Mary Harney (Dublin Mid West, Progressive Democrats)

I welcome the opportunity to set out the motivation, facts and benefits of the policy initiative I have brought forward to achieve 1,000 new public hospital beds by encouraging private sector investment. I must say, with regret, that the motion before the House is inaccurate. Not one square inch of public land will be given away to anyone. Public land will be leased or sold at commercial rates in order to achieve new public hospital beds. I would like to think that this inaccurate motion arose from a genuine misreading of the policy initiative, but objections from the Opposition on other occasions leads me to conclude that the language of the motion was chosen for its pejorative effect. If we are to have a debate, let it at least be on the basis of an accurate reading of what the policy is about.

This initiative is about creating 1,000 new public hospital beds in the most cost effective way, at less than half the capital cost of traditional procurement. It will be done in a way that will mean all patients in the relevant publicly-funded hospitals can be treated on the basis of medical need and not financial payment. It will be done by building on public and private roles in co-operation. It is not about the privatisation of our hospital services. No existing public service will be made private. In other countries such as Sweden this has happened recently and more than 11% of their hospitals are now run by the private sector. That is not on the agenda here and it is definitely not part of this initiative.

The policy I am promoting is all about improving access for public patients to beds in public hospitals which are currently reserved exclusively for private patients. It is also a call and a stimulus to innovation from both public sector and the private sector to work together to develop coherent services, managed separately, but integrated strategically, on the one hospital campus.

This initiative invites ideas and innovation at local level at 11 hospitals for the development of hospital services. Already the signals are that many consultants, hospital managers and independent hospital operators will rise to this challenge to use the potential of this initiative to develop new services and new ways of public and private investment working together for the benefit of patients. The policy brings together different elements of Government policy in a coherent and practical way with the ultimate aim of increasing bed capacity for public patients in public hospitals; encouraging the participation of the private sector in generating that extra capacity; maximising the potential use of public hospital sites; promoting contestability among acute service providers; and offering improved quality and choice to all patients.

There are currently 13,255 acute public hospital beds. Approximately 2,500 of these beds are designated for private use. My plan is to transfer up to 1,000 of these beds to private facilities over a period of five years. Under this policy we will still retain a significant number of private beds within our public hospital system. I am of the view that this offers a practical and cost effective method of providing significant additional capacity for public patients.

To those who would say that this initiative is somehow foreign to our health system, I point out that the co-location of private facilities on public hospital sites is already a feature of a number of public hospital campuses. The experiences of these will be taken on board under this new initiative.

I also point out that we have a long tradition of independent hospital services here, which started with Dean Swift in the 1700s and institutions such as the Bons Secours Group and the Highfield Group have been providing services valued by the public for many decades and centuries. They have been joined in recent years by newer providers such as the Mater Private Hospital,Beacon, the Blackrock and Galway Clinics,Harlequin Healthcare and others.

Diversity of health care financing and health care provision is the norm in Ireland and internationally. The reality is clear — we have always had a diversity of providers of hospital services, just as we have long had a diversity of public and private finance. This policy builds on that track record of diversity; it encourages the private sector to manage private beds and the public sector to manage public beds, and the two to work together to create coherent campus services, rather than have completely separate developments on separate sites with no possible integration.

To dispel another myth, we already have a diversity among independent hospital providers of both not-for-profit and for-profit operators. There is nothing in this policy that requires a new operator to organise itself on a for-profit basis. The finance raised to build new hospital beds in this way can fund not-for-profit facilities as well as for-profit facilities. If Opposition parties wish to propose a policy to the electorate that our State should prohibit for-profit hospital operators, let them say so. That is a choice open to them. Short of that, it is disingenuous to suggest, as an objection to this policy initiative, that the standard of patient care is less in for-profit hospitals than public or not-for-profit hospitals in our country. If that were the case, it would be incumbent on those who believe it to prohibit private for-profit hospitals altogether.

It is scaremongering to suggest that patient safety is necessarily compromised in hospitals in this country that operate on a for-profit basis solely because they are for-profit. The bottom line is that patient safety must be systematically assured in all hospitals, both public and private. Quality care is driven by factors such as clinical standards, volume and specialisation and not by the corporate status of the hospital operator. I will promote accreditation and clinical audit for all settings, irrespective of their financial structure. In Ireland the same consultants, largely, have treated patients in both public and private settings. I do not believe hospital consultants would accept that their patient care is lower in one location than another.

Since I announced this initiative for 1,000 new public beds I have heard confused and confusing objections to it. I now hear that the Fine Gael Party is in favour of private investment in new hospital wings, as if that were a major distinction from the policy. It is not a distinction at all. The policy allows for any type of facility to be built — a wing, a floor, a building or an annex. The architectural term is not the point. It is an essential of the policy that there will be close co-operation and connection between the new privately-financed and managed facility and the existing public hospital. How this is achieved will be for the HSE to decide in each location but I am clear that there will be training of junior doctors available on all campus buildings, that consultants' commitment to their public duties will be delivered and managed transparently and that patients will receive the treatment they require whether they enter through accident and emergency or through a planned admission.

