Dr. Bernadette Carr:

Senator Burke asked about competition among providers and certainly VHI is committed to keeping costs affordable. We have heard much today about the fall-off in the market and the decline in the number of people who can afford to take out insurance and we are all concerned about this. As the largest insurer, the commitment to sustaining the market as a whole is fundamental to how VHI operates. Much can be done about cost containment, and one element which is important is a balance in the supply of services in the market.

A big part of this supply comprises hospitals and hospital beds, which are very expensive. We are all familiar with what happened to the hotel market in Ireland where we have a huge oversupply because of a large amount of overbuilding. We would not like to see the same situation apply to private hospitals. We attempt to ensure our members have access to an adequate supply of beds but not an oversupply. As Senator Crown mentioned earlier, if the hospital sector has an oversupply and a hospital is under-utilised it would be very expensive to run and there would be a big incentive for the facility to bring in patients and potentially provide unnecessary treatment. An alternative incentive would be to go to a private insurer and state it does not earn enough money and prices must be increased. Internationally it is accepted that balancing supply of hospital beds is a very important part of managing costs. This is what VHI does. It certainly does not make us popular, but we are not there to support developers or private investors; we are there to manage costs on behalf of our members.