Investing in primary care makes economic sense

Insights Newsletter
4 April, 2025

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.

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