Written answers

Wednesday, 28 June 2006

Department of Finance

Tax Incentive Schemes

11:00 pm

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 82: To ask the Minister for Finance if he has sought a review of the evaluation of tax relief for private hospital investment in view of the decision to permit these hospitals to use public lands adjoining public hospitals; and the way in which this alters the benefit to cost ratios of such projects. [24907/06]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The plan for private hospitals in the grounds of public hospitals is designed to be a cost effective way of expanding the supply of beds for public patients. However, there have been no decisions yet in regard to approving any particular proposal. It will be a matter for the HSE to assess any proposals.

The scheme of capital allowances for the construction of private hospitals was reviewed by Indecon Economic Consultants as part of the overall review of property tax incentives in 2005. Indecon consulted widely in the course of their review, including consultations with the Department of Health and Children and the Health Service Executive. Their report was published on 6 February 2006 and is available on the Department of Finance's website. The review recommended that this scheme should continue as there was a need for on-going investment in private hospitals. The consultants observed that the construction of private hospitals could free beds in public hospitals used by private patients. It should also be noted that the consultants observed that the Government's plan for private hospitals in 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 summary of the main findings from Indecon's analysis is as follows:

∙'There has been an overall increase in planning applications and approvals for private hospitals since 2000 but most have not proceeded to date.

∙Most of the extra investment in the sector would either not have been undertaken, or would have taken longer to come on-line in the absence of the tax incentive scheme.

∙While it is too early to provide detailed estimates of the impact of the scheme on the supply and on the costs of hospital beds, Indecon believes the scheme has the potential to address supply shortages in the sector and to reduce costs.'

Private health care is a long established feature of the system of health care provision in Ireland and acts as a strong complement to the publicly funded system. Private health care provision spans from general practitioner services through private beds in public hospitals and private hospitals to private nursing homes. The Government is committed to exploring fully the scope for the private sector to provide additional capacity in the health system. The key objective is to provide the required extra capacity, whether this is in the public or private sector. A number of Government policies-initiatives support the co-existence of public and private health care such as: the designation of private and semi-private beds in public hospitals; income tax relief on private health insurance premiums; income tax relief on medical-dental expenses; the National Treatment Purchase Fund sources capacity in private hospitals for public patients; and the Tánaiste's policy direction to the Health Service Executive to build private hospitals on public sites thereby freeing up beds for public patients.

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