How to build a hospital without blowing the budget

Building major projects like hospitals on budget and in time requires maintaining a small number of key decision-makers and sticking to your original plans, according to Kaweka Health director Colin Hutchison.

Dr Hutchison spoke at the nib NZ Health Innovators’ Summit at the Northern Club in Auckland on Tuesday. He discussed some of the lessons he’d learned through his role in the development of Hastings’ Kaweka Hospital. The private hospital in Hawke’s Bay came with a $120-million price tag and was officially opened in July 2022. It includes five operating theatres, a radiology centre, inpatient beds and facilities for interventional cardiology.

The hospital’s team of surgical and non-surgical specialists offer ear, nose and throat, general surgery, gynaecology, urology, ophthalmology and gastroenterology services. The project was a joint venture between the facility’s specialists and management, along with local investors dedicated to improving healthcare in the region.

Dr Hutchison says they were able to keep the project on track and close to budget through shorter time frames, sticking to the original designs and not letting other people interfere in the project. Time is money with any development, he says, and with healthcare inflation running at 5 per cent or more, there’s little to no room for mission creep.

Maintaining a small team to drive the development is key and with Kaweka Hospital there were just four to six people tasked with decision-making, he says. “We’ve been really clear with professional teams about actually what we want, the prices that we can afford, and then we’ve held them to account on it.”

And that comes with greater responsibility.

“When Kaweka was $30 million over budget, it was my problem to solve and it was real money, it was my investors’ money, my banking partner’s money and I knew we were going to hit a point where we actually had to stop the project if we couldn’t solve that,” he says. “And that meant actually just getting around the table with the mechanical engineers and solving the problems.”

The facility is now home to 60 surgeons and anaesthetists and processes around 35,000 surgical patients a year and treats over 12,000 patients a year.

Dr Hutchison was asked at the conference for his thoughts on allegations private hospitals are guilty of cherry-picking easy operations – the low-risk, high-margin procedures – that have a quick turnaround and produce more profit, while leaving the complex surgery to the public system.

But Dr Hutchison says that wasn’t the motivation behind Kaweka Hospital.

“We actually designed it with critical care beds. We designed it with plenty of ward bed capacity so that we weren’t seen to be just doing easy day-stay operations, the high turnover, the cataracts, the arthroscopy, but actually we were there to support the broader needs of the community.”

Outsourcing elective surgery to the private sector is a growing market. Private hospitals providing surgery receive patients from four main sources: insurance companies; ACC; self-funded patients; or those outsourced from Health New Zealand Te Whatu Ora.

But there has been increased investment in the sector in the last couple of years and the ageing population is a key factor driving growth.

In 2023, Te Whatu Ora spent $317 million outsourcing surgeries – nearly double the $162 million spent in 2019, according to Deloitte. That accounts for 13 per cent of patients seen by private hospitals.

Published in NZ Doctor, Thursday 7 May 2026