The state drug-buying agency Pharmac has been put in charge of purchasing hospital medical devices such as gloves and gowns, in a bid to cut costs.
Health Minister Tony Ryall says $880 million was spent on 250,000 types of medical supplies last year - just over 6% of the total health budget of $14 billion.
The country's 20 district health boards are currently buying 24 different brands of gloves and 28 types of cauterising instruments for surgery.
Mr Ryall says Pharmac has a proven track record in keeping the cost of medicines and treatments low through bulk purchasing and he thinks it can do the same for medical equipment.
Savings of $9 million are expected in the first two years, increasing substantially after that.
The industry body representing the country's health insurers is supporting the move.
Health Funds Association chief executive Roger Styles says rising public health spending is unsustainable and anything aimed at reining it in is a good move.
He says there is an ageing population, rapidly increasing health care costs and every OECD country is grappling with fiscal imbalances in the public sector.
But Resident Doctors' Association national secretary Deborah Powell says buying medical devices is a complex process, and one size does not fit all.
She says when it comes to medical equipment, cheapest is not always best.
Dr Powell says it is important that clinical input is sought before equipment is bought.
