Speeches

Keynote Address by An Tánaiste and Minister for Health and Children to the Inaugural Annual Private Healthcare Conference

Thank you for the invitation to address this inaugural conference on private healthcare. I am a strong fan of innovation and enterprise in all sectors, public, private and voluntary. Innovation and enterprise is a key reason we now have a dynamic, world class economy and it is vital to achieve the same in healthcare.

I have heard ads recently asking ‘Is private healthcare the solution?’

My answer is, ‘No, private healthcare is not the solution, it but it is very much part of the solution’.

In Ireland it always has been part of the solution, and will continue to be.

A lot of the attention about private health care focuses on hospital services. It would be a mistake to consider health services in general to be hospital services, be it in the public, private or voluntary sector.

Health services encompass a tremendous range – from our GPs and primary care, to hospital services, both secondary and tertiary, to continuing and palliative care, at home and in community settings.

There is no one model of provider or financing in the great majority of health services, nor should there be. Patients, customers, the public lose out from monopoly providers wherever we find them. Diversity of provision and of financing is best and it has been the model of Irish healthcare for centuries literally.

I will focus my remarks today on private hospitals developments, bearing in mind the context I have just emphasised.

Policy direction to HSE on co-located hospitals

Last summer I issued a direction under Section 10 of the Health Act 2004 to the HSE to implement a policy to encourage the private sector to invest in new co-located hospitals in order to create new public beds as efficiently as possible.

I want to achieve a situation where there is no two-tier entry into publicly funded hospitals, as has been the case for many years.

I do not want to continue the present system forever, under which public hospitals and consultants are paid more for private patients than public patients, for treatment in our tax-funded public hospitals.

There are a lot of transition issues that will be addressed, but we cannot arrive at the end point without starting out on the right course.

The HSE is taking steps to implement the policy direction. I expect an invitation to the market for a number of sites very shortly.

There has been mischievous criticism of the policy with some wild and ideological rhetoric.

I am quite sure that many of those who choose to misunderstand this policy will be less vocal when they see new hospitals underway in their own locality.

I want to address the first deliberate myth, that this policy amounts to privatisation.

My response is, when is privatisation not privatisation? When it delivers up to 1,000 new public beds.

This is the central objective of the policy.

There are 2,500 private beds within our state funded hospitals. Effectively there is a private business going on inside each public hospital. The capital cost has been subsidized 100 per cent by the State. The running cost is subsidised about 40 per cent. Public hospitals only get 60 per cent of the cost of the beds.

Some of the income received for private treatment goes to hospitals. The rest goes to consultants in private fees. None goes to any other staff.

Let me give an analogy. We effectively have been running state-funded hospitals like airplanes with business class; and with the pilots getting a special fee for each business class customer, whether or not they sit in a business class seat.

That simply doesn’t make sense. And its continuation forever won’t make sense for equity, financing or management reasons.

It is not privatisation to free up beds for all patients, public and private.

Nor is it privatisation to ask the private sector to finance and manage private beds and private hospital services.

It is not privatisation to cease the practice whereby 20 per cent of new public beds built with public capital are reserved for private use.

However, it would be privatisation if we were to ask the private sector to run our public hospitals – as is happening in Sweden. But we are not doing what the Swedes do.

All the evidence is that the private sector is capable and willing to invest in private bed capacity. With €8bn estimated as likely to flow out of the country into foreign property, I see every reason to encourage a portion of that to be invested in hospitals at home.

I am determined that the private and public sector will work together in co-located facilities. As we separate out financing and management, we will also create the conditions for transparent purchasing and providing of services from public to private, and vice versa.

Patients will benefit because the State will be able to purchase services for public patients.

There will not be two completely separate health systems in our country. They will work closely in collaboration. There will be one policy that embraces a diversity of providers, both public and private. All patients will benefit from innovation and investment in both sectors.

Consultants

The policy will mean that the private practice of public hospital consultants’ would take place in these new facilities, instead of within publicly-funded hospitals.

I are mindful, of course, with the HSE, of putting in place working arrangements so that consultants are also motivated in these circumstances to do the best possible job for patients under their public contract obligation.

I know that in quite a few locations around the country, consultants have indicated their willingness to organise their work so that services in the public hospital will be protected and improved.

I welcome this positive engagement and initiative by consultants in these locations and I expect that the HSE will find their response very useful.

Private hospitals not new

The second myth I want to debunk is that this policy represents a radical injection of some new, alien and American provision into our Irish hospital system. It is claimed this is against the wishes and the benefit of the Irish public, and out of line with our history. It is nothing of the sort.

