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Should Public System Pay for Private Lab Tests?

Media Release

21 October, 2005

Should Public System Pay for Private Laboratory Tests?

Should the public health system be paying for the laboratory tests of patients using the private health system?

That’s the question being asked by Capital & Coast and Hutt Valley DHBs, who are currently reviewing their contracts for community laboratory tests.

As in other parts of the country, both DHBs contract medical laboratories to provide tests for patients referred by GPs and midwives working in the community. Tests asked for by private hospitals or private specialists have also traditionally been paid for by the public system.

The two DHBs’ current contracts with laboratories expire in June 2006 and they are now asking medical laboratories in the region to put forward proposals for providing laboratory tests from then on.

As part of that process they’re consulting over the current practice of the public system paying for laboratory tests for patients using private health services.

Capital & Coast DHB’s director of integrated care, Martin Hefford, said the practice appeared to be an historical anomaly. “When people go to a private specialist the public system does not pay for any part of their care, except for their laboratory tests. We don’t pay for their surgery or their nursing care and if they have x-rays or other radiology tests such as a CT scan, we don’t pay for those, but we do pay for their laboratory tests,” Mr Hefford said. “We’re wondering if that is good use of public money.”

Private specialist laboratory tests cost the Capital & Coast and Hutt Valley DHBs more than $3 million last year. The average cost of a test is $10.

“Obviously there is a range of costs and some people may need a range of tests, so we’re consulting to see if there are instances where it might in fact be a good use of public money,” he said.

Mr Hefford said that if there was to be a change it would have no impact on primary health providers such as GPs and midwives, or patients in the public health system.


Should District Health Boards Pay for Private Patients to have Laboratory Tests?

Questions and Answers

- What do we mean by “private patients’ laboratory tests”?

When you see a private medical specialist, a private clinic or hospital, laboratory tests are sometimes ordered as part of your treatment.

- Who pays for those tests?

The public health system pays through the local district health board (DHB).

- Why is that?

This is the way it has always been. At present we (Capital & Coast DHB and Hutt Valley DHB) are wondering if it is the best use of public health funds. That’s why we’re going through this consultation process, to see if people think it is a good use of public health money and if there are reasons why we should continue to pay.

- Have you already made a decision?

No, we haven’t. This is an option we are exploring and we need more information to understand whether or not we should change the way these laboratory tests are paid for. We want people to have a say, because it would be an important change and we wouldn’t want to get it wrong. We’ve sent information about the option out to specialist groups, individual specialists, private hospital owners and groups or individuals that represent the public in various ways. We want to hear from them before we make a decision.

- What exactly is the proposal?

We contract community laboratories to provide tests for a range of health professionals such as GPs and private medical specialists. The current contract is running out and will finish at the end of June 2006. We’re asking local laboratories to tender to provide test after June 2006. However, we’re thinking about excluding tests for private patients from that process. That would mean that when a private hospital or private medical specialist orders a test from the laboratory, the bill will go back to the specialist or private hospital, rather than to the local DHB.

We would also like to hear whether people think we should vary that option – for instance there may be some tests that should always be free, or it may be appropriate to only charge part of the cost of a lab test.

- Is there any reason why private patients should pay?
Historically, there has been a clear separation between the public and private systems in New Zealand. Private patients have always paid for other types of tests, such as x-rays. However, laboratory tests for private patients have been paid for by the public health system. We think this is an anomaly and we’re wondering if it should be changed. We think that most people are unaware that the public system is picking up part of their private healthcare bill.

- How many people would be affected if there is a change?
The information we gather tells us that last year the total number of laboratory tests for private patients was about 436,000. However doctors sometimes need to order more than one test for a patient, so we can’t be sure how many patients required those tests. That means we can’t tell how many people would be affected if we decided to make the change we are considering.

- Will health insurance premiums go up?
We can’t answer that question. It’s something for insurance companies to consider. However, we estimate that the average cost of a laboratory test is around $10, so we think it would be a very small proportion of the total cost of private health care.

- Would some laboratory tests continue to be paid for by the public health system?
The public health system will continue to pay for some tests, eg tests that are ordered when you see your family doctor (or GP), a midwife, or any part of treatment provided by the public health system. We want to know whether there are other tests that should always be paid for by the public health system.

- But aren’t GPs or family doctors part of the private health system?
It is usually a through a visit to the GP that people enter the public health system. We think they are the backbone of our health system and we want to make it as easy as possible for people to see a GP when they need to. The government also works towards this by subsidising GP care. If people need treatment beyond what a GP can give, they get it through the public health system or they can choose to use the private health system, in which case they pay for that service.

- But many people use private health because they have to wait too long in the public system.

This is one of the reasons why it is important to make sure we are using public health dollars in the best way we can. Tests for private patients cost the Capital & Coast and Hutt Valley DHBs more than $3 million each year. This is a significant amount which could go to address other health needs and provide a real boost to our public health services.

- Are some tests more expensive than $10 and do some conditions require more than one test?

Some tests are more expensive. The costs range from under $10 to more than $200 for very rare and complex tests. Also, some people have conditions that require them to have more than one test or to have tests at regular intervals. That’s why we’re having this consultation – we need to see if there are situations where it makes sense for the public health system to pay for the tests of private patients.

- If private patients have to pay for their laboratory tests, will that increase the wait for public health services?

The total cost of these tests for private patients is significant for the DHBs, but we think it is only a very small percentage of the total cost of private health care, so we don’t think it will be a major factor when people decide whether to use the private or public health systems.

- Why are the DHBs looking at this change now?
The current contract for laboratory tests will end shortly, so it seems a good time to look at this issue.

- Why would you make this change in Wellington and Hutt Valley when private patients wouldn’t have to pay in any other part of the country?
DHBs are expected to make the best use of health funding for the people in their district. We think it could be a wise decision for the health services we have to fund. Other DHBs have the same responsibilities and we’d expect that over time they would look at this issue too.

- What about tests for patients in the public health system?
Treatment for patients in the public health system is free, including any laboratory tests that are needed as part of their treatment. We are not considering any change to the public health system in this consultation. DHBs will continue to pay the costs of laboratory tests for these patients.

- Could private hospitals and clinics refer people back to their GP for lab tests?
It is possible that some medical specialists may advise the GP what investigations to do, rather than ordering them themselves. Sometimes this will be appropriate as it will ensure that GPs are kept informed about the ongoing care of their patients. However we don’t think that laboratory tests make up a significant proportion of private healthcare costs, so we don’t believe that private specialists will change the way they work if we decide not to pay for private patients to have laboratory tests. We are interested what people think of this possibility.

- Would any change include tests required for treatment after an accident or medical misadventure (ACC tests)?
These tests are paid for by an ACC levy that goes to the district health boards – so they will continue to be free.

- So if someone wants to have their say on this issue, what should they do?
People can send us their response to the issue until 5pm Friday 18 November 2005. You can fill in the attached form, write your own response, ask to present a verbal response or to meet with members of the project team.
Email us at, or post to Peri Te Wao, Planning & Funding, Capital & Coast DHB, Private Bag 7902, Wellington South. For further information contact 0800 999 442 and ask for Laboratory Consultation, or go to or

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