Hospital laundry services will be overhauled along with production of patient meals in a bid to save millions of dollars, and job losses are not being ruled out.
The plan has been drawn up by Health Benefits Limited (HBL), a Government-owned organisation set up to find savings by reducing duplication and administration costs.
The organisation released two papers last week proposing changes to district health boards' food and laundry services.
A range of options to improve the laundry service were being considered "that might or might not include some outsourced opportunity", said HBL spokesman Mark Reynolds.
Job cuts were a possibility but no decisions have been made yet, he said.
"In any of our programmes, I'm not going to be cute and say there won't be any impact ... So yes, it is possible. Have we made any decisions, any recommendations to do with staff or any closures? No."
"We think there's great opportunity for everyone to work together, make some savings that can be delivered back into the health sector, so I'd say that's not a bad thing."
Hospital meals are also under review to reduce costs.
Health Benefits would sign a 15-year contract with one provider, with an estimated total saving of $100-$175 million.
Health Minister Tony Ryall confirmed there would be staffing cuts and didn't rule out closing or downsizing some of New Zealand's 39 hospital kitchens operated by 20 district health boards, but rejected Labour Party claims that the Government planned to close 50 hospital kitchens.
Mr Reynolds denied any jobs were confirmed as being lost.
"Right at this time HBL we remain open to how services should be delivered. No decisions on anything to do with staff or any closures."
The options being considered saw the majority of hospital food produced locally, he said.
Mr Reynolds said any changes would maintain or improve existing standards of quality and they were working with nutritionists to make sure all options meet national standards.
Mr Reynolds confirmed the sector was consulting staff and unions but said the process would take several months.
Compass already provides a third of health board meals, Spotless Services another third, and local providers the rest.
The preferred provider of meals is believed to be UK-based Compass Group.
In Parliament, Labour health spokeswoman Annette King told MPs the company was linked to the recent European horse meat scandal.
"It's going to be a UK multinational company which recently fed horse meat in their dinners."
