Health NZ sending more eye operations to private sector under long-term contracts

Source: Radio New Zealand

Health NZ (HNZ) is sending more eye operations to the private sector under longer-term contracts without first working out how much that is likely to save compared to short-term outsourcing.

It is moving to set up a “panel” of private providers of ophthalmology it can draw on, though it does not appear to be using all options to boost public care.

One option was for more weekend and evening surgeries in public hospitals.

“Health NZ has not added more evening and weekend operating theatre sessions for ophthalmology,” it told RNZ this week.

Also, it had aimed to add more types of surgery at hospitals in Auckland and Christchurch; however, asked by RNZ if it had added ophthalmology, it did not say.

The tender for the panel has just closed.

The tender said the country’s four health regions could not meet demand for eye care so it would outsource some of the work for five years to start with, with a further five-year right of renewal.

Other related “commitment” contracts would be three years long.

HNZ said the panel would not set a volume for outsourced surgery and more complex procedures would usually still be done in public hospitals.

A coalition of health sector organisations, Kaitiaki Hauora, accused it of going further than ever towards privatisation.

“If the public system is struggling, the answer should be to rebuild it, not hand more of it over,” the group said.

HNZ’s director of hospitals funding Rachel Haggerty pushed back.

“There has been no decrease in public hospital provision for elective treatments in ophthalmology, rather outsourcing has enabled Health NZ to treat the unmet needs of our patients requiring elective treatment intervention. This in part is reflective of our aging population growth,” she said in a statement.

Health NZ already had a mini ophthalmology panel in Auckland and Northland of eight private clinics on three-year contract terms, a table released to RNZ by HNZ showed.

It also had panels set up for outsourcing “surgical”, radiology, endoscopy and cardio procedures, among the 16 clinical specialities.

The five-year duration of the new ophthalmology panel would deliver “better value for money through stronger commercial leverage”, Haggerty said.

Yet when asked if the agency had analysed how much the long-term deals might save compared to the short-term ones, she said no.

“Health NZ has not completed a standalone analysis quantifying savings from longer-term versus previous short-term outsourcing contracts, including for ophthalmology,” Haggerty said.

“This work is currently in the planning stage.”

The agency’s savings programme was among the areas ranked weakest in a recent report to a committee working to decentralise Health NZ.

Outsourcing hits 19 percent

The share of outsourced elective procedures versus those done in public hospitals had climbed steadily, from 8.6 percent of public-funded treatments in 2011-12, to 12.5 percent halfway through the Labour-led government’s term in 2020, to 16.7 percent in 2023-24.

The government’s introduction of its ‘Elective Boost’ policy last year would likely push that share higher.

The boost was an attempt to hit a target of 95 percent of patients getting their elective surgery within four months.

HNZ told Health Minister Simeon Brown last year hitting that would take two things: more outsourcing and more insourcing.

For the latter, to increase operations in public hospitals required “better use” of the country’s newest surgical hospital Tōtara Haumaru, which had a delayed start in 2024 due to staff shortages, and also of Burwood “by expanding the elective treatments they are funded to provide”.

Asked if it had done this, Haggerty said, “Service additions at individual facilities (including Tōtara Haumaru, Manukau Health Park, and Burwood) are set regionally based on workforce, theatre capacity, and demand.

“Any ophthalmology expansion is coordinated with national clinical and capacity planning.”

She did not make clear what if any speciality procedures had been added where.

In Waitematā, she said, ophthalmology procedures increased from about 19 a month before April 2025 to about 125 a month now in public facilities.

As for the second must-have – more outsourcing – Brown was told this demanded setting up longer-term agreements such as of two-to-three years.

HNZ told RNZ the longer terms provided more certainty for patients and clinics and a more stable market to build a workforce and infrastructure plus better commercial leverage.

It told Brown last year the main risks to upping volumes both in- and out- sourced were around how to increase the availability of senior specialists and still safely manage public hospital clinical workloads; and that the private workforce might be “insufficient” to take on the extra work.

Health commentator Ian Powell, who used to head the senior doctors’ union, said in a column the new panel plan would hit the reality of ophthalmology’s small number of clinics that faced huge technology costs to set up.

There were only 175 ophthalmogists countrywide, 85 of those primarily in private clinics, Powell said. “Already stretched, it is unlikely that there is the workforce capacity.”

Ophthalmology elective treatments had risen from 23,000 five years ago to 31,600 last year, said Health NZ. Five years ago, about 7700 were outsourced, versus 11,600 now with several months yet to run in the financial year.

Kaitiaki Hauora contended the panel tender signalled a clear shift to privatisation.

Its chair – and ex-chair of HNZ – Rob Campbell – said the move was qualitatively and quantitatively “significant” for community eye-health.

He called the panel a case of “contract fishing … cast it out and see what we catch. It is very dangerous as the bidder can start to control the process”.

Haggerty said outsourcing was a long-standing part of planned care.

“Volumes are managed so outsourcing complements public services, improves access, and supports elective targets.”

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.

– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand