Privatisation is continuing to expand in Aotearoa New Zealand’s public hospitals, both in volume and scope.

Owing to the Government’s reluctance to use this ‘p’ word, it instead calls it ‘outsourcing’. However, few in the health system and public are fooled.

Privatisation through outsourcing

Privatisation is most associated with the Government’s plans to significantly increase outsourcing of planned (elective, non-acute) procedures (usually surgical) to private hospitals.

This outsourcing is at a greater cost to the health system and taxpayer because of the need for a sufficient profit margin.

Politicised rationale and leadership failure

The politicised rationale for this is the Government’s misleading health targets. I have previously discussed the problems of these targets in an earlier blog post (23 June) Health target politics and in Newsroom (18 August 2025) Minister places target on patients’ heads.

Health targets erroneously seen by Government as key to improving healthcare access

The Government has two health targets relevant to planned non-acute hospital procedures. They are:

1. 95% of patients wait less than four months for a first hospital specialist assessment of an accepted patient referral for further investigation which often leads to a planned procedure (many GP referrals are declined because of specialist staffing shortages; in some cases GPs don’t refer because they already know that it will be declined).
2. 95% of patients wait less than four months for planned treatment (following the first specialist assessment).

To date, this privatisation has applied to the second above health target; post-first specialist assessment treatment using the more costly and disruptive option of private hospitals.

Health workforce fatigue is an unsurprising consequence of severe shortages

What leads to (and is worsened by) this privatisation is the failure of the Government to invest in addressing both:

• the severe health professional workforce shortages (primarily but not exclusively specialists and nurses) in public hospitals; and
• since 2014 the rising number of acute hospital admissions, which can’t be deferred, has increasingly led to hospital overcrowding and reducing the workforce capacity to do planned procedures.

New direction for privatisation

However, on 25 July, senior investigative journalist Nikki Macdonald had a paywalled article published in The Post revealing an extension of privatisation to the first above-mentioned health target; first specialist assessments (FSAs): Farming out first specialist assessments to private sector.

Nikki Macdonald revealed extension of privatisation to public hospital first specialist to private specialists

Macdonald notes that at the time of writing 196,006 New Zealanders were waiting to their FSA following referral from their GPs for further investigation.

In the last quarter just 61% of these referrals were seen within that 95% within the four months target (65% for the full 2025-26 financial year).

Then she revealed that in a recent letter to a Canterbury orthopaedic patient, Health New Zealand said it was now paying private specialists to do “a limited number” of FSAs to reduce waiting times.

Health New Zealand confirmed to her that it was outsourcing FSAs to private specialists but would not:

… say where, in what specialties, how many, or at what cost, as that information was not held nationally. They instead referred the request to the formal Official Information Act process.

While Health New Zealand has delayed further investigation by choosing to consider her above request under the Official Information Act, information on the extent and specialties of outsourcing FSAs remains sparse.

It seems largely confined at this stage to ophthalmology, orthopaedics, and ear, nose and throat.

Pertinent observations

Dr Angus Chambers fears undermining of public hospitals

Nikki Macdonald reports pertinent observations by Christchurch GP and Chair of the General Practice Owners Association (GenPro) Dr Angus Chambers:

“GPs want their patients to be seen, so if it helps that you could argue that’s a good thing. But it’s also quite an indictment of our health system that we don’t have enough resource to provide what would be a basic level of care and specialty services.”

Chambers feared increasing moves to shift work to the private sector risked undermining the attractiveness of working in the public system.

“This is a band-aid, and we’re not really striving to get our system up and optimally running…Maybe it’s necessary in the short term, but from a longer term perspective, I feel like it’s putting our system at risk.”

Consistent with Dr Chambers above concerns, Macdonald also identified the risk of specialists reducing their time commitment in public hospitals in order to more higher paid work in the private sector.

As an aside, they can also escape some or all of the fatigue and burnout of working in public hospitals.

Health Minister Simeon Brown disregarded Health NZ’s advice on risks of outsourcing

Macdonald also referred to a February briefing paper to Health Minister Simeon Brown about Northland efforts to reduce waiting lists. It found that:

…outsourcing operations made it harder to find people to cover unplanned absences and extra surgical lists, and resulted in some doctors reducing their public hospital hours.

“A number of SMOs [senior doctors] have reduced their job size commitment to Health NZ to pick-up private work,“ the briefing noted.

Asked whether, given that experience, outsourcing was a sustainable strategy to deal with increasing demand in the public system, Health NZ failed to respond.

Undermining public hospitals

At one level outsourcing first specialist assessments might appear to be a pragmatic solution to a wait times problem. But this is only if one disregards both why we are in this situation and the consequential undermining of public hospitals.

For privatising either or both FSAs and the scheduled procedures that consequentially follow, it is necessary to allow through deliberate neglect the rundown of public hospital workforce capacity.

The less the rundown, the less the need to outsource and the less the private profit. Perversely the greater the rundown, the more the reverse applies.

Ideology is obsessively driving Government’s privatisation policy

It is not just that the Government’s policies are based on an ideological orientation towards the private sector. More so is the high level of obsessiveness over implementing this ideological position.

This ideological obsession is driven by the lack of health system experience in the political leadership of the system leading to an irrational position on the role of the narrowly focussed health targets that have limited effect on health system effectiveness and performance.

Dramatically increasing acute hospital admissions driving demand and cost

It also leads to the failure to address both the greatest driver of health demand and cost; increasing acute admissions and the severe workforce shortages.

Along with the wider health system, public hospitals require medium to long-term solution planning. However, the Government’s ideological obsessiveness leads to short-term (and consequently shortsighted) decision-making.

Privatising first specialist assessments is the latest example of this counterproductive trend.