Concern with the social welfare implications of dual (public and private) hospital systems has grown over the last decade as national commitments to welfare state ideals have wavered in the continuing atmosphere of fiscal conservatism that has permeated through western democracies. New Zealand provides an excellent example of a health care system in which private hospitals have survived (and recently flourished) alongside those provided by the state. Following a brief survey of the evolution of the New Zealand hospital system, variations in the 'mix' of public and private hospitals are described at the (regional) Hospital Board District level. It is noted that competition for patients and funding between the public and private sectors occurs almost exclusively in the larger, urban hospital districts, and is invariably to the detriment of public hospitals. Districts with a substantial private hospital presence are found to have fewer resources in the public sector (relative to their population) than those which have few or no private hospitals. The welfare implications of this situation are explored. It is proposed that the maintenance of a dual hospital system in New Zealand has provided, in some parts of the country at least, a 'choice' for those able to afford private hospital charges or insurance coverage, but at the expense of those dependent solely upon a (shrinking) public sector.