Seanad Éireann - Volume 183 - 31 May, 2006

Public Hospital Land: Motion.

  An Leas-Chathaoirleach: I welcome the Minister of State at the Department of Health and Children, Deputy Tim O’Malley.

  Mr. Browne: I welcome the Minister of State to the House. I move:

That Seanad Éireann condemns the Government for pursuing a policy which will give away the lands of public hospitals to private hospital developers; and calls on the Government to:

— abandon its plans to give the lands of public hospitals to private developers;

— ensure that the lands on public hospitals are kept for public health facilities; and

— instead use the public lands to build much needed public health facilities such as more in-patient beds and more step-down and rehabilitation facilities for the elderly.

While Fine Gael is not against the concept of the private sector being involved in health care, we [1709]have a difficulty with public land being given to the private sector. We have a difficulty with this approach for a number of reasons. Given this Government’s inability to manage projects we have every reason to be concerned. At Beaumont Hospital a public private partnership involving a carpark went way over budget and time. It benefitted only the private developer and was not of use to the public or the taxpayer.

5 o’clock

My colleague, Deputy Paul McGrath, has done much work on the area of the Kinnegad and Kilcock motorway bypasses. The company involved invested €40 million and borrowed a further €150 million. The taxpayer has put €268 million into the project and is liable for tolls estimated in the region of €600 million over the next 30 years. That cost will rise considerably.

This Government has not negotiated good deals with the private sector in the past and in this case, because public land is being handed over, it will restrict the future development of hospitals. We have a simple ideology, that public hospitals and lands should be kept for public beds and facilities. We do not agree with the Government’s policy and I do not believe that Fianna Fáil agrees with it. It is being pushed by the PDs. In the Sunday Independent recently Mr. John Drennan wrote about the privatisation of the health service by stealth under the Tánaiste and Minister for Health and Children, Deputy Harney, and he is not far wrong.

There have been many announcements about public and private bed levels and most people are confused. In November 2001, the Government’s national health strategy promised an additional 3,000 beds and 650 beds by the end of 2002. In January 2002, four months before the general election, we had a bed review report. The then Minister, Deputy Martin, promised 3,000 acute hospital beds over ten years, and this was due to be “the largest ever expansion of acute beds for public patients”.

In June 2002, the Fianna Fáil-Progressive Democrats programme for Government referred to expanding the number of public hospital beds in line with a programme to increase total capacity by 3,000 during the period of the strategy. By October 2004, the Taoiseach told the Dáil that 900 beds had been funded, but had the embarrassment of having to admit that the 900 beds of which he spoke may not have been beds and it later emerged that this figure included trolleys. The next day the Tánaiste told the Dáil that none of the 900 beds was a trolley. This was contradicted the following month when a journalist, Ms Maev-Ann Wren, made an FOI request which revealed that a bed or a day place is “a device or arrangement that may be used to permit a patient to lie down, recline or recover in the course of an elective day admission”.

By May 2005, the Department of Health and Children progress report on the 2001 health strategy referred to provision being made for 900 [1710]additional inpatient or day beds. In early 2005, Professor Brendan Drumm of the HSE stated that we do not need more beds, which contradicts everything that has been said so far. In July 2005, the Tánaiste told the Oireachtas Joint Committee on Health and Children that she intends to provide 1,000 of those beds by decanting 1,000 private beds in public hospitals into private facilities on public hospital grounds. It is worth noting that 2,500 of the 12,900 beds in the acute hospital system in public hospitals are private beds. One can understand why the public is confused, as is the Government, I suspect.

While Fine Gael is not opposed to private individuals being involved in health care, we have a problem with them using public land. The Tánaiste justifies this by saying that by freeing up public land she will remove private beds from the public health system. There have been quite a few mixed reports on that issue. I was interested that Dr. Fergus O’Ferrall, director of the Adelaide Hospital Society, the Adelaide and Meath Hospital, Incorporating the National Children’s Hospital in Tallaght, stated that this proposal makes neither health policy sense nor economic sense. He states that patients will not have the same quality of care because they will not have the comprehensive teams and services available to those in private beds in our public hospital systems. He said that those occupying public beds will also get poorer care because consultants will not be around as much as they are when public and private beds are in the same hospital. That is an important point. The Tánaiste’s plan is to free up 1,000 beds by moving 1,000 of 2,500 private beds in public hospitals into new “for-profit” private hospitals over the next five years. These hospitals will be required to offer at least 20% of beds to public patients at a discount of 10% or more. Fine Gael and the Labour Party believe that public land belongs to the people. We will use that land for public beds, particularly step-down beds.

