Running on the spot: lessons from a decade of health reform in New Zealand.

Over the past 10 years the New Zealand public health system has been the subject of major reforms. This paper describes these reforms and asks what real changes resulted from the decade of restructuring, and what general lessons might be learned from these experiences? The discussion contributes to the ongoing economic debate concerning the role of markets in the health sector. It also highlights some of the more practical issues and problems that are relevant for health policy makers. The New Zealand reforms have been costly, and yet any benefits appear to have been considerably less than expected, especially in terms of efficiency gains. Explanations for this include the possibility that the magnitude of potential efficiency gains had been overestimated, and that any incentives for improving efficiency were weakened by the particular institutional arrangements that were established. Some of the more interesting developments that have occurred in the service delivery area have emerged largely from unplanned responses to the reforms rather than by design. New Zealand's experiences illustrate that, unless due cognizance is taken of the norms and values of those working within a system, structural change is unlikely to bring about the expected responses, nor achieve the desired outcomes. Given the high cost of reform, incremental change, which aims to tackle specific issues, may be a more cost-effective means of securing the desired results.