Hospitals could earn €120m from better management

Thu, Dec 8, 2011, 00:00

HEALTH INSURANCE:PUBLIC HOSPITALS could generate an additional €120 million in revenue from health insurance companies if they were more efficient in how they managed their stock of beds for fee-paying patients.

Briefing papers drawn up by the Department of Health maintain that moves to improve the level of efficiency in which hospitals manage their existing number of beds could be an alternative to the controversial measure set out in the budget to charge all private patients treated in public beds.

The VHI has said plans by Minister for Health James Reilly to introduce legislation to remove official limits on the number of beds designated for fee-paying patients so as to allow hospitals charge for all private patients treated could result in premiums increasing by 50 per cent.

The departmental papers, which were submitted as part of the Government’s recent comprehensive review of expenditure, said that a further alternative could involve preventing consultants admitting private patients to public hospital beds at all. However public hospitals receive about €350 million in fees from private patients and represent a very important source of revenue.

The department said that the system of designation of beds for private patients was put in place to control the level of private practice in publicly-funded hospitals and to ensure equitable access for public patients.

Under this system 20 per cent of all beds in a public hospital are designated as “private” with the remainder classified as “public” or “non-designated”.

“The regulations permit a patient admitted as a private patient and as an emergency admission to elect to be treated privately by a consultant and to be accommodated in a public bed if no private bed was available or until such a bed became available.

“No private bed charge applies for such periods of accommodation in a public bed or a non-designated bed, and so no private patient revenue accrues to the public hospital in these cases.”

But the department said “a great degree of variation” existed in efficiency with which acute hospitals used their private bed stock.

“The national average for private income raised from private beds in 2010 was 61 per cent of potential whereas the top performing hospital achieved a level of 81 per cent.”

The department report stated that one potential measure for dealing with this issue would be to improve the level of efficiency with which hospitals manage their private bed stock by setting a target that they achieve 75 per cent of the potential maximum level of private income.

“If each hospital below 75 per cent improved its performance to this level and those above the threshold maintained their performance, it is estimated that an additional €120 million (approx) per annum revenue would accrue.”

The Irish Timesreported yesterday that the department has made “a planning assumption” that €75 million could be generated next year by its plans to end the designation system and allow hospitals to charge for all private patients treated in their facilities.