Senators expressed differing opinions during a recent debate on accident and emergency units. Those in hospital should be allowed to move home or to a step-down facility in order to recover after operations. They should not clog up hospitals. Fine Gael has pledged 600 beds in the Dublin area. This can be done within 30 months and would help to alleviate the scandalous situation of people on trolleys in accident and emergency units.

The Finance Acts of 2002 and 2003 were altered to allow investors to write off the entire cost of the construction or refurbishment of private hospitals against their tax bill using accelerated capital allowances. For every €100 million invested, the taxpayer will contribute €42 million. This is effectively a gift from the State and will not result in the public ownership of the hospital. Families will inevitably end up paying more.

The proposed new hospital beds will attract a subsidy of €190,000 per bed in tax relief. The [1711]Tánaiste admits that VHI members could face an increase of 66% in hospital charges as a result of this policy. Fine Gael asks what ordinary families receive in return for the extra cost burden. We have seen examples of public private partnerships that did not work in the field of education. They were completed late and over the budget allocated, which cannot be justified. The average household pays €3,000 to fund public hospitals but the Tánaiste has failed to provide a full hospital service. As a result, she has collected some €1,800 more per family than in 1997. Furthermore, families have been forced to pay €1,300 on private health insurance because they cannot guarantee a health service without it.

The key to public private partnerships is that risk is transferred to the private sector. These private hospitals will receive a 42% subsidy on the building and a 20% subsidy on its operation. No accident and emergency units will be included because the hospital will concentrate on routine work rather than complicated, costly cases. The Comptroller and Auditor General did not give a glowing report of the handling of the saga involving the car park at Beaumont Hospital.

The hospitals to which the Tánaiste refers depend on generous tax relief and massive indirect public subsidies through reliance on the public hospital system. The Tánaiste does not refer to the separate laboratory or X-ray facilities, CT and MRSI scans, or post-operative intensive care units to be provided in the hospitals. If public facilities continue to be used for private patients, the public patient may have to wait longer for diagnostic tests and procedures.

Furthermore, the Tánaiste stated that consultants in public hospitals will be permitted to treat private patients in new private hospitals. In order to maximise income, consultants will have to spend more time in private hospitals and less with those in public beds. Accident and emergency units are expensive and no private hospital in the country provides accident and emergency services similar to public hospitals. Private hospitals tend to choose services that are most cost effective and easy to manage. Fine Gael has no problem with private hospitals but questions why land from public hospitals is given away for such a minor return. It does not represent value for money.

Last week representatives of the Medical Council appeared before the Joint Committee on Health and Children. It stated that private hospitals are not subject to the same degree of regulation as other hospitals. One does not require a licence to operate a private hospital, a situation that has inherent risks. Fine Gael objects to public land being given to private developers for their gain, not for the taxpayers’ gain or that of the patient.

  Mr. Ryan: I welcome the Minister of State, although he may not welcome what I have to say.

[1712]The Civil Service, and particularly the Department of Finance, is awash with accountants whose function is to account for money. There is not a single qualified project manager working in the Civil Service. Most people would not know that there is such a qualification but hundreds of young people train as project managers and it is time they were employed in the public sector. The ESB should be in charge of public sector project management. It does so all over the world, on time and within the budget. It would do a better job than the dead hand of the Department of Finance, holding up matters and intermittently causing overruns.

On an intellectual level, I am intrigued by what the Progressive Democrats, effectively the Government, are attempting. Is there insufficient money to provide beds? Why are extra beds being provided if, as we are being told, there is no need for them? The Tánaiste and the chief executive of the HSE agree that we do not need extra beds despite much objective evidence to the contrary. Do we need these beds because the private sector promised to provide them?

At the end of this year the Government could have a surplus of up to €1.5 billion. This would build all the hospitals we need and, when the capital investment was finished, the surplus would fund the staff costs. It is impossible to believe a shortage of money is the problem. Will we save money by following this path? We may save some in the short term but we are effectively giving money away, enabling rich people to increase their wealth at the expense of our health service. We are providing them with much money and valuable sites. If we need further public health facilities, the State will have to buy sites because it has given these away. The hospitals will remain private. Will the private sector deliver a more efficient system?

