Dáil Éireann Debate, Wednesday - 23 June 2004
64 Dr. Twomey asked the Minister for Finance if his Department’s attention has been drawn to the new private hospitals being built by investors availing of current tax relief; and his views on the current situation whereby 30% of publicly funded beds are used by privately insured patients who essentially contribute a second time to the funding of these hospitals. [18560/04]
View answerIn Finance Act 2001 I provided for a scheme of capital allowances in respect of capital expenditure incurred on the construction or refurbishment of buildings used as private hospitals. This legislation was amended in Finance Act 2002 following consultations with the EU Commission from a state aid perspective. In order to qualify for the allowances, the hospital must have the capacity to afford medical or surgical services all year round. It must provide a minimum of 70 in-patient beds, out-patient services, operating theatres and on-site diagnostic and therapeutic services and have facilities to provide at least five specialist services, ranging from accident and emergency to oncology and cardiology etc. While the hospital will provide services to those patients with private health insurance, 20% of the bed capacity must be available for public patients, and the hospital must provide a discount of at least 10% to the State in respect of the fees to be charged in respect of the treatment of public patients. Fulfilment of the above criteria will, in the main, be certified by the local area health board.
The capital allowances regime provides for a seven year write-off period. Allowances of 15% a year are available for the first six years with the balance of 10% being written off in year seven. The allowances will be subject to a clawback if the building ceases to be a qualifying hospital within ten years. The allowances are subject to the usual €31,750 limit per annum on the amount of capital allowances which an individual passive investor can set against non-rental income.
The implementation of the legislation in relation to private hospital developments is a matter for the local health board and the Revenue Commissioners in the first instance. However, I understand from the Department of Health and Children that it is aware of a number of proposals to develop private health care facilities which are at various stages of planning and development, and which may come within the provisions of the relevant legislation.
In relation to public hospitals, all persons irrespective of income are entitled to in-patient treatment, subject to certain statutory charges. As a matter of choice, certain persons also avail of the option to buy private health insurance which, depending on the nature of cover purchased, entitles them to treatment in either private beds in public hospitals or in private hospitals.
The provision of private care in public acute hospitals has been a long standing feature of the Irish health care system. The 1999 White Paper on Private Health Insurance set out the advantages of allowing private practice on public hospital sites, as follows: it helps to ensure that medical and other staff of the highest calibre continue to be attracted into and retained in the public service; it promotes the efficient use of consultant's time by having public and private patients on the one site; it represents an additional income stream to the public hospital system; and it allows patients to avail of private health care when admitted as emergencies to public hospitals.
The consultants' common contract includes a provision to allow consultants treat private patients in public hospitals and in private hospitals. Beds in public hospitals are designated public or private. On average 20% of the beds in public hospitals are designated as private beds.
The key policy challenge is to ensure that a fair balance is achieved and that patients dependent on the public system are not disadvantaged. Policy responsibility in that regard rests with my colleague, the Minister for Health and Children.
