Brendan Smith (Cavan-Monaghan, Fianna Fail)

I will group the relevant queries raised by Senators Prendergast, Fitzgerald and Feeney. This amendment is intended to delay the initiative which was launched in 2005. There has been considerable debate, in particular leading up to the general election in May. St. James's and Beaumont hospitals are both anxious to move forward on co-location projects as quickly as possible.

Senator Prendergast specifically raised the issue of staffing. The project agreement between the Health Service Executive and the private provider requires that the private facility at each hospital should be capable of treating all the private patients currently in the relevant public hospitals. The specific minimum requirements which co-located hospitals must provide include the ability to admit private patients directly from public hospital accident and emergency departments, primary care centres and general practitioners, on a 24-seven basis; research and development programmes; joint clinical governance between the public hospital and the co-located facility; performance management requirements and documented service level agreements; and shared information and records management.

The essential idea underlining the co-location initiative was that private patients could be "migrated" from public hospitals to private facilities. This would free up capacity for public patients and ease the pressure on waiting lists and on accident and emergency departments.

It is important to emphasise the initiative was founded on the principle that all patients ordinarily resident in the State should continue to have access to public hospitals. Access should be based on need and the possession of private health insurance should neither influence timeliness of access nor treatment regime. I presume all in this House agree with that aspiration.

Co-location is seen as the quickest and least expensive means of providing significant additional capacity for public patients. No capital outlay is required as the beds are already in place, having been funded by the Exchequer. In addition, the beds are already staffed and all the back-up services and facilities required to support them are in place. A target of transferring 1,000 private beds to the private sector over a period of five years was and is seen as attainable. It was accepted that there would be loss of income from private insurers, estimated at €100 million, but this was seen as a small price to pay in order to free up 1,000 beds for public patients. Furthermore, it was anticipated that this loss of income would be mitigated in part through a new income stream from the private hospitals.

Senator Fitzgerald raised an issue in regard to the cost to the Exchequer. The Minister, Deputy Harney, responded in some detail to the Fine Gael leader, Deputy Kenny, recently. She stated:

There will be no direct capital cost to the State arising from the co-location initiative. There will be a loss of private health insurance income to the hospitals from private health insurers. This is estimated at €79 million in respect of the six sites where the co-location initiative is most advanced, as follows; Waterford Regional Hospital, €11 million, Cork University Hospital, €18 million, Sligo General Hospital, €8 million, Limerick Regional Hospital, €17 million, St. James's Hospital, €14 million, and Beaumont Hospital, €11 million. I consider that this is a small price to pay in order to free up 1,000 beds for public patients where the running cost of over €300 million is already being met by the State. The loss of income will be mitigated, in part, through income from the lease of the land and a potential share of profits from the co-located facility.

It is anticipated that the private developers will avail of the scheme of capital allowances under the Finance Acts. The level of tax relief depends on the financing arrangements for each hospital and it is not possible at this stage to provide a breakdown of potential capital allowances by hospital site. However, it should be noted that not all costs are eligible for tax relief under the scheme. The Government's consideration of the initiative assumed a capital cost of €1 million per bed. It is anticipated that for each €1 million in allowed capital expenditure, most relief will be claimed at the 41% income tax rate plus any allowable PRSI-related relief, spread over seven years, and not taking account of tax buoyancy effects. This is still less than the capital cost to the State of building and commissioning an additional 1,000 new beds for public patients.

That information was conveyed to Deputy Kenny by way of written reply to a parliamentary question. As far as ideology is concerned, my only ideological position, or that of my party or the party of the Minister, Deputy Harney, is to provide the best possible level of care to people who need hospital and medical and health services. This is about building additional capacity into the system in the best and least expensive way to the State to expedite the provision of new beds and facilities. I share strongly the view that people's access to treatment should not be determined by their health insurance. Co-location is an innovative approach to ensure that 1,000 beds are freed up for public patients in the fastest way possible.