It Does Matter To Patients Whether They Are Operated In A Public Or Private Hospital

Tuesday, 15 April 2025, 12:04 pm
Opinion: Ian Powell

On 7 March Minister of Health Simeon Brown made a major health announcement concerning Health New Zealand (Te Whatu Ora).

It had three main features –  partnering with the private sector in elective surgery, devolution and five health priorities.

I discussed this announcement in my Newsroom column (12 March) with a particular focus on Health New Zealand ‘partnering’ with private hospitals in elective (non-acute, planned) surgery:

This ‘partnering’ is in the form of outsourcing elective surgery to private hospitals which is a specific form of partial privatisation).

Outsourcing is not new to Aotearoa New Zealand’s public hospitals. However, the health minister’s announcement envisages a major extension of this controversial practice.

Summarising outsourcing risks

In summary my main points were:

• Increased reliance on outsourcing is a direct consequence of the conscious and avoidable rundown of public hospitals since the early to mid-2010s.
• Outsourcing is more expensive for the taxpayer. In contrast with public hospitals, private hospitals are businesses that are required to be profitable to survive. Public hospitals are funded at cost; private hospitals are funded at cost plus profit plus higher rates for private specialists engaged as independent contractors.
• Normalising outsourcing incentivises a move to a two-tier hospital system in which the harder and more stressful acute work is done publicly while the relatively easier, less complex (but attractively profitable) work is done privately.
• Generally surgeons perform best if they have a balance of acute and non-acute work. Normalising outsourcing risks upsetting the balance of surgeons’ work.
• The medical training of doctors is compromised by normalising outsourcing because it is best done in integrated public hospitals and is unprofitable in private hospitals.
• Extending outsourcing endangers, through its fragmentation, the highly integrated nature of public hospitals and the benefits for patients and cost-effectiveness that flow from it.
• The health minister’s aspiration depends on a non-existent parallel surgical workforce in the private sector readily available to pick up this additional work.
• Increasing outsourcing will incentivise more surgeons to reduce their time in public and increase it in private, thereby further contributing to the rundown of public hospitals.

Looking through a colonoscopy camera

Although not surgery Radio New Zealand’s Ruth Hill (8 April) reported on increasing colonoscopy wait times (ie, delayed diagnosis and treatment) which reinforces the above penultimate bullet point:

Colonoscopies are examinations through a long tube with a camera of the inside of large intestines, which includes the colon. They can detect whether there is bowel cancer and remove growths (polyps) which might be, or become, cancerous.

They are provided by gastroenterologists in public hospitals but, because of increasing demand, these procedures can be outsourced to the private health system. This was my recent personal (successful) experience. The private gastroenterologist also worked in the nearby public hospital.

Ruth Hill’s above-mentioned piece revealed that total colonoscopy wait times were increasing because of increasing demand. This was in no small part due to the overall workforce shortages in both public hospitals and private providers.

Spilling the beans

On 25 March Radio New Zealand’s flagship programme Morning Report covered another Ruth Hill item reporting that outsourcing was simply a pretence that hospital wait times were being fixed:

She focussed on Northland where 24 patients were set to get their long-awaited gynaecology operations through outsourcing.

Hill reported Dr David Bailey, Northland’s lead obstetrician & gynaecologist, noting that while this was good news for these patients, it would not fix the longstanding chronic underfunding and neglect of the public health service over many years.

Had that money been available over the last 12 months, we could have treated many more patients than they are going to do with this. This is a political move to make them look good.

Bailey revealed that his team had offered to do extra surgery sessions to help clear the backlog. But Health New Zealand would not pay for it. In his words: “We can’t actually run weekend lists because they are nitpicking about pay for theatre nurses.”

More revealing was his further observation than when surgery was outsourced, those most in need of treatment tended to miss out.

He was referring to the experience about 12 months earlier of the previous referral of Northland patients to a private hospital (in Auckland). Many were declined because they were “too complex”.

Dr Bailey concluded:

So they were already selecting those who were easiest to operate on. And then patients self-selected because a large proportion of them refused to travel.

Essentially it was disproportionately advantaging relatively well-off white women, rather than those who were most in need – who are typically people who live a long way from Auckland, north of Whangārei, who are our highest needs patients and also the most complex.

Dr Bailey also criticised the lack of transparency by Te Whatu Ora which had declined to tell him how much it was costing to send the 24 patients to a private hospital because that information was “commercially sensitive”.

