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Insights 11: 4 April 2025
Research Report: The Heart of Healthcare by Dr Prabani Wood
 
Newsroom: Dr Oliver Hartwich on German post-election absurdity
 
NZ Herald: Dr Eric Crampton on legalising grocery competition
Investing in primary care makes economic sense
Dr Prabani Wood | Research Fellow | prabani.wood@nzinitiative.org.nz
Health Minister Brown's primary care package takes aim at the country's critical GP shortage. He is right to be concerned. The economic consequences of our failing primary care system are as alarming as the health impacts.  
 
Your local GP practice is highly efficient at diagnosing, treating and managing health conditions and also preventing illnesses from occurring before they require expensive specialist intervention. Research abroad shows every dollar invested in primary care can save up to $13 in healthcare expenditure.  
 
Treating conditions early is less expensive than addressing them later. A minor infection treated by a GP costs a fraction of what sepsis requiring hospitalisation would cost.  
 
Lack of GP access forces patients to emergency departments, overwhelming them nationwide. An ED visit costs the health system around $650, compared to around $50 for a GP consultation, a financial haemorrhage hiding in plain sight.  
 
International studies show that for every additional ten GPs per 100,000 population, there are 40 fewer hospitalisations annually. This could save millions each year.  
 
"Continuity of care" – consistently seeing the same doctor – operates like any successful business relationship. The established trust and accumulated knowledge create remarkable efficiencies. Doctors avoid unnecessary test duplication, make quicker diagnoses, and improve treatment compliance. Patients with good continuity of care are 16% less likely to visit the emergency department.  
 
Break this relationship, and both health outcomes and economic benefits crumble.  

Former PM Sir Bill English's "Social Investment” philosophy fits perfectly here: invest early to avoid costly downstream consequences.  
 
While technology promises future efficiencies, many GP practices still use fax machines to transfer records. We cannot build a digital healthcare system on analog infrastructure. 
 
The fragmentation of health information systems has real costs: critical results get delayed, treatments duplicated, and errors occur. A patient-centred information system would yield substantial efficiency gains.  
 
The Government's focus on primary care is heading in the right direction, but these announcements are merely the opening chapter in a much longer story. Strengthening primary care is not just good medicine – it is good business.  
 
The return on investment could be extraordinary. But only if we get the fundamentals right. 
 
Dr Prabani Wood’s research report, The Heart of Healthcare, was published 3 April.
Breaking up is hard to do
Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz
The pendulum theory of politics suggests that policies often swing from one extreme to another without finding a balanced middle ground.

Consider New Zealand’s supermarkets.

Current regulations have made it near-impossible for new large-scale grocers to enter the New Zealand market.

Planning rules typically do not allow more than one supermarket in a centre, generally restrict the size of allowed supermarkets, and often require proof that any new supermarket would not compete too much with existing supermarkets.

If a potential entrant can find sites where they are in-theory allowed to build, getting permission can take months to years. And they will probably also have to deal with the Overseas Investment Office.

Is it surprising that people are not happy with the level of competition in grocery retail?

The solution is obvious.

Lift the de-facto ban on setting up a new supermarket chain.

Set a fast-track process that simultaneously, for however many sites are proposed, rezones the land, consents the buildings, and approves the investment.

Require it to decide within months, not years. And, ideally, let new supermarkets have apartment towers of potential customers above them.

That would be the happy place for the pendulum to stop.

It’s hard to stop that pendulum.

Over the weekend, Minister Willis signalled that ‘all options will be on the table’. She might force existing supermarkets to separate their wholesale and retail operations. She might also require them to sell stores to a new entrant at a price the government considers fair.

She asked potential entrants to tell her what they need.

Even if liberalising land use were enough on its own, entrants have been given a strong signal to demand that the government break up existing supermarkets. Doing so would very likely hurt consumers by increasing incumbent grocers’ costs and the prices they charge their customers. Companies often like regulations that increase their rivals’ costs.

A break-up would be complex. One supermarket chain is a cooperative of independent stores sharing branding and wholesale. The government would force this chain to expel members, regardless of their wish to stay.

It would be like stripping a McDonald’s franchisee of their brand and telling them they had to sign up with Mojo.

It would be great if a government that pretends to like property rights could consider a simple solution firmly grounded in property rights.

Stop the pendulum. Just let people build supermarkets.
A lucky signal
Dr James Kierstead | Research Fellow | james.kierstead@nzinitiative.org.nz
Struggling to think of a good topic for a humorous column this week, I unexpectedly got a major break when my name was – unbelievably – added to a Signal messaging group of top New Zealand government officials. 
      
The texts reveal the magnitude of some of the problems that New Zealand politicians have to deal with.

‘Can I say “marmite sandwiches” or is marmite too polarising?’ said one text from ‘CL’ to the group.

‘Maybe add an apple?’ added, appropriately, the ‘Health Minister’ account.

‘Sounds a bit paternalistic to me. Maybe suggest an apple or a banana and add that the kids should be free to choose,’ came the reply from ‘DS.’

‘We have to take a stand against the people forcing marmite down our throats!!’ added ‘Sir Winston,’ sadly too late.

But ‘Sir Winston’ began a new conversation soon afterwards. ‘200m long, 28m wide, rail decks… These things are going to be beasts!!’ There followed two ‘ship’ emojis.

At first I thought these might be two new badly-needed frigates for the Royal New Zealand Navy, but other texts soon made clear that these were the Cook Strait ferries.

‘And they’ll be designed to reduce carbon emissions!’ someone called PS chimed in, perhaps as a post-script.

‘1500 passengers, 2.4km of lanes for cars, trucks, and rail wagons…and they might even not break down!!’ ‘Sir Winston’ added.

But ‘DS’ wanted to discuss ‘this Paddy Gower thing’ instead. ‘Apparently the Intellectual Property Office turned down his request to make “Is This The F#$%ing News” a trademark.’

And a few moments later, ‘Well, not “Is This The F#$%ing News,” but you catch my drift, and we don’t want this to end up in a New Zealand Initiative Insights
column or something…’

That only got one reply, from ‘Sir Winston.’ ‘Sorry David, but is this the f#$%ing news??’

And it will indubitably be a major news story now after the whole chat history was made available to me, apparently in the belief that I was James Meager.

What have we learnt from this sensational spill? Well, maybe not much. But in a way, the question Sir Winston asked was the right one.

New Zealand’s politicians have some serious decisions ahead of them (let’s not forget those frigates, for one). But comparing this Signal spill with a more dramatic recent leak is a healthy reminder that whatever the problems we face, we still live in a country that isn’t bombing rebels, eyeing up anyone for annexation, or weighing up threats to its democracy.

And maybe, every now and then, we should take that as a lucky signal.
 
On The Record

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