The entire health and disability system will be reviewed, with the District Health Board system coming under the spotlight.
The terms of reference for the review say the current system has a "complex mix of governance, ownership, business and accountability models and arrangements".
"This complexity can get in the way of ensuring public money is spent to invest in, and provide healthcare to the public in a coherent and smart way."
Health Minister David Clark, who announced the review today, has previously indicated he was keen for a "fresh" look at the way DHBs operate.
He said it would focus on primary care and preventative health as well as the hospital system.
"We need to face up to the fact that our health system does not deliver equally well for all. We know our Māori and Pacific peoples have worse health outcomes and shorter lives. That is something we simply cannot accept.
"We also need to get real about the impact of a growing and aging population, and the increase in chronic diseases like cancer and diabetes. Those issues in turn create pressure on services and the health workforce that need to be addressed for the long term sustainability of our public health service."
The review will be chaired by Heather Simpson, a former chief of staff to Helen Clark who has been working in Prime Minister Jacinda Ardern's office since Labour got back into Government.
David Clark said Simpson had a background in health economics.
However, the choice raised eyebrows among Opposition parties.
National's health spokesman Michael Woodhouse said such a significant review needed to be independent.
"The appointment of long-time Labour staff member Heather Simpson requires her to reassure the public that her actions will be free from party politics and that she will advocate on behalf of patients, healthcare workers, and the sector as a whole.
The review needs to be independent and work across party lines. In order to be worthwhile it must consider a range of views and approaches to achieve the best outcome for patients."
He said the measure of a successful health system was not the amount of money spent but the quality of care patients receive and urged Labour not to ignore the Health Strategy commissioned under National in 2016 on the strategy for the next 10 years.
Act leader David Seymour said the choice of Simpson showed it was a "political exercise".
"There is no way that this review can deliver an objective and impartial view of the problems facing our health system. It is a completely political exercise and will simply deliver whatever the Government wants it to."
He said despite health budgets increasing year after year, patient satisfaction, access to primary health care, and self-rated health were static or declining.
The review will provide an interim report by the end of July 2019 and a final report by January 31, 2020.