The benefits and risks of DHBs contracting out elective procedures to private providers

A key plank of the New Zealand National Party's health policy is to "Support the smart use of the private sector to increase the number of people getting timely access to vitally needed surgery, and reduce hospital waiting lists". This policy raises a number of questions. These include: How do the two sectors compare with respect to the efficiency of elective surgical services? What effects might increasing private provision have on public hospitals? What impact might the policy have on access to care and equity amongst population groups? What are the effects of different methods of setting prices? This paper reviews both the theory and evidence about these and other questions related to the mix of public and private providers of surgical services in a publicly funded health system. It is concluded that the policy has some potential benefits but also carries a number of risks. If the policy is to be successful, the district health boards (DHBs) will need to be alert to these potential risks and be prepared with strategies to mitigate them.