Kiwis are clueless about healthcare costs

Saturday , 16 April 2016 by Aimee Bourke

Research by New Zealand health insurer Southern Cross Health Society has shown that many Kiwis are clueless about the costs of common surgeries.

What Kiwis think surgery costs:

15% think a knee replacement is $2,500 or less. 61% think a knee replacement is $10,000 or less

- It actually costs $20,600 - $29,100

23% think a cataract replacement is $1,000 or less.  44% think a cataract replacement is $2,000 or less

- It actually costs $2,700 - $4,600

40% think a tonsillectomy is $1,000 or less.  60% think a tonsillectomy is $2,000 or less

- It actually costs $3,200 - $4,300

28% think a hip replacement is $1,000 or less.  53% think a hip replacement is $10,000 or less

- It actually costs $19,600 - $27,900 

CEO Peter Tynan says, “With over half of elective surgeries being funded privately in New Zealand, either personally or through health insurance, it’s alarming that so few know what these procedures actually cost.

“I recently advised an elderly family member to shop around when paying for a single cataract procedure in Christchurch. Doing so saved her $1,600 – a lot of money for a pensioner.

“Paying 73% of the country’s health insurance claims, we know what elective surgical procedures cost and what’s most likely to be claimed for,” says Tynan.

Below are Southern Cross’ most common surgical procedures by volume, examples of what is paid to some non-contracted specialists and surgeons, and costs for common procedures.

Most common surgical procedures by volume in 2015

Skin biopsy and excision


Colonoscopy & Gastroscopy


Cataract removal


Tooth removal


Hip and knee replacement


Hysteroscopy & Hysterectomy




Examples of amounts paid in 2015 to individual doctors in private practice



Physician – internal medicine


Orthopaedic surgeon


Ear, nose and throat surgeon






Cardiac Surgeon


NB: These amounts are only income earned from Southern Cross, this doesn’t include income from other insurers, out-of-pocket patients, ACC, DHBs etc.

Tynan says, “These examples of amounts paid to doctors are on the higher end of the scale and may alarm some people but they also provide insight as to why medical procedures cost what they do. This is why we are so proactive in contracting with providers for agreed prices.

Contracted providers (Affiliated Providers) now account for 50% of Southern Cross’ claims costs and by participating in the Affiliated Provider programme, these providers help us manage claims inflation. For example, when contracting for colonoscopies was introduced in 2011, claims inflation fell from historic levels of around 7% to 1.7% in the last financial year. 

Tynan says, “This is especially important for more expensive procedures. An orthopaedic surgery like a knee replacement can cost almost $30,000. While this includes the expenses for consultations, the hospital stay, theatre and equipment, surgeon, anaesthetist, nurses, drugs and other overheads, I don’t think anyone will disagree that this is a significant sum of money.

The reality is, if you need such a procedure, living with immobility or pain is extremely limiting and if you don’t meet pain thresholds for the public waiting list, or have insurance, this is something you’ll end up paying for yourself. If that’s the case you’ll appreciate knowing how much you need to save.”