Kevin Humphreys (Dublin South East, Labour)
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Question 237: To ask the Minister for Health the number of consultants that have received remuneration from the VHI of over €1 million; the number of consultants who receive between €900,000 and €200,000 in remuneration; and if he will make a statement on the matter. [19304/11]

James Reilly (Dublin North, Fine Gael)
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This Government is committed to reviewing costs generally across all sectors, including the private health insurance market, and scrutinising where savings can be made for the Exchequer and the consumer. I am not satisfied that any consultant should be paid €1 million in a single year. This level of remuneration is grossly out of step with most ordinary people's expectations. I am also dissatisfied that a number of other consultants earned enormous sums from the VHI and no doubt to a lesser extent from other insurers, in recent years.

Tables 1 and 2 below show a breakdown of consultant earnings from VHI during 2010. Table 1 shows the gross payments in 2010 by VHI to consultants who are engaged in both public and private practice. Table 2 shows the gross payments in 2010 by VHI to consultants who have private practice only. The professional fees paid by Vhi Healthcare to consultants are expected to cover the costs of the procedure or service rendered plus the doctor's rooms, professional indemnity insurance, practice nurse, secretary and sundry other practice expenses. As can be seen from Table 1, the majority of consultants who have both public and private practice (57.95%) were paid less than €50,000 by VHI in 2010. 11% of consultants with both public and private practice were paid in excess of €200,000 by VHI in 2010.

In relation to consultants who have both public and private practice, there are a number of different contracts under which consultants practise and are remunerated for their public practice. Table 3 below gives the public salary scales for consultants who engage in both public and private practice.

· Type A: Work exclusively for the public hospital with no private practice.

· Type B: Work exclusively for the public hospital but may engage in limited private practice on the public hospital campus up to a maximum of 20% of total clinical throughput.

· Type C: To be created only in exceptional circumstances where there is a demonstrable benefit to the public health system. Such a consultant will be entitled to treat private patients outside the public hospital campus.

· In addition as a special transitional arrangement, a Type B* contract was available to existing Category II Consultants and Category I Consultants in Emergency Medicine. This permits them to engage in private practice in facilities operated by the employer or in private hospitals on the public hospital campus. Consultants holding this type of contract may also engage in private practice in locations outside the public hospital campus subject to them signing up to all the other terms and conditions of the new contract.

TABLE 1

TABLE 2

TABLE 3

I met with the Chairman and CEO of the VHI very shortly after my appointment in March 2011. At that meeting, I expressed my concerns about the VHI's significant claims costs. Because of its size and position in the market the VHI has a crucial impact on costs and I made clear my firm belief that this issue needed to be addressed vigorously. Many of the concerns about the company's approach to costs were outlined in a report commissioned by my Department and conducted by the Department's actuarial advisers, Milliman.

I also raised the important issue of the base cost of procedures with the company. They responded to me with an outline of how their payments to consultants were calculated. I am not satisfied that these costs represent best value for the consumer. For this reason I met with the Health Insurance Authority on 10 June 2011, as the regulator of the private health insurance market, and requested them to examine the issue of provider costs in the market. The Authority undertook to revert to me within one month on how this matter might be addressed.

In April I welcomed the VHI's announcement of its financial outturn for 2010, which shows a significant improvement over the 2009 outturn. I acknowledged that, over the last two years, the company has taken steps to contain the rising costs of meeting customers' health care needs, including a 15% reduction in consultants fees per procedure, a 6% reduction in private hospital fees per procedure and an annualised reduction in internal administration costs of €14 million. These actions have generated annualised savings of €100 million. VHI pays professional fee benefits to medical practitioners for services rendered on a fixed fee per service basis. In 2011 VHI anticipates that the total remuneration paid to hospital consultants will be over €50 million less than the total remuneration paid in 2009.