The Northern Beaches Hospital project is the O'Farrell government's test case for handing its responsibility to develop and run public hospitals to the private sector, Greens NSW MP John Kaye said.

The Frenchs Forest replacement for Mona Vale and Manly Hospitals is to be built, owned and operated by one of two private health companies bidding for the contract. Public clinical services will be paid for by the state government.

The Greens and the local community argue that the incursion of the private sector into public health will drive up costs and reduce the quality of service.

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