Ian Powell: Does private healthcare threaten public healthcare in New Zealand?

Ian Powell: Does private healthcare threaten public healthcare in New Zealand?

Is the private health system impacting negatively on the public health system? Health commentator Ian Powell evaluates a recent NZ Herald article by Natalie Akoorie (“Public v private healthcare: Moonlighting, skimming, duplication – should NZ do better”), and looks at how the dual system works, and concludes that the answer is a better-resourced public sector.


I got to know many health journalists in my over 30 years working for the Association of Salaried Medical Specialists. Among the most impressive was Hamilton based NZ Herald’s Natalie Akoorie.

Her reporting of the Nigel Murray disgrace at Waikato District Health Board was relentless. Her numerous articles always had a strong investigative empirical base written in the context of values including standards of conduct. What makes the quality of her health writing even more impressive was that she wasn’t even a health reporter although she had been in a previous life. Instead she was a general reporter and part-time to boot.

Now Akoorie has written an in-depth article under the online title Public v private healthcare: Moonlighting, skimming, duplication – should NZ do better. The article is well-written, the subject matter always timely, and important issues are brought out into the open. I disagree with some of the article’s assertions and definitely do with the implication of the heading but agree nevertheless that New Zealand could do much better.

Levering off Canada’s Supreme Court

She levers off a Canadian Supreme Court decision in a 4-year case rejecting an argument that efforts to expand private healthcare in British Columbia didn’t breach Canada’s statutory Charter of Rights and Freedoms.

The Court noted a strong connection between duplicative private healthcare and increasing waiting times in the public system and didn’t accept the argument that expanding private healthcare would free up stretched public resources. Interestingly an expert Court witness was New Zealand independent health policy consultant Dr Jacqueline Cumming.

The Akoorie article quotes Dunedin specialist surgeon and intensivist Mike Hunter who commends the Canadian decision for wider reading in New Zealand in respect of the effects of private healthcare on our public health system. He’s right. The decision can better inform our understanding of this relationship.

Canada’s two private healthcare systems

But there are important differences between private healthcare in Canada and New Zealand. In fact, Canada has two private healthcare systems. The first is within Canada. Its ability to expand is highly constrained. This goes to the heart of the Supreme Court decision. Canada’s health legislation is much more expressly supportive and protective of public healthcare than New Zealand’s. Private healthcare in New Zealand has much more relative scope to expand compared with Canada.

Canada’s second private healthcare system is across the border to the south – the United States. The large majority of Canadians live within close proximity to the border and, for many of those who can afford it, the largely private US health system is reasonably accessible.

The effect of these differences is that the effects of private healthcare on public healthcare in Canada are not necessarily the same as in New Zealand. Yes we should seriously consider Canada’s Supreme Court decision, but we should also be careful about comparing apples with oranges.


Natalie Akoorie cites New Zealand specialist gynaecologist Alison Barrett arguing that private healthcare damages public healthcare because specialists working in both systems are “moonlighting”. I disagree.

Moonlighting is a term usually used pejoratively. It generally means holding a second job (traditionally at night or weekends) and usually secretively. Give or take, around 60% of district health board specialists are employed full-time. Of the rest most also work privately in their own time.

This is not moonlighting. Instead It is transparent and expressly permissible in the national collective employment agreement covering DHB employed specialists. The right to work privately in their own time is protected providing that it doesn’t materially disadvantage the DHB.

Public healthcare props up private care

The journalist also brings former Deputy Director-General of Health Kathy Spencer, with a strong background in health policy, into the debate. She makes a valid point that the public system props up private healthcare in New Zealand. I’m conscious that it does by providing health professionals with their training, professional development (along with skill maintenance and enhancement), and greater capability and capacity to undertake more complex treatments.

The public system also provides unprofitable emergency medicine and intensive care that private hospitals depend on. In contrast, private healthcare is well-placed to ‘cherry pick’ less complex or urgent patients who can afford to pay either as they go or through private health insurance.

Private healthcare would struggle to survive without a good public system. However, this propping up and cherry-picking is more to do with New Zealand being a small country with a limited critical mass to sustain much more extensive private healthcare than deliberate design.

Health target for elective surgery

But Spencer is astray when she tries to argue that specialists working in both public and private healthcare contribute to the failure to achieve the official health target for elective services following first specialist assessments because of their control of waiting lists. Incidentally, this target is not an indicator of DHB performance. It is simply a target for what can be counted which is a small part of public healthcare.

My assessment is different from Spencer’s. If they ever did, it has been a long time since specialists were able to manipulate waiting lists and certainly not since the introduction of the current system of first specialist assessments. Any manipulation would be very much the exception and would risk dismissal. If anything the incentive has been for specialists to prioritise their patients higher in their first assessment in order to ensure that they can access the restricted public waiting list.

Public specialists who also work privately don’t have the power that Spencer suggests and, in my very pro-public experience, overwhelmingly they are committed to the public system.

There has been manipulation of the elective health target, however. There have been ‘virtual’ elective lists where patients undertaking non-elective procedures are coded as elective in order to meet the target. More complex theatre time-consuming procedures are ‘parked’ in order that quicker procedures to get the numbers up. Although these perverse outcomes haven’t been widespread, my experience is that they have been managerially driven through fear of punitive reaction.

The biggest reason why elective waiting times targets haven’t been achieved is the same reason why the 6-hour emergency department similarly hasn’t been. It is the increasing demand of acute patient admissions in recent years. Largely due to the combined effects of a growing and aging population, along with increasing poverty-related illnesses, acute admissions are increasing at a higher rate than the rate of population growth. Particularly with workforce shortage, acute admissions will, rightly so, always take priority over elective admissions.

In effect, the ability to work privately part-time assists the public system because of our recruitment and retention vulnerability. Many services, particularly surgical and diagnostic, would be unable to maintain current levels of provision without them.

Nevertheless our public hospitals would function more effectively if a greater proportion of our public specialist workforce was full-time. But to do this we need to have specialists salaries at a level where there isn’t a financial incentive to work privately. This doesn’t mean equivalent incomes because of the significant non-salary benefits of public employment. But salaries and other conditions should be negotiated at a level where this is achievable.

What’s the greatest threat

Coming back to the core question, is private healthcare a threat to public healthcare in New Zealand. My opinion is no but Natalie Akoorie has raised an important issue that deserves serious consideration.

The greatest threat is the rundown of the public system through a deadly combination of significant underfunding since 2009, increasing workforce shortages most evident for specialists (nearly 25%) and both fatigue and burnout, and increasing managerialism in decision-making at the expense of comprehensive clinical leadership. This enables opportunities for private healthcare to benefit. But this benefit is significantly restricted because of its own capacity limitations and because it is only for those who can afford it.

Rebuilding the capacity and capability of the health professional workforce and leadership culture in DHBs is what should be at the forefront of New Zealand’s health policy.


Ian Powell was formerly the Executive Director of the Association of Salaried Medical Specialists for over 30 years until December last year.  He is now a health commentator, editor of the blog ‘Otaihanga Second Opinion’, and based in Otaihanga on the Kapiti Coast.

This article can be republished under a Creative Commons CC BY-ND 4.0  license. Attributions should include a link to the Democracy Project.