Press Release

Minister Harney says ‘Co-location projects will free up public hospital beds with savings of hundreds of millions of euro to taxpayers.’

Responding to a statement on Friday by Deputy Eamon Gilmore, the Minister for Health and Children, Mary Harney, T.D. said,

‘The Taoiseach supplied clear information to Deputy Gilmore last Wednesday representing the consistent position of the Government on the co-location initiative in a range of areas’

‘The co-location projects will achieve new public beds less than both the capital cost and the current cost of the traditional method of full Exchequer-funding, and faster than has been the case traditionally.’

‘We have always set out that the co-location policy includes costs to the State, in terms of capital allowances and the removal of bed charges for private patients in public hospitals.  We have also set out from the start that the benefits greatly outweigh the costs.’

‘However, Deputy Gilmore spoke about costs while omitting the clear benefits.’

‘Each project must be shown to represent value for money for the State, on the advice of the National Development Finance Agency, taking all quantifiable costs and benefits into account. That was demonstrated for six sites last summer.  It remains the case.’

Hospitals’ private fee income

‘Public hospitals currently earn fee income from private patients.   In relation to the six co-location sites approved last July, this is about €80m.   But the ‘loss’ of this income for public hospitals must be set against the value of the new capacity to treat more public patients, capacity that is already fully paid for and serviced by taxpayers, but is not normally available to public patients.

‘Put simply, in these sites, we achieve new public capacity for a current cost of €80m’

‘This is significantly less than the running cost of new acute hospital beds, and will achieve net savings of hundreds of millions of euro over the period of seven years selected by Deputy Gilmore, and for many years beyond.’     ‘The loss of income will be also offset to varying degrees by rental income from the private operators and by profit-sharing.’

‘Finally, the €80m private fee income to hospitals must also be seen in the context of a total current budget for public acute hospitals of over €5 billion annually and an increase this year of €120m over outturn for 2007.’    Capital allowances

‘The cost of capital allowances is related to qualifying construction expenditure as set out in finance legislation dating back to 2001.  The Revenue Commissioners have issued detailed guidelines for these capital allowances.’

‘It cannot be assumed that all the capital costs involved in each project will attract capital allowances.’

‘It is also the case that the operators of co-location sites have been required to build facilities within certain specifications so that the capital allowance costs are not excessive.’

‘It remains the case that the capital cost to taxpayers of new beds in the co-location projects is less than half the cost of direct, full Exchequer capital funding.’

 

Construction timeframe

‘This initiative is part of the commitment to expand acute public bed capacity of 3,000 over a ten year timeframe made in the context of the Health Strategy published in November 2001.  It is also part of the five year Programme for Government.’

‘The private sector developers have calculated that they will open their facilities about three years after planning permission is received.’

‘Planning permission has been granted at Beaumontand CorkUniversityHospital(under appeal to An Bord Pleanala).  A decision is expected shortly for the Limerick Regional site.  It was always the case that there would be a pre-construction phase in relation to each project.’