THE collapse of the agreement between 18 private hospitals and the VHI over increased charges by the hospitals means that many patients will now have to pay their bills before they leave hospital and then seek reimbursement by the VHI after submitting claim forms and invoices.

The dispute between the hospitals and VHI poses difficulties for many people who do not have the resources to pay substantial medical bills in advance of settlement from their insurance company.

You, or your family, may not be in a position to borrow the money even for the few days or weeks might take the VHI to reimburse you. VHI customers who are contributing to Plan D or E, specifically for accommodation and services at Blackrock Clinic for example, may very well be tempted to reduce their cover to a plan which provides private room cover, but not at the Blackrock clinic.

One course of action which VHI customers should consider, is to inquire before treatment as to whether it can be provided in a hospital which has reached agreement with the VHI. This often depends on where your consultant or specialist is based, and, while changing consultants may be inconvenient, it may save you money.

If you do decide to receive treatment at one of the listed hospitals (which in Dublin includes the Blackrock Clinic, Mount Carmel, Bon Secours Dublin, St John of God Stillorgan and St Michael's Private Hospital in Dun Laoghaire) make sure to check with both the hospital and the VHI about the items or treatments which carry increased costs this year and which may or may not be reimbursed by the VHI. This is a good rule of thumb for any private hospital treatment since many patients discover to their horror after treatment that a number of services which they thought were covered are either outside the scope of the policy or are only partially paid.

The lack of agreement between the VHI and the 18 listed hospitals has drawn the criticism of the Consumer Association which is now calling for the setting up of an independent body, operating on the lines of an assessor or ombudsman to decide on any future premium increases for the state monopoly.

The continuing rise in premiums, says the Association, "does not make VHI membership an attractive option for young people whom the VHI must attract to ensure its long-term survival. Along with existing members they may decide to rely on the public, health service instead. Clearly this is not in the VHI's or the Department of Health's interest.

The current dispute is good news for the insurance companies that provide hospital cash policies, which are often marketed through the main banks' credit card divisions, and for HSA, the UK-based medical insurance plan. For relatively modest weekly or monthly premiums (a family can get cover for as little as £25 per month with the former), the policyholders are usually paid up to £50 for every day spent in hospital; premiums are not affected by claims. Payment is usually within seven days, but brokers are suggesting that the insurers will probably improve their claims service as a way to attract disaffected VHI customers.