GPs in Otago and Southland are waiting with interest to see if a bid led by Murray Tilyard's Southern Clinical Network will be granted.
The sole existing PHO, WellSouth, is strongly resisting the change.
PHOs distribute money to GPs and formulate programmes designed to improve health.
Prof Tilyard said when contacted yesterday that Southern District Health Board commissioner Kathy Grant had decided to opt out of making the decision, referring it to a chairman of a different health board.
He said it was most likely because Cook Gallaway Allan carried out legal work for South Link Health Services, another entity led by Prof Tilyard.
Mrs Grant, appointed in June to oversee the health board, is married to Cook Gallaway Allan partner Stephen Grant, and she works as a legal consultant at the practice.
''South Link Health Services, purchaser of [medical] practices, use Cook Gallaway to do conveyancing work, so it's most probably that.''
Prof Tilyard said he felt positive about the hearing into the proposal last week, at which his group gave a presentation to a specially convened panel.
The panel will advise the person who makes the decision.
A new PHO would lead ''transformational change'' in community healthcare.
''We're not talking about another PHO doing the same things. Obviously, you've still got to do the basics.''
Southern was the only big health board with just one PHO.
WellSouth chief executive Ian Macara said he was confident Prof Tilyard's breakaway application would be turned down.
''A second PHO would potentially create inconsistencies and divisiveness in service delivery to patients.''
Most GP practices did not want a new PHO to set up, he said.
''We are very confident that our track record will stand up to any scrutiny.''
He said the PHO received a fair hearing before the panel, and had been able to explain its position and the work it was doing.
Mrs Grant could not be contacted.
