Is outsourcing value for money?

NZ Herald 3 November 2026

An internal Health New Zealand Te Whatu Ora briefing shows the agency isn’t sure whether the Government’s push to do more surgeries in private is a good use of taxpayer money.

The July briefing to the Health NZ board, obtained by the Association of Salaried Medical Specialists and provided to the Herald, also warned the expansion of surgeries done in private could see the loss of senior doctors from public hospitals.

The Government has set a target that by 2030, 95% of patients will get their elective surgery within four months.

Information obtained by the Herald under an Official Information Act (OIA) request shows the number of private providers getting Health NZ contracts to do procedures in private has more than doubled since early last year.

Just over 33,000 surgical procedures were outsourced to 78 private health providers in the first nine months of this year, the Herald’s data revealed.

Official information obtained by the Herald shows which clinics and hospitals are performing the most private procedures.

The figures also give an insight into which private clinics and hospital chains are benefiting most from the Government’s push to get surgeries done quicker.

The Remuera Eye Clinic Day Surgery and Laser Centre, which is now called the Eye Institute, topped the list with 1604 procedures in the nine-month period. Nationally, Southern Cross hospitals delivered 19.6% of all outsourced surgical procedures – about one in every five.

Southern Cross Healthcare is one of the big players that the Government recently signed long-term contracts with to tackle a backlog of patients needing orthopaedic surgery.

Counties Manukau – an area of significant population and health need – outsourced the most surgeries, with 3990 procedures done since January.

Bay of Plenty outsourced more procedures than some busy metro areas including Auckland city, Waikato and Christchurch.

Health NZ told the Herald the higher level of outsourcing in Bay of Plenty is largely because all ophthalmology in the region is outsourced.

“Unlike Auckland and Waikato, the Bay of Plenty does not have an internal ophthalmology service”, Health NZ director of procurement, supply chain and health technology management, Andy Windsor, told the Herald.

The Association of Salaried Medical Specialists (ASMS) is concerned the ramping-up of outsourcing to private providers has come at the expense of infrastructure and workforce investment in public hospitals.

ASMS senior policy and research adviser Virginia Mills told the Herald any money spent outsourcing to private providers was cash that could be invested to make public systems stronger.

Association of Salaried Medical Specialists senior policy and research advisor Virginia Mills says money spent outsourcing to private is cash that could be invested in public hospitals.

“It’s our public system that provides our emergency departments and our intensive care units. It’s our public system that’s going to look after patients who’ve got long-term conditions like diabetes and heart disease, whereas the private system takes those cases that are much simpler and more straightforward,” she said.

She said the move to do more procedures in private isn’t supported by evidence that it’s a good idea.

A briefing to the Health NZ board from July this year, authored by Health NZ’s director of hospital funding, Rachel Haggarty, urged caution amid the Government’s drive to hit its 2030 elective surgery targets.

Risks outlined in the briefing included a “migration of senior doctors” from the public sector, reduced public training capacity and the “perceived diversion” of operational resources that could be invested in public hospitals.

These are “key considerations we need to have”, Haggarty said in the briefing.

The briefing revealed Health Minister Simeon Brown wanted advice to further increase private outsourcing to 50,000 treatments annually – a suggestion the briefing advised against.

It said: “No additional changes to outsourcing is currently recommended.”

The Herald asked the minister why he wanted advice on further increasing outsourcing and what he made of Health NZ’s views on the issue.

A spokesperson for Brown told the Herald the Minister asking officials for advice is part of normal process.

“Asking for advice on an option is not the same as having decided on it, and nothing in this document sets out the Minister’s views,” she said.

The briefing also showed there was uncertainty about whether paying for more work in private was a sound investment. It compared the costs of doing surgeries in private versus public, but the breakdown came with a note of caution.

“Price comparison provides some insight but is not enough to assess value for public investment. It doesn’t take account of patient outcomes, or availability of the appropriate facility and workforce to guarantee timely care,” the briefing said.

Mills said that admission was concerning given the vast increases in spending on private health that had already been confirmed.

“We don’t know if we’re getting good value for money and neither does Health New Zealand.”

The Minister’s spokeswoman said Health NZ was responsible for delivering the planned care target, and how it does that, including the balance between public and private delivery, is an operational matter for the agency.

The Herald sought a breakdown of the total cost of outsourcing surgery between January and September as part of its OIA, but Health NZ only provided costs for the months of July and August, which hit $160.7 million.

“The real problem is setting up these long-term contracts [with private providers], which will essentially bake in our reliance on the private system at the same time as undermining the services that we can provide in public,” Mills said.

Health NZ said ensuring value for money was at the forefront of the agency’s approach.

“Health NZ is focused on using public funds responsibly to improve access to care and lift health outcomes for New Zealanders. Our priority is always maximising value and giving the best care to patients, regardless of who is providing the service,” Windsor said.

The New Zealand Private Surgical Hospitals Association (NZPSHA) said the expansion of outsourcing had not so far seen specialists reduce public hospital duties.

“A typical time allocation for a surgeon is 70% public, 30% private. We are not hearing about any significant changes to that long-standing model,” NZPSHA chief executive Chris Roberts said.

Another key concern about the increased prevalence of private surgery is the loss of training opportunities.

The surgeries being done in private are generally routine procedures, like hip and knee operations or hernias – high-volume surgeries that are essential for training for the next generation of specialists.

Roberts said there is a training agreement in place for orthopaedics but that wasn’t the case for other specialities.

“I’ve talked with other associations – general surgery, plastics, ears, nose and throat – who want to put in place similar agreements. Our hospitals are very open to that, but we can’t get Health NZ to engage,” he claimed.

Health NZ has been approached for comment on Roberts’ concerns but the agency is yet to respond.

Southern Cross Healthcare chief executive Chris White said public and private partnerships made the best use of existing healthcare capacity.

“Most importantly, they help more New Zealanders receive timely treatment and achieve their health outcomes sooner,” he said.

Southern Cross Hospital Christchurch ranked second in the Herald’s OIA for the number of procedures in the past nine months – performing 1561 procedures.

White said the company’s Christchurch hospital was one of the biggest in the country.

“It is well placed to provide additional capacity when demand in the public system is high or there are capacity constraints.”

Brown said reducing wait times for elective surgery is a key priority for National, and significant progress has been made to cut wait times.

He said he’d had positive feedback from those who got their operations done in private as part of the Government’s initiatives.

“Not one [patient] has ever told me they’d rather have stayed on the waiting list for a public hospital,” he said.