Is Private Healthcare The Answer To Public Funding Woes, Or Making It Worse?

Tuesday, 18 February 2025, 9:45 pm
Article: RNZ

Ruth Hill, Reporter

• Private hospitals say they are reducing the burden on public system by doing 70% of elective surgeries
• Professor Robin Gauld says private providers are undermining public system by poaching staff and diverting resources
• Government and Health NZ say outsourcing to private hospitals is "pragmatic" way to reduce wait times in public system.

The burgeoning private healthcare industry claims its current building boom will "take pressure off the public system".

But critics say it is just sucking out resources and staff, and increasing inequities for New Zealanders without health insurance - or the cash - to "go private".

A Waikato bowel cancer patient - who first spoke to RNZ last year - spent her house deposit on private diagnosis and treatment, but saved herself about seven months' wait-time in the public system.

"Who knows what could have happened in that time? It would be horrible to think I could have had disease progression and it was just public health delays that meant I hadn't got on top of it sooner," she said.

"It's not a nice position to be in where there is that chance of disease progression, and you're faced with that choice of spending your savings, or borrowing, or waiting to see what would happen."

Having now finished her treatment in the public system, she and her husband are focused on the future.

"We're definitely on the backfoot in terms of savings, but grateful to be done."

Many patients like her face the same choice of waiting months for treatment in the public system - or "going private" and getting an appointment the next week, often with the same specialist.

Close to 70 percent of elective ops done in private hospitals

When it comes to elective surgery, private hospitals do the heavy-lifting - nearly 70 percent of procedures - about 224,000 a year.

Most have contracts with Health NZ and ACC: the number of publicly-funded operations in private hospitals doubled between 2016 and 2023.

Speaking at the opening of Wakefield Hospital's $185m redevelopment in Wellington last week, Aaron Hockly from Vital Healthcare Property - which owns the building - said the private sector "reduces the burden on public finances".

"A mixed private and public model like we have in NZ provides universal access to basic healthcare in public and private facilities, while also allowing individuals to opt for additional, potentially faster and more specialised care, in private ones."

Private sector undermining public access - professor

However, former Otago University Health Policy Professor Robin Gauld - now at Australia's Bond University - said there was no evidence that private healthcare increases capacity in the public system - in fact, the opposite is true.

"The studies that have been done in the past show that where there is increased access to private sector delivery there is actually less access to public sector."

Gauld said the boom in private healthcare was eroding the public system, firstly by poaching staff.

"Unless you're bring in a volume of specialists and theatre staff to ensure the whole system is able to improve it's capacity, it's a zero sum game."

Taxpayers were subsidising private providers, by paying the ongoing cost of upskilling part-time public specialists and providing emergency back-up, Gauld said.

A 2021 Otago study (based on data from 2013/14) found 2 percent of private patients had a subsequent admission to a public hospital within seven days, with an average cost of $2800 and $11.5m overall.

"If there's a cardiac event on an operating table, they will routinely be put in an ambulance and sent to the public sector, because they can't deal with it themselves."

That was one reason why private hospitals were usually built close to public ones.

Southern Cross Healthcare - which is not-for-profit - is due to open its own multi-million dollar upgrade of its Newtown site later this year, while developer Kumar Vasist has consent to build a 10,000sqm facility 400m north of Wellington Regional Hospital.

Gauld said the best way to ensure the private sector did not leech off the public system was to have a national health insurance, funded through a levy - like ACC.

"It's agnostic whether [the care is provided through] public or private - and everyone in the system is covered."

New Zealand Private Surgical Hospitals Association spokesperson Fiona Michel, chief executive of Braemar Private Surgical Hospital in Hamilton, said direct transfers to public hospitals were rare, "about five in 1000 patients" (0.5 percent).

"The fact that they might start in a private hospital does not take away their right to also have public treatment when the nature of their condition requires that public support.

"Private hospitals are not there to do end-to-end health."

If specialists were restricted to working solely in the public system, they would leave New Zealand, warned Michel.

"The public sector cannot pay clinicians the level of payment that perhaps many of them will need to have the lifestyle they expect.

"The offset to that is that when they provide all that good work to the public at a particular rate, they have the ability to augment that by providing private services as well."

In the Waikato region, the private system had played a big role in reducing wait lists for cardiac surgery and its charitable work with children has seen public wait lists halved in the last year, she said.

"So the evidence comes typically not because of anything we say, but the public system itself advises that it's made a difference to their waiting lists and the turnaround that their patients are getting."

Health NZ deputy chief executive Robyn Shearer said public-private partnerships were a "pragmatic" way to meet the government's wait time targets.

"At the moment the public system isn't able to meet the need, so this is a great solution for us."

© Scoop Media

RNZ

New Zealand's public broadcaster, providing comprehensive NZ news and current affairs, specialist audio features and documentaries.

Radio New Zealand is a Crown entity established under the Radio New Zealand Act 1995. Radio New Zealand News are vital elements in our programming, providing impartial news and information to New Zealanders every day. Radio New Zealand (RNZ) provides listeners with exciting and independent radio programmes in accordance with the Radio New Zealand Charter.

Contact RNZ

• Website - www.radionz.co.nz
• Twitter - @rnz_news
• Facebook
• Link - Contact RNZ