Dáil Éireann Debate, Wednesday - 9 July 2008
171 Deputy James Reilly asked the Minister for Health and Children the names of the proposed sites for co-location hospitals; the progress to date in each location; if the tendering process has been completed; the names of those awarded each tender; the cost of the facility in each case; and if she will make a statement on the matter. [28060/08]
View answer172 Deputy James Reilly asked the Minister for Health and Children the status of her co-location hospital plan with regard to recent reports that banks are reluctant to commit financing to operators; the action she will take in the event that an operator proves unsuccessful; her plans to amend co-location agreements in order that the State will buy the hospital in the event of a default; and if she will make a statement on the matter. [28061/08]
View answer173 Deputy James Reilly asked the Minister for Health and Children the details of the assessors who established the commercial value of each co-location site; the commercial value identified for each site; and if she will make a statement on the matter. [28062/08]
View answer174 Deputy James Reilly asked the Minister for Health and Children the consortia involved in the provision of co-location hospitals; and if she will make a statement on the matter. [28063/08]
View answer175 Deputy James Reilly asked the Minister for Health and Children the number of hospital beds which will be provided under the co-location hospital scheme; the number of beds which will be provided at each site; and if she will make a statement on the matter. [28064/08]
View answer176 Deputy James Reilly asked the Minister for Health and Children the cost to the Exchequer of co-located private hospitals with a breakdown of the cost for each of these hospitals; the amount of tax relief involved with these hospitals; and if she will make a statement on the matter. [28065/08]
View answer177 Deputy James Reilly asked the Minister for Health and Children the assessment carried out on the staffing implications related to co-located hospitals; her views on whether this will increase the difficulties encountered in recruiting staff for certain posts in the public health system; and if she will make a statement on the matter. [28066/08]
View answer178 Deputy James Reilly asked the Minister for Health and Children the details of all advice sought by the Health Service Executive regarding co-location; the cost of this advice; and if she will make a statement on the matter. [28067/08]
View answerI propose to take Questions Nos. 171 to 178, inclusive, together.
Under the Programme for Government, the Government is committed to providing an additional 1,500 public acute hospital beds. The co-location initiative aims to deliver approximately 1,000 of these beds for public patients through the development of private hospitals on public sites. The intention is to transfer private activity to those hospitals thereby freeing up capacity for public patients.
The process for the development of the co-located private hospitals is governed in each case by a detailed project agreement between the public hospital and the developers of the private hospital. The Health Service Executive (HSE) has retained external professional advisers in relation to the procurement, financing and legal aspects of the process in order to ensure that the public interest is protected at all times. Detailed provisions in relation to all aspects of the relationship between public hospitals and co-located private hospitals will be the subject of a service level agreement between the parties in each case.
The revenue cost to the public hospitals will be minimal. A very important benefit of the initiative is that the beds made available for public patients in public hospitals under the initiative will come staffed and the back-up services and facilities required to support them are in place. This contrasts with the position which usually obtains where direct capital investment is used to fund public hospital capital developments. The only staffing cost envisaged is the appointment of additional hospital consultants, something that the Government is now doing in the light of the agreement on the new consultants' contract. The HSE, having considered the potential implications of the co-location initiative on public health service recruitment, has stated that it does not envisage any significant impact, given the terms and conditions applying in the public service, and in particular, the attractiveness of membership of a contributory pension scheme.
The loss of private health insurance income to the hospitals from private health insurers is estimated at €80 million in respect of the six sites where the co-location initiative is most advanced. This loss of income will be mitigated, in part, through income from the lease of the land and a potential share of profits from the co-located facility. It is recognised that provision will need to be made to allow the budgets of participating public hospitals to be adjusted appropriately to reflect the net private patient income forgone. Public patients will have access to the private facilities under the service level agreements between the public and private partners.
The scheme of capital allowances for the construction or refurbishment of buildings used as private hospitals was introduced in the Finance Act 2001 and came into effect in May 2002. Provided that capital expenditure on the proposed co-located private hospitals conforms to the existing legislation governing that scheme, normal tax relief will apply. Under the terms of the Finance Act 2001, the co-located hospital must ensure that at least 20% of its bed capacity be made available to the HSE for the treatment of individuals awaiting in-patient or outpatient hospital services as public patients. The fees charged must be not be more than 90% of the fees that would be charged for equivalent treatment provided to a patient with private medical insurance.
The cost of such tax relief will ultimately depend on the level of qualifying capital expenditure and no such expenditure on the proposed co-located hospitals has yet been incurred. For each €100 million of qualifying capital expenditure on these hospitals, the cost of tax relief to investors (assuming a marginal tax rate of 41% for those investors) would amount in gross terms to €41 million spread over 7 years. With the additional activity generated by the construction of the hospitals, the employment generated and the related services provided on which taxes will be paid, additional revenues would accrue to the Exchequer.
A fundamental principle of the co-location policy initiative is that there is no State underwriting in respect of private sector risk. The banking arrangements for the co-location projects are of course a matter for the preferred bidders concerned.
The Board of the Health Service Executive (HSE) has approved preferred bidders for six co-located hospital sites: Beaumont Hospital, Cork University Hospital, Limerick Regional Hospital, St. James's Hospital, Waterford Regional Hospital and Sligo General Hospital.
The Project Agreements for Limerick Regional Hospital, Beaumont Hospital and Cork University Hospital have been signed. Planning permission has been granted by the local authorities concerned for the co-located hospitals at Beaumont and at Cork University Hospital. Planning permission for the Beaumont and Cork projects has been appealed to An Bord Pleanála. The HSE has advised my Department that a decision to grant planning permission for the Limerick Regional Hospital project was given in mid June and that this decision is scheduled to be made final later this month, subject to no planning appeal being lodged.
The HSE has also advised that the Project Agreements for St. James's Hospital and Waterford Regional Hospital are expected to be signed shortly. The HSE expects the Sligo Project Agreement to be concluded by the autumn.
Connolly Hospital and Tallaght Hospital, which are also participating in the co-location initiative, are at an earlier stage of the procurement process. Connolly Hospital is at preferred bidder stage and it is expected that the invitation to tender (ITT) for Tallaght Hospital will issue in the near future.
My Department has requested the HSE to respond to the Deputy in relation to the detailed operational information sought in respect of the successful preferred bidders approved by the HSE Board, the proposed number of beds for each project, and the advisors used by the Executive in relation to co-location.
