Palmerston North's two private hospitals have taken another step towards merging.

The Commerce Commission granted approval for Southern Cross and Aorangi to join forces a year ago, after both argued that Palmerston North was not big enough to support both of them while they worked in competition.

They have now created an independent joint board to oversee their merger from August 1.

Aorangi Hospital chairman Jim Jefferies said the merger would create a stronger private health provider for the region, with advantages for both private and public patients.

“Many specialists and surgeons work both privately and in the public sector.

"Providing high quality private facilities will help in attracting specialists and surgeons to the area - and keeping them here,” he said.

The board will be chaired by Michael Ludbrook, a Manawatu businessman who was a former chairman of Waikato District Health Board and an acting chief executive of Te Manawa.

Aorangi general manager Lorna Grove has been appointed chief executive of the new partnership.

All other staff would transfer to the employment of the joint venture, and both hospitals would continue with business as usual at the two sites, said Mr Jefferies.

Southern Cross Hospitals chief executive Terry Moore said the merger would allow the two organisations to deliver the best possible private surgical services to the Palmerston North community in a sustainable way.

"Bringing our two businesses together will create cost efficiencies that will enable us to make a greater investment in new technology and surgical methods, giving local patients more options for their healthcare.”

Future decisions about investment in the hospitals, properties and equipment will be made by the joint board.

The two partners will continue to exist in their own right.

While Southern Cross is part of a national network owned by a charitable trust, Aorangi Hospital is owned and operated by local medical specialists.

- © Fairfax NZ News