Prime Minister John Key announced the new system on Monday and said the aim was to improve health services.
DHBs were expected to make smarter use of the private sector than the previous government had.
"The basic ambition is to reduce waiting lists, make sure people get service more quickly, and better value for money," he said.
The changes have been made by altering the protocols that govern the way DHBs use the private sector.
Instead of being a last resort on costly short-term contracts -- often at the end of the year to reduce waiting lists -- DHBs will now be able to negotiate longer-term contracts, Key told reporters.
It was intended for private services to compliment, not replace, public ones.
Labour Leader Phil Goff said the last government had used the private sector, but there were dangers in large scale use.
"I think the difficulty you've got in regard to the use of the private sector is you are dealing with the same pool of people and the same pool of money," he told reporters.
"The Labour Government obviously used the private sector from time to time, but there is no magic solution in contracting out to the private sector for those services.
"You are simply taking staff away from the private sector, enticing them into the private sector if you do it on a grand scale."
Health Minister Tony Ryall gave an assurance the public health system would not be undermined.
"We are telling DHBs they are free to work more co-operatively with the private sector to complement their own services, provided the long-term viability of their resource and delivery is not undermined."
It was not about more money, but better use of existing money, he said.
Association of Salaried Medical Specialists executive director Ian Powell told Radio New Zealand it was a good idea in theory but posed serious risks.
Where clinical work had been contracted out to the private sector in the past the workforce had followed it there, possibly by reducing their hours worked in the public sector, he said.
The Public Health Association (PHA) said the Government was missing the point.
"Encouraging DHBs to enter into longer-term arrangements with private hospitals isn't dealing with the real issue," said PHA national executive officer Gay Keating.
"What we need to be doing is keeping people healthy, by sorting out little health problems before they become big problems.
"About one in five hospital beds is taken up with someone whose illness could have been prevented."
