Patients may be casualties in health costs row

AGREEMENT between the VHI and the independent or private hospital sector on the cost of treating VHI subscribers expired last month. The threat of "partial participation status" now hangs over hospitals and subscribers alike. Under such an arrangement a patient who received care in a private hospital might have to pay the full cost of treatment and then seek to recoup an agreed percentage of this from the VHI.

Currently, patients receive full cover and this cannot be changed without subscribers being given a month's notice. The VHI has threatened that full cover will be removed if the stalled negotiations between it and the private hospitals are not restarted and brought to a successful conclusion.

"If we go on to partial participation status and if members don't go for it and start to drop out, this will lead to permanent damage for the private hospitals," Mr John Looney, director of finance with the VHI, warned.

The Independent Hospitals Association of Ireland, for its part, says that its hospitals have so far operated at the old 1995 prices but cannot continue to do so. "If this goes on for much longer we will have no choice but to put up our prices," says Mr Michael Heavey, chief executive of the IHAI.

The VHI, under its current contractual agreement with subscribers, would have to pay these increased charges in full.

The IHAI has reacted strongly to the VHI threat and has written to the Minister for Enterprise and Employment, Mr Bruton, asking that the Competition Authority investigate. The IHAI believes the VHI is abusing its dominant position in the market.

"The VHI is saying to the hospitals, `look, we can put you out of business'. This is absolutely over the top," says Mr Heavey.

It may be of some comfort to VHI subscribers contemplating this breakdown, however, that a fierce and public dispute between the VHI and the IHAI is something of an annual event, with the VHI fighting the rising cost of medical care - and the need to raise premiums - and the hospitals fighting for more funds from the VHI to pay for the increasing numbers seeking expensive, high quality medical treatment.

"The public brawling heightens tensions and is worrying for people who are potential patients of a private hospital," says Fianna Fail health spokeswoman Mrs Maire Geoghegan Quinn.

A Bill currently making its way through the Oireachtas, the VHI (Amendment Bill, will give the VHI freedom to "shop around" among the various private hospitals, a freedom which it does not currently enjoy. This "tendering" for a best offer for VHI business may introduce a competitive edge into the private hospital sector, setting hospital against hospital in a way that has not yet been seen.

"Competition is supposed to reduce costs but this doesn't seem to be the case in the independent hospital sector," says Mrs Geoghegan Quinn, who has also been very critical of VHI premium costs.

After the last meeting between the two sides on February 5th the VHI announced that negotiations had broken down. It subsequently wrote to each of the hospitals, inviting them to begin individuals negotiations. According to the IHAI, each of its member hospitals has now written back to the VHI, informing it that they expect the IHAI to negotiate on their behalf.

But the VHI is still insisting - that the hospitals agree to individual negotiations. "If they do not wish to negotiate, we may have to consider other moves," says Mr Looney.

Last year, the VHI paid £109 million to private hospitals for treating more than 100,000 subscribers. Both the VHI and the IHAI have agreed that there will be a rise in hospital costs in 1996 of 3.5 per cent. However, the two sides are not in agreement over the base from which this should be calculated.

The VHI is strongly resisting a demand from the IHAI that unit prices rise by 3.5 per cent, just like the overall hospital costs. The VHI says this would cost more than £3 million extra, a figure the IHAI disputes.

"These sort of increases are not sustainable and the VHI has to be tough in order to protect its subscribers," says Mr Looney.

Late last year, the VHI established a "members' advisory council", chaired by Mr Finbar Fitzpatrick, which is to act on behalf of subscribers. The Minister for Health, Mr Noonan, has said that if this council does not work to his satisfaction, he will review calls from Mrs Geoghegan Quinn - for such a council to be established on a statutory basis.