With this policy, we are decidedly European. In fact, we are only catching-up in some respects. For example, the NTPF’s forerunners were not in the United States, but in Norway and Britain.

We are also very much building on our own traditions.

I would like to put the policy in a broader context, which I believe is compelling for the Irish public.

History and diversity of providers

Private or independent hospitals in Ireland are not new. They have always been an integral part of our health care services. They are not confined to one service, for one group of people, in one locality.

Jonathon Swift founded St. Patrick’s Hospital in the 18th century. The Highfield Group has offered services for 175 years in Dublin. The Bons Secours have run their hospital in Cork since 1915.

People in north Dublin, south Dublin, Kerry, Limerick, Cork, Kilkenny, Wexford and Galway have seen private hospitals in their region and benefited from their services for many years. New hospitals are starting in new locations also.

The Mater Private, St. Vincent’s private hospital, the Blackrock Clinic, the Bons Secours group, are all embedded and accepted in health care provision in our country for many years.

I could list all providers, including innovative new entrants, but these are among some of the best known. If they and others expand their services, I anticipate the public will welcome that, not rise up in protest against them.

The hospitals also come in different forms. There are for-profit, not for profit, and voluntary hospitals. Some are owned by families, some by groups of investors, some by trusts. This mix is to be welcomed.

Treating public patients

Nor are their services on offer to certain people only, for example, those with health insurance.

Over the years services were often provided for individuals for philanthropic reasons – and we should never forget that. There have also been occasional purchases of services from private hospital by the State sector.

In recent years, the National Treatment Purchase Fund has built into our health services the role of private, independent hospitals in providing services to people without insurance. The partnership of private hospitals and a dynamic public service team in the NTPF made it work, with co-operation from public hospitals.

Nearly 40,000 public patients have been treated in private hospitals under this initiative, dramatically cutting waiting times for elective treatments.

With the NTPF, private hospitals have been systematically opened to public patients.

We have built this permanently into our health service, notwithstanding initial opposition from some quarters and now their grudging acceptance that it works.

The NTPF will spend about €70 million this year on treatments. To continue to work and expand, it is important that the independent hospital sector in Ireland is dynamic, diverse and competitive. That is one good reason to expand the range of private providers – so that public patients can benefit too.

Mixed system of financing

Very importantly, we have also diversity in finance. We can calculate that the Irish public is spending in the region of €17 billion this year on health services. This money comes from taxation, the health levy, private insurance and direct payments. €13 billion is State funded, representing about quarter of public spending.

We have a mixed system of financing – about three quarters public, one quarter private.

Far from this being odd, unsustainable or “American”, we are almost exactly at the OECD average, excluding the United States.

In fact, the American system is the real exception with 56 per cent private.

I see our mix continuing in roughly the same proportion as now. I do not envisage a reduction in the proportion of State financing. It is not a policy goal of mine or of the government to reduce that proportion.

What this means is that, as we encourage private finance and private management for private beds, we will also continue substantial new public investment in public hospitals.

For example, we have a €3 billion public capital investment programme over five years in health. Even if €1 billion were invested in the next five years by the private sector, the government would still, on present plans, substantially outpace that investment.

But nor do I agree with policies that would attempt to drive up an increase in the proportion of State financing. Some of these policies are put forward for old-fashioned ideological reasons, as if State financing and monopoly State provision were the one, big symbol and guarantee of social justice or equality.

The Irish public has shown that it wants to finance health care in this mixed way. It is for government policy to reflect that and to design policies that get the best health outcomes for all the public.

A mix is best for patients and for taxpayers. This is recognised the world over.

I was recently in Canada, a country noted for its unusual policy that excludes private healthcare insurance and provision. While their system performs well on many indicators, it is not without problems.

The Prime Minister of British Columbia, Gordon Campbell, said in a recent speech:

“Why are we so afraid to look at mixed health care delivery models when other States in Europe and around the world have used them to produce better results for patients at a lower cost to taxpayers?”

In Britain, Stg £3 billion will be spent over the next five years on providing some 1.7 million operations by independent providers to NHS patients. Their target is to have 15 per cent of NHS operations carried out by the independent sector. They are now out to tender for £1 billion worth of additional diagnostic procedures.

Conclusion

I am optimistic for our health services and for the opportunities that arise from collaboration between the public and private sectors.

I will continue to encourage investment and innovation on the part of both sectors, so that all patients get the high quality, responsive services they want.

That is, and will continue to be, the over-riding goal of all health policy.