The Government has approved changes to allow private hospitals to do more taxpayer-funded operations.
Prime Minister John Key says the rules have been changed to enable district health boards to negotiate long-term contracts with private hospitals.
Mr Key says the contracts can only proceed on the basis that they are not undermining services provided by district health boards.
The DHBs will also have to be able to guarantee elective surgery provided by private hospitals will be as safe as if it were done at public hospitals.
Mr Key says by negotiating long-term contracts, DHBs will be able to negotiate lower prices with private hospitals.
He says the previous Labour-led government also contracted to private hospitals but only as a last resort when it wanted to reduce hospital waiting lists.
That meant private hospitals were able to charge more for operations they performed.