Noting that the decision appeared to be “entirely ideological” and a “PR push”, he added that:

We know that this is costing a very large amount of money with no transparency….whereas we would do these procedures in the public hospital, maybe as additional lists on the weekend for a fraction of the money in theatres which are sitting unused.

Throwing large amounts of money to do small number of procedures in private to make your figures look better, to give the impression that you are improving on health targets, is fundamentally dishonest.

‘Ben’ there, done that, it failed

Again on Morning Report that same day as the above-mentioned observations of Dr David Bailey there was another incisive interview with a medical specialist, in this case a Nelson Hospital anaesthetist,  Dr Katie Ben: https://www.rnz.co.nz/national/programmes/morningreport/audio/2018980293/concerns-over-plans-to-outsource-procedures-to-private-sector  

Dr Ben is well-placed to comment. This is not just because she is the President of the Association of Salaried Specialists (ASMS).

Her early medical specialist career was in the National Health Service in England in the 2000s. This enabled her to critically observe a politically and ideologically driven adventure in outsourcing elective surgery with what were called ‘independent treatment centres’. They were privately owned.

Allowing for the obviously massive difference in scale, Dr Ben’s experience and concerns rhymed with those of Dr Bailey.

They were also consistent with my own experience when working for ASMS. In my role I was able to discuss the issues with ‘think tanks’, medical academics and professional bodies on regular visits to the UK.

Health minister’s narrow health system lens

In response to concerns about the health minister’s above-mentioned announced intention to increase the partial privatisation of public planned surgery (7 March), he argued that patients were not concerned whether their publicly funded operation was undertaken in a public or private hospital.

When the question is framed as narrowly as this, then the answer will be consistent with the intended response. Of course, if limited to the procedure alone, then patients would not be concerned.

But framing the question in such a simplistic and misleading way leads to a simplistic and misleading diagnosis.

If you put the question in the context of why outsourcing is being promoted by government, however, you get an opposite response.

The prime driver behind the increasing dependence on outsourcing is the rundown of public hospitals.

The prime driver of this increasing dependence is the ideology of the health system’s political leadership.

Some rhetorical questions

Let’s introduce context in order to see what patients, along with their families and whanau, do care about:

• Do patients care about the rundown of public hospitals? Yes.
• Do patients care that outsourcing is more expensive for taxpayers because it has to be profitable to the private sector? Yes.
• Do patients care that outsourcing incentivises a move to a two-tier hospital system in which the harder and more stressful acute work is done publicly while the relatively easier, less complex (but attractively profitable) work is done privately? Yes.
• Do patients care  that normalising outsourcing risks upsetting the balance of surgeons’ work and, consequentially, wellbeing and skill maintenance? Yes.
• Do patients care that normalising outsourcing compromises the medical training of doctors? Yes.
• Do patients care that increasing outsourcing incentivises more surgeons to reduce their time in public hospitals and increase it in private hospitals? Yes.

Final observations

I received many pertinent responses to my above-mentioned Newsroom column. Two particularly struck me. One was a direct email from an obstetrics & gynaecological specialist colleague of Dr David Bailey:

One other point that isn’t raised with the “solution” of private surgical care is that the private sector only takes the “easy” cases – easy from either the anaesthetic or surgical viewpoint.  These are the very cases on which registrars learn and if they are taken away then so are their learning opportunities.  That means they won’t be able (or confident) when they finish their training, and so the service provided will be lessened.

The second was a published response from Professor Jackie Cumming (population health) at Victoria University:

Nice piece, Ian. The lack of real analysis relating to outsourcing in this decision is a huge problem. We know there is a major workforce shortage. We know surgeons work in both public and private sectors.

We know their income is higher in the private sector. So, if more work is sent to the private sector, the public sector will lose staff time to the private sector and will have to pay more to keep staff working in the public sector. Is the Minister going to monitor this?

Moreover, we need a well-functioning prioritisation process to make sure there is not an increase in waiting lists that then further encourages more services to be delivered privately.

Private hospitals are also not evenly distributed around the country so this policy will likely benefit those living in the main centres in particular. We need proper funding of our public system.

© Scoop Media

Ian Powell

Otaihanga Second Opinion is a regular health systems blog in New Zealand.

Ian Powell is the editor of the health systems blog 'Otaihanga Second Opinion.' He is also a columnist for New Zealand Doctor, occasional columnist for the Sunday Star Times, and contributor to the Victoria University hosted Democracy Project. For over 30 years , until December 2019, he was the Executive Director of Association of Salaried Medical Specialists, the union representing senior doctors and dentists in New Zealand.

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