Co-located Private Hospitals

For-Profit Hospitals:Entrenching inequity in healthcare

On July 5, 2007, the Health Services Executive approved six tenders for co-located hospitals on public hospital grounds –reducing, at least for the time being, the Government’s
original plan for eight. The case for the Government’s co-location policy rests on transferring over 900 private beds currently within public hospitals to private hospitals.

The need for addressing inadequate bed numbers is undeniable – especially in view of the Government’s failure to deliver the 3,000 newplaces for public patients within ten years as promised in the 2001Health Strategy. In November 2006, the Minister for Health and Children, Mary Harney, stated that 235 acute public
in patient hospital beds had been provided since 2001 – a figure far below expectations.
Indeed, it is shocking to learn that bed numbers in Ireland have been reduced by one third since the 1980s, from18,000 to 12,000, despite an increase in the population of 20% over the same period (Doctors Alliance for Better Public Healthcare). While improving capacity in the health care systemis an objective that all stake-holders support, delivery in an equitable and cost effectivemanner remains amatter of contention. The lack of specific information available on the tax incentive schemes for building private hospitals prior to 2004 makes it difficult to calculate the total costs to the Exchequer. Based on income tax returns for the tax year
2004, 37 claims for capital allowances were made, corresponding to€1.9million in tax forgone (as stated by the Minister for Finance, Brian Cowen, on February 7, 2007).
A report by Indecon consultants estimates that for the period 2001-2005 the State waived €23,278million in tax revenue under the support structure. Since annual relief applies at the rate of 15%for the first six years and 10%in year 7, it is certainly clear that the Statewill continue to forfeit tax for a considerable period to come. The policy of promoting private healthcare essentially involves taxpayers subsidising investors to build private hospitals which operate primarily for private patients.

For-Profit Hospitals Entrenching inequity in healthcare

On July 5, 2007, the Health Services Executive approved six tenders for co-located hospitals on public hospital grounds – reducing, at least for the time being, the Government’s
original plan for eight. The case for the Government’s co-location policy rests on transferring over 900 private beds currently within public hospitals to private providers. Low- to middle-income households gain none of the benefits of private medicine because they cannot afford to pay: instead they are left to endure the inequitable effects of a two-tier system.For instance, under co-location, it can be assumed that the time spentwaiting in A&E will be minimised for private patients. But no such assurances can be given for public patients.
Access for public patients to private care through the National Purchase Treatment Fund is limited: not all treatments are covered and the exercise is a costly diversion of funds which should be invested in services within public hospitals. A Canadian report published in 2004 comparing studies from a large number of countries found that costs associated with care in private hospitals typically prove to be much higher than not-forprofit care. Another study in America linked high medical insurance charges to the expansion of private facilities (Tussing, D.&Wren,M., How Ireland Cares). Handing over the delivery of hospital care to profit-driven ventures amounts to turning public health into a commodity, leaving patients’ welfare conditional on whether they can afford treatment rather than whether they need care. Both private and public patients are left worse off: The former paying high premiums and the latter inadequately serviced. This approach also contravenes fundamental principles of human dignity, solidarity and equity. In addition, the eligibility conditions for availing of capital allowances suggest that private hospitalsmay not evenwork in favour of private patients. The tax incentive scheme for the investors is structured in such a way that
tax allowances are first set against rental income. Any remaining balance can be offset against other income, up to a limit of €31,750. So it is in the interest of a financier to exhaust as much entitlement as possible through rental income in order to sidestep the threshold applicable to non-rental income. So the scheme may, therefore, bebiased towards stimulating high rents – a cost likely to be passed on to patients in the form of expensive charges for consultations, procedures, in-patient treatment, etc. This has clear implicationsfor the cost of health insurance premiums to cover care. Alternatively, since the goal of the board of trustees or foundation operating a private hospital is to generate a profit, then failure to produce adequate returns is likely to result in cutting those services or procedures that do not generate high profits. Private hospitals cannot meet the needs of patients in a comprehensive way. With profit as their main motivation, forprofit private hospitals cherry pick the services they provide on the basis of money-making potential. Routine proceduresmay be financially attractive but more complicated operations – and especially those involving serious A&E trauma, multi-disciplinary care for chronic illness or long-termrehabilitation– as well as preventative health care strategies will not be catered for because they would represent a poor return on investments for private financiers. So private patientswithmore difficult health conditions will have to turn to public hospitals for more complex treatment. But this will be a public system struggling with increasingly inadequate resources as a result of the incoherent public health strategy pursued by the State. Indeed, the signing of six contracts for co-located hospitals in Dublin (St. James’s and Beaumont), Cork, Waterford, Sligo and Limerick fundamentally contradicts the 2003 Hanly report which recommended the consolidation and centralisation of health facilities of best practice. Instead of writing off tax for private services, the State could use those funds to finance regional centres of excellence, to modernise existing facilities and to expand community-based care across apublic health service which would benefit all. There remains an ideological argument: that the private sector is an efficient method of delivering healthcare services. But that assertion has never been proved.
Despite all their rhetoric, the advocates of this view have produced no evidence to show that private enterprise is the most effective means for delivering healthcare.Ultimately the issue
of providing adequate public healthcare is a matter of political will. The model of healthcare provision currently in place is unsatisfactory – both for public and private hospital users.
In effect, disjointed and unequal outcomes are institutionalised and promoted through the use of tax incentives for private development. The ultimate cost of division and unfairness within the health system will fall on society. Arewewilling to risk social cohesion as the price to pay?