found that larger hospitals were being under-funded because the population-based funding formula does not directly reimburse providers for the complexity or volume of cases they receive.
- Manawatu Standard
Will the bus shelter walkway planned for The Square be ready by the end of June?Related story: Covered walkway for Palmerston North bus users by winter