Private hospital owners look to the public arena

The State will, over the next 10 years, begin to look at contracting out the management of services in public hospitals to private healthcare operators, the chief executive of one of the State’s biggest private healthcare providers has predicted.

Beacon Medical Group’s chief executive, Michael Cullen, said it would be interested in taking over the running of public hospitals as happens in Sweden where private companies are contracted to operate state-built and state-owned hospitals.

Mr Cullen said at a conference on health reform organised by the Health Economics Group at the Department of Economics at University College Cork that Beacon would be interested in buying public hospitals if they came up for sale and he then expanded on the proposal.

He said he understood that while there was no defined policy on the matter yet within Government, both the current Fine Gael-Labour administration and the previous Fianna Fáil- Green coalition had discussed the idea of contracting out the operation of hospitals.

“It’s something that has been done in Sweden with some success and I think the model could be replicated here,” said Mr Cullen, adding that operational contracts would have to be of five to 10 years’ duration to attract the private-sector investment to make it viable.

He said he could see serious challenges not least in terms of changes to staff terms and conditions and other human resource issues and, while he didn’t believe contracting out of public hospital services was going to happen in the very near future, it was “certainly a prospect”.

Mr Cullen said it would be particularly relevant in the event of the introduction of a full model of universal health insurance (UHI), as outlined in the Programme for Government, where the issue of the public-private divide would become largely irrelevant.

However, Mr Cullen cautioned that much discussion about UHI ignored the salient fact that its successful implementation would not deliver a solution to the current health crisis in Ireland unless there was a significant increase in bed capacity in Irish hospitals.

“UHI works on a principle that we are all equal and there is no barrier to every member of society receiving the same opportunity of access and quality of care, no matter who they are or how much money they have,” he said.

“It is a laudable, correct and proper aspiration for a just society. However, it is based on an assumption that there is sufficient capacity within the health system and infrastructure to cater for the demand placed on it by the population.”

Given that Ireland does not have enough beds, theatres or diagnostics to cater for demand this year let alone the even greater demands of 2016 and 2021, UHI will not work as there will still be waiting lists, cancelled elective procedures and inequalities, he said.

Inpatient hospital occupancy rates per 1,000 population are strongly age-related. In 2000, people over 60 years of age constituted 11 per cent of the total population, but comprised 27 per cent of the acute hospital inpatient population and consumed 46 per cent of acute hospital inpatient bed days.

But by 2026, the number of people who are over 65 years of age will have almost doubled to an estimated 767,300 and will constitute 16.4 per cent of the population, meaning that over-65s can be expected to occupy 71 per cent of available bed days if the present bed stock is not increased.

Mr Cullen said the number of acute hospital beds in Ireland stands at about 16,000 – which is almost 2,000 less than in 1980 – and represents one of the lowest number of acute hospital beds per capita in the OECD at 3.7 beds per 1,000 population.

While the new Special Delivery Unit may improve efficiencies in the public system, Ireland already has very high bed occupancy rates of 95-100 per cent, so it does not appear as if there is much scope to squeeze greater occupancy from the existing resources.

Most recent expert reports suggest that Ireland needs an extra 3,000- 4,000 beds and given that the average length of time for a public hospital to go from concept to opening is 18 years, the private sector must become more involved, Mr Cullen added.

The Government should look at public-private partnerships as a way of expanding capacity and there are currently 10 public hospitals around the State that could benefit from extra capacity in a public private partnership deal, he said.

“Four of these could be adapted to suit the new UHI environment from the previous co-location policy,” said Mr Cullen. “They are ‘shovel ready’ with full planning permission ready to commence construction and could employ approximately 5,000 people almost immediately.”