Private hospital deal will cost State €115 million per month

Coronavirus: Confidential deal to take over private hospitals could cost State €115m per month

The State’s confidential deal to effectively take over 19 private hospitals during the Covid-19 crisis is expected to cost about €115 million per month.

The Irish Times understands that as part of the unpublished agreement the State has also agreed to reimburse the existing pay of top management in private hospitals by up to €200,000 per year.

Taoiseach Leo Varadkar said yesterday a bill of €115 million per month was an "accurate estimate" of the cost to the State of its deal to lease the 19 hospitals. However he said the actual cost will not be known until the end of the contract when all the bills were calculated.

Later Minister for Health Simon Harris told the Dáil the HSE had made advance payments for April of €90.2 million.


“Under the arrangement, a participating private hospital is due 80 per cent of its estimated monthly costs in advance from the HSE,” he said, adding the costs would have to be verified and “any difference is subject to a claw-back in the subsequent month”.

Under the deal the private hospitals agreed to use all of their resources, staff and management to support the delivery of public services for the next three months.

The agreement says the HSE will reimburse the salaries of staff and senior management in private hospitals at their current rates up to a ceiling of €200,000 per year.

It stresses that staff will remain in the employment of the private hospital. The State will not be involved in any pension arrangements for the personnel concerned.

The deal says that patients will be transferred to the most appropriate facility taking into account clinical need and common purpose.

However the agreement does not cover fully private sector medical consultants who practise in these hospitals, leading to an impasse over proposals to bring up to 600 specialists into the public system.

The new agreement – which essentially makes private hospitals only available to public patients – has had huge implications for the health insurance industry and the 2.2 million people who pay for private cover.

Health insurers on Thursday announced a series of rebates and payments to subscribers to take account of the curtailment of access to traditional private hospitals.

The country's largest health insurer, VHI, is to return an average of 50 per cent of premium to customers for an initial three-month period while Laya Healthcare said it would be giving back €195 per adult member and €60 per child member in equal instalments over three months – April to June 2020.

The Government has not published the private hospital agreement and the Department of Health has declined to answer questions about provisions in the deal, which contains a specific confidentiality clause.

Under the agreement the HSE is to reimburse the private hospitals for their operational costs under a number of headings that are actually incurred “on a cost-only and open book basis”.

The agreement sets out how costs will be assessed and as well as a means for dealing with underpayments and overpayments. There is also provision for the referral of disputes to an independent expert.

It says that the HSE would make reasonable attempts to allow private hospitals to access the rates it pays for agency staff.

The agreement also says private hospitals will, where appropriate, be entitled to access HSE frameworks and prices for supplies.

Martin Wall

Martin Wall

Martin Wall is Washington Correspondent of The Irish Times. He was previously industry correspondent