NSW hospitals could perform an extra 20,000 operations a year if they were better managed, the auditor-general says.
Peter Achterstraat has called for a "tune up" of the state's public hospitals to ensure their annual $1.3 billion budget for elective surgery is maximised.
Releasing a report into NSW operating theatres on Wednesday, Mr Achterstraat said hospitals must ensure they carry out operations on schedule.
"Hospitals just need to start the first operations of the day on time, stay on time and reduce the numbers of cancellations," Mr Achterstraat said.
"Less than half the scheduled first operations started on time over the past three years.
"In some hospitals, less than 10 per cent of first operations start on time."
Mr Achterstraat said there was capacity to do more elective surgery using existing resources.
"If NSW Health met its own theatre utilisation targets for elective surgery, an estimated 20,000 more operations could be achieved each year," the Auditor-General said.
He also warned that waiting times for elective surgery would continue to increase unless NSW Health improved its management.
The problem in many hospitals is that it is not clear who is in charge, he said, adding many places would benefit from employing someone with "the same authority and skill as the matrons of the past".
"We just need to make sure someone is clearly in charge of each operating theatre and make sure operations start and stay on time.
Another problem was that over a quarter of theatre cases are non-surgical, such as endoscopies and colonoscopies, which "could be done in procedure rooms rather than using up valuable operating theatre time", he said.
On a positive side, Mr Achterstraat said NSW public hospitals are performing more elective surgery than in previous years and are treating patients substantially within national clinical time frames.