There is an ideological issue, since most economic consultants build into their measurements a presumption of greater efficiency on the part of private provision. They believe that to be true universally; it is not a matter to be discussed by mere mortals such as me, since they know best. The only way to deal with that argument is to examine the question of whether private health provision is more efficient. I do not know how one measures efficiency in health provision, but I have two indices. The first is the outcomes, and the second is the cost.

In Ireland, we spend approximately 7% or 8% of GDP on health care. It is not quite as much as we like to say, since we add in things that other countries leave out. The Nordic countries and Canada achieve levels of approximately 10% of GDP. They have life expectancies among the highest in the world and infant mortality rates among the lowest, two very important indices of performance.

No one disputes that the most privatised of all health services is in the United States. The glossy image is of middle-class people attending posh [1713]hospitals with wonderful backup, but it is the most expensive health service in the world, by a factor of 60%. It takes up approximately 16% of the United States’ GDP. One dollar in every six generated in the US every year goes into health care. At the end of it all, they have a lower life expectancy than the Nordic countries and a higher infant mortality rate. The baby of a Spanish-speaking mother in the United States has a lower prospect of survival than one born in Cuba, owing to the appalling American system.

Private health care does not deliver better health, and it is extraordinarily expensive. If we had time, I could explain why. Health is not a commodity regarding which the laws of supply and demand work, owing to all sorts of factors. The presumption of the Competition Authority that if consultants had no agreement on fees, people would shop around for the cheapest is a classic example. If people are seriously ill, they will shop around for the most expensive consultant, believing him or her to be the best.

Money does not work. There is no argument on the basis of funding or delivery of services anywhere in the world to show that private health care is more efficient. There is an ideological assumption that it is, since the private sector is known to be more efficient. The inconvenient fact is that the biggest health market in the world, the US, where market forces run health services to the greatest possible extent, is least efficient and poorest at delivering quality in the western world. However, that fact is conveniently left out because we all know that the market is more efficient.

I need not go into the fact that most sane people, including my wife, who is a doctor, would in most instances decline to attend a private maternity hospital. My wife would not go near a private maternity hospital when our three children were born, since she knew that if anything went wrong, they would promptly call an ambulance and ship her off to a public maternity hospital. That is true of entire areas, and as Senator Browne has said, private hospitals provide a service and serve a purpose, but they leave out the hard parts most of time. Many private hospitals have a policy of leaving out what is difficult. They will deal with routine psychiatry but not with the seriously psychotic. They will deal with what they call accident and emergency, but it will not include the seriously ill. They will deal with many other issues, and at least one private hospital to my knowledge is more of a rest home for comparatively well-off people funded through VHI than a genuine hospital, and there are many of those around the country.

I do not understand why the Government is so set on this route. I regret to say that ideology rather than delivery of a service is the bottom line. Ideology has touched the Tánaiste, in the same way that the hand of God touches people, and told her that this is better. I find it astonishing that a sensible party such as Fianna Fáil, which [1714]knows this is a bad idea and will provide bad value for money rather than better health care, has allowed itself to be bounced into this by the party that seems increasingly to be driving the Government. I am very happy to second the motion.

  Mr. Glynn: I move amendment No. 1:

To delete all words after “That” and substitute the following:

Seanad Éireann

— commends the Government on the measures it is promoting to improve access for public patients to acute hospital care;

— supports the Tánaiste’s policy to develop private hospitals on the campuses of public hospitals in order that up to 1,000 beds currently reserved for private patients may be redesignated for use by public patients in the most cost-effective way;

— notes that the Health Service Executive has invited expressions of interest from developers who are interested in developing private hospitals at 11 public hospital sites;

— notes that the process is being conducted in accordance with the relevant EU law and will adhere to public procurement rules and best practice and will fully protect the public interest; and

— supports the Government’s policy of encouraging public and private sectors to work together in the provision of health care for the benefit of the entire population and encourages further innovation and initiative in this regard.

Tá fáilte roimh an Aire. I welcome the opportunity to debate this motion.

As someone who was involved with the health board system for some time, both before and after its demise, it seems that one advantage it still has under the aegis of the HSE is that it holds a fair amount of property. I am in favour of the proposal that properties surplus to the HSE’s established requirements should be devolved to another sector or arm of the health services.