The policy makes intelligent use of the capital allowances for investment in private hospitals. Under the Finance Acts, capital allowances are available for the construction or refurbishment of buildings used as private hospital facilities under conditions which will also benefit public patients. This scheme was reviewed by Indecon consultants as part of the overall review of property tax incentives in 2005 by the Department of Finance. The consultants recommended that this scheme should continue as there was a need for ongoing investment in private hospitals. The consultants also observed that the Government plan for private hospitals on the grounds of public hospitals is designed to be a cost effective way of expanding supply and, if properly managed, will increase supply and competition.

The capital allowance scheme has already incentivised the building of new hospitals. What this policy does is to provide a channel for that welcome new investment into hospital facilities that will be more closely integrated with existing public hospitals and create new public beds.

If the public sector builds 100 new beds at a hospital, the full capital cost must be met from the Exchequer, which is approximately €100 million. However, if the private sector builds the new facility, the capital cost to the Exchequer is reduced to a maximum of 48% with full capital allowances used — that is, €48 million for 100 beds. The public hospital gains 1,000 freed-up, new public beds for all patients, without a direct capital cost. For 1,000 new public beds, the saving to the Exchequer will be at least €520 million. This is nearly the equivalent of one year's health capital budget. l cannot see a more cost effective way of providing additional capacity to the public system. The HSE and the National Treatment Purchase Fund will be in a position to contract for services from the new private facilities. Any transaction regarding public land, whether lease or sale, will be done on a commercial basis and will fully protect the public interest.

The amount of private work carried out in public hospitals is in excess of the designated ratio of 20%. It amounts to approximately 25% of all activity but in some public hospitals it is higher; it was 46% last year in Tallaght. This cannot be sustained. It is not equitable for public patients and it is not the best use of public funding. The cost of a newly freed up public hospital bed will still be much less than the full running cost of new acute hospital beds. This policy is good value for money as it saves taxpayers €520 million in capital costs and there is also a substantial saving in running costs. Those beds are staffed by nurses who are paid by the public purse and they are subsidised to the tune of approximately 48% to 50% on an ongoing basis.

The Health Service Executive has advertised for expressions of interest for the construction and operation of private hospitals on the campuses of 11 publicly-funded hospitals before the end of June 2006. The 11 hospitals are as follows: Limerick Regional Hospital; Waterford Regional Hospital; Cork University Hospital; St. James's Hospital; Beaumont; Connolly Hospital, Blanchardstown; Adelaide and Meath Hospital, incorporating the National Children's Hospital, Tallaght; Sligo General; University College Hospital, Galway; Letterkenny General Hospital; and Our Lady of Lourdes, Drogheda.

The projects will be procured by utilising the new competitive dialogue tendering process in accordance with the procedures set out in the EU directive. It involves a three stage process, namely, pre-qualification; competitive dialogue phase within which solution are identified, discussed and eliminated or brought forward to tender stage; and a final tendering stage. It is proposed that at least three candidates will be shortlisted for each hospital and each of those candidates will be invited to participate in the competitive dialogue. It is intended that the project will involve making available the site to the successful tenderer at the full market value, subject to certain restrictions on the use and management of the site. The hospitals will be private hospitals which, in addition to providing private medical health care services, may enter into contractual arrangements with the various contracting authorities for the provision of medical services to the contracting authorities. All options will be discussed in detail as part of the tender process.

Government health policy is about health care provision for the whole population. It is centrally about publicly funded and publicly provided health care. In Ireland, 75% of money spent on health care comes from the public purse — €13 billion in 2006. Approximately €4 billion, or25%, comes from private sources, including the insurers. This initiative is about much more than that. It is about the full range of health care provision and standards for the whole population no matter who provides it, whether public, private, for-profit or not-for-profit. This is the future of health care policy — policy for all the people, policy that invites innovation and works with flexibility, policy that builds on diversity of finance and management and policy that meets every person's health care need with quality services open and available to patients.

In most public hospitals, there is a considerable amount of private enterprise and private activity — 100% of which, from a capital perspective, is being funded by the Exchequer and which is subsidised to the tune of 50% on an ongoing basis by the Exchequer. That is not in the public interest when only certain patients can access those facilities, namely, patients who have private health care insurance or who can pay from their own resources. The idea of reducing the number of private beds in the public hospital system is to provide more beds for public patients based on medical need and not to provide a cohort of beds exclusively for one group of patients over another. This is a fair policy and one which will deliver additional capacity for the public hospital system without the taxpayer having to expend the capital cost of providing these additional resources.