Jan O'Sullivan (Limerick East, Labour)
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Question 9: To ask the Minister for Health and Children if discussions are on-going between her Department and the Health Service Executive to change the compensation on termination clauses in contracts for the building of co-located private hospitals on the grounds of public hospitals; if these discussions have concluded and if changes are being made; if so if she will detail these changes; if she proposes to go ahead with the projects; and if she will make a statement on the matter. [34958/10]

Mary Harney (Dublin Mid West, Independent)
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The renewed programme for Government reaffirms the Government's commitment to the hospital co-location programme. Preferred bidders have been selected for six co-location projects, including those at Beaumont, Cork University, Limerick Regional and St. James's hospitals. The Beacon Medical Group was awarded the Beaumont, Cork and Limerick projects. Synchrony Healthcare was successful in the case of the St James's project. Project agreements have been signed and planning permission has been granted for these four projects.

The co-location programme is a complex public procurement process. A core principle underlying the co-location initiative is that the private sector should bear all normal business risks. It is a matter for each successful bidder to arrange its finance under the terms of the relevant project agreement. The co-location initiative, like other major projects, must deal with the changed funding environment.

The HSE has been considering proposals put forward by the Beacon Medical Group to advance the projects. For reasons of commercial confidentiality I am not in a position to comment on the elements of these proposals or the specific issue raised in the Deputy's question at this time. I recently met representatives of the Beacon Medical Group at their request and was briefed on progress on the banking issues and other factors they consider to have a bearing on this matter.

Jan O'Sullivan (Limerick East, Labour)
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Does the Minister still plan to go ahead with these projects, especially in view of the fact that her own expert working group under Ms Frances Ruane stated, on page 51 of its report, there is a surplus of private hospital space and a shortage of public hospital space? Why is the Minister proceeding with this project despite the fact there is officially a surplus of private hospital space? God knows, we need all the tax we can get to fund vital public services in the years ahead and obviously tax will be forgone if these projects go ahead.

I read a report in the Irish Medical Times of 20 August which stated specifically that the Beacon Medical Group has submitted a proposed contract amendment, essentially to have a way out clause in order that the risk to the private company involved in the case would be less than that contained in the original plan. Will the Minister assure Members there will not be a change to the original proposals? At this stage does the Minister accept we do not need any more private hospital beds and that what we need is funding for the public hospital service?

Mary Harney (Dublin Mid West, Independent)
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That may be correct in regard to stand-alone private facilities but the reality is that almost 50% of elective admissions, including those in the Deputy's local hospital, are for private patients. The impetus behind this plan came from a letter from six consultants in the Deputy's hospital who were the first people to write to me on this idea.

Jan O'Sullivan (Limerick East, Labour)
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That does not mean it is right.

Mary Harney (Dublin Mid West, Independent)
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Hold on. They are highly respected and I believe the Deputy, too, would respect them. The reason they proposed this was to free up the private beds which are designated in our public hospitals for public patients. That remains the plan. The sad reality is that we do not have additional resources to invest in our public hospital programme, regardless of whether I or anyone else is in charge.

The Deputy is adopting an ideological approach to this but it is the most cost-effective way-----

Jan O'Sullivan (Limerick East, Labour)
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It is the Minister's ideological approach.

Mary Harney (Dublin Mid West, Independent)
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-----of providing additional capacity because too many public beds are consumed by private patients who could be dealt with in private sector facilities. These facilities must be made available to all patients of the hospital and profit may arise - in the case of the hospital in Limerick about 25%. There can be no breach of the tender or of the project agreement entered into with any of the promoters, nor any breach of competition law, which does not arise.

Jan O'Sullivan (Limerick East, Labour)
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I put it to the Minister that one reason we do not have enough acute beds in the public service is because almost 1,000 of them have been closed. No number of private hospital beds will address that issue. It is not that we do not physically have beds in acute public hospitals, rather that we do not have the resources to staff them. Is it not true that if the Minister gives tax breaks to private developers to build co-located or apartheid-style hospitals in the grounds of public hospitals she will, in effect, be giving taxpayers' money to these hospitals which will not be available to provide public services?

Mary Harney (Dublin Mid West, Independent)
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In Waterford Regional Hospital there are 80 private beds paid for by taxpayers which are accessible only to private patients. I do not have the figure for Limerick but it is similar. A large proportion of private beds in our public hospitals are paid for by taxpayers, as are the staff concerned, but these are available to one group of patients only. I do not find that acceptable.

Not all such projects are looking for tax breaks and it is a myth to suggest they are. The Deputy's party favours the tax breaks for primary care facilities, as recommended by the all-party committee on health, so it is not the case that every-----

Jan O'Sullivan (Limerick East, Labour)
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That is a different issue.

Mary Harney (Dublin Mid West, Independent)
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Those tax breaks, too, will only be available to certain people. If the tax system can deliver in health or any other area a benefit for our citizens that is greater than the benefit which can be achieved otherwise, we must have an open mind about it.

Jan O'Sullivan (Limerick East, Labour)
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We have too many private beds.