The Government published the National Action Plan in Response to Covid-19, on March 16. In anticipation of the projected surge in Covid-19 cases and the expected impact on the health care system a major part of the Action Plan was to urgently ramp up capacity for acute hospital care facilities. A critical element of the strategy was to put in place an arrangement with the private hospitals to use their facilities as part of the public system, to provide essential additional acute hospital services for the duration of the emergency. The terms of the arrangement reflected the expected Covid-19 pandemic at time of signing, and therefore is for a 3-month period, with an option for the HSE to extend it for a further month, and by mutual agreement thereafter.
Under the agreement payment to the private hospitals will be on a cost only Open Book model whereby the hospitals will be reimbursed only for the operating costs properly incurred during the period. The costs that will be covered will be limited to normal costs of operating the hospital. The final cost will be verified by independent firms of accountants appointed by the HSE and the private hospitals and there will be an arbitration mechanism in place in the event of any disagreement. Under the Heads of terms private hospitals are funded to 80% of their estimated monthly costs in advance. The private hospitals combined submitted estimates for April which totalled €115m, therefore €90.2m in total was advanced to them for that month. A balancing payment will be made or funding clawed back depending on the outcome of the cost verification process.
Since the purpose of the arrangement is to provide additional capacity to deal with the impact of the COVID-19 pandemic for which there is no definitive time horizon it is not possible to indicate a precise cost estimate attaching to the arrangement. The cost only open book model is therefore the most effective way of ensuring the arrangement provided the additional capacity necessary and that it is value for money for the State.