Costs are rising rapidly in New Zealand's health system without significant extra benefits, an OECD report warns.
It suggests the ownership of public hospitals be removed from district health boards in a bid to gain more efficiency.
The Organisation for Economic Co-operation and Development says primary health organisations are sorely in need of a purpose, and results so far from the $2 billion primary healthcare strategy are disappointing.
It says Pharmac needs more money and continued independence from Government.
Health Minister Tony Ryall says the Government has already started addressing weaknesses highlighted in the report, putting in place greater cooperation between district health boards and increasing the number of medical training places.
Mr Ryall says there will be funding in the Budget to address some issues, including enabling the drug buying agency Pharmac to fund more medicines.
However, he is ruling out changing the ownership of public hospitals, saying major structural upheaval would divert front-line medical staff from improving services for patients.
A resprentative of senior doctors has describing as ridiculous the suggestion that ownership of public hospitals should change.
Association for Salaried Medical Specialists executive director Ian Powell says it is ironic that a free-market group would suggest a plan that would increase bureacracy.
OECD warns NZ to watch spending
New Zealand cannot continue to spend its way out of recession, the OECD warns in the same report
The Paris-based club of rich nations says international investors could cut New Zealand adrift if debt levels are not brought under control.
Its report says New Zealand is one of the most indebted countries in the world, once government and household debt is taken into account.
The OECD says is this measure of a country's borrowings that international investors consider when making lending decisions.
However, the OECD believes the Government faces a difficult balancing act, as it risks a deeper recession and bigger deficits by clamping down on government spending too hastily.
