When people in greater Auckland see their family doctor (or GP) with a problem that needs higher levels of care or treatment, they can be referred to a medical specialist or clinic at one of the public hospitals e.g. Auckland Hospital etc. The treatment people are given in a public hospital is free, anywhere in New Zealand.

People can also decide not to use the public health system and see a private medical specialist at a private hospital or private clinic for treatment instead. This is treatment you have to pay for and some people may have health insurance to pay for this. We know that some people without health insurance still choose to have private treatment and pay the full costs themselves.

At present, public health money is paying for all laboratory tests, whether people are being treated privately or by the public health system. So even if you have surgery in a private hospital and the cost is being paid by your health insurance, public health money is paying for your private specialist referred laboratory tests. When public health money is used to pay for private specialist referred laboratory tests, this means that public services are affected as a result (i.e. if we are using public money to subsidise the private system then this money cannot be used for health services within the public health service).

If District Health Boards decide that privately referred laboratory tests are to be paid privately there are some potential impacts that we do not know the size of. These are:

• How many people who currently go privately would elect to wait for publicly funded treatment.
• How health insurers would change the insurance premiums you pay to cover the increased costs to them.
• What pricing changes the laboratories would apply to the privately referred testing as they would no longer be covered by the pricing agreements with DHBs.

As a result of the unknowns listed above we are not able to advise you on the potential cost impacts to those patients who do decide to go privately if DHBs withdraw this funding. However, in Wellington where this policy has bene introduced patients are paying an average of $16 per test. Additionally the DHBs are unable to provide advice on what if any impacts a change such as this would have on health outcomes as we do not have any information on the potential changes in behaviour is seeking private treatment.

District Health Boards do currently, and intend to continue with, the payment of other health services when patients seek private treatment. One example is that the cost to patients for medications is the same irrespective of where treatment is prescribed.

The withdrawal of funding for privately referred laboratory tests would see some immediate decrease in the amount of money spent in this area. The level of referrals from private practice is estimated at approximately 8% of all referrals. This is equal to approximately $5 million of the current spend. The Auckland Region District Health Boards expectation is that if a policy of not funding privately requested tests is introduced then a saving of more than $2.5 million will be achieved.