The public private mix in public hospitals has long been a feature of the health service. While it has advantages when it comes to sharing clinical expertise, it has been recognised that inequities have arisen for public patients. That is a fact. This initiative will improve access for public patients while providing insured patients with new, purpose-built hospital facilities.

It is also a central element of the policy as set out in the Finance Acts that public patients should be able to access new private facilities. That can be done through the National Treat[1715]ment Purchase Fund or by direct arrangement with the HSE. The Tánaiste has given very clear reasons to pursue that objective, to which there is a strong degree of logic. Whether we like it or not, all consultants employed in hospitals, irrespective of discipline, have several private patients and a private practice.

In 2001, the health strategy contained a commitment to increase acute beds by 3,000 over a ten-year period. That year, the average number of inpatient beds and day places available for the treatment of patients in public acute hospitals was 12,145. Hospital returns for 2005 show that the number has now risen to 13,255, an increase of 1,110 inpatient beds and day places. Some 90% of treatment places in acute hospitals are overnight inpatient beds. In addition, a further 450 acute beds or day places are at various stages of planning and development under the capital investment framework for 2005-09.

In July 2005, the Government announced an initiative to have private beds built on the campuses of public hospitals. The aim of the initiative is to enable up to 1,000 beds in public hospitals that are currently being used by private patients to be redesignated for use by public patients. I do not see anything wrong with that, I think it is a good initiative.

By allowing a new private hospital to take a substantial number of private and semi-private beds out of our public hospitals we will create new beds for public patients in the fastest and most cost effective way over the next five years. This will bring together different areas of Government policy in a coherent and practical way in order to increase bed capacity for public patients in public hospitals.

Encouraging the participation of the private sector in generating extra capacity maximises the potential use of public hospital sites, promotes efficiency in public and private acute service providers, promotes greater competition in the supply of hospital services and offers improved quality and choice to all patients. Choice is a very important element of our health service. The public-private mix has proven difficult to manage and resource and cost sharing is not as clear as it should be. Separating the management and financing of a substantial portion of private beds will bring greater clarity to such issues.

Since 1999, it has been Government policy that the full cost of private beds in public hospitals should be paid by insurance companies. This initiative, which incorporates the policy of full economic charging, will bring about an increase in the number of public beds and new hospital facilities. This is a realistic and achievable objective. It will offer tax breaks on private hospital investment and there is an important rationale behind this concession. By locating new private hospitals adjacent to existing public hospitals we will make their roles complementary. The initiative is designed to support the policy of building [1716]regional self sufficiency in our hospital services. Team-based working arrangements in the hospital are required to ensure best patient care and will be introduced.

This policy is a key part of the context for a new consultants’ contract, which has been overlooked. Most Members of the House would agree a new contract must be negotiated.

Cost effectiveness is of great importance because we are all long-suffering taxpayers. This plan is designed to be a cost effective way of expanding the supply of beds for public patients. 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 its review which was published in February 2006, including consultations with the Department of Health and Children and the HSE.

When a new public bed is provided in the traditional way, the Exchequer bears 100% of the capital cost. By moving private beds into a new facility and thus allowing for new public beds, the State bears less than 50% of the capital cost. The running costs of the private beds would no longer be subsidised or managed by the State and taxpayers’ money is saved. These beds are currently staffed by nurses paid through public funds, therefore, all that is required is the relocation of the private beds to a new facility financed by private investors. These facilities would be co-located, so consultant staff would be on site for both public and private patients. Consultants can use their time more effectively if they work in one place only, as opposed to many different sites.

  Mr. Browne: Is the Senator joking? Consultants spend equal time in public and private health care.

  Mr. Glynn: It is all about delivering services to more people. This initiative will increase the delivery of services and reduce the cost to the Exchequer. I appreciate that there will be concerns and some people may be afraid of what is new, but this has the capacity to work. It will increase the number of public beds and the savings made can be used elsewhere in the health service.

  Mr. Quinn: I welcome the Minister of State and congratulate Fine Gael on putting down this worthwhile motion. For two reasons, I am tempted to say that in an ideal world we would not allow private medicine to exist at all.

The first reason is perhaps of lesser importance, but it is significant nonetheless. The existence of private medicine means that none of the movers and shakers in our society need experience the difficulties that public medicine can bring. I doubt very much if any Member of this House, or indeed of the other House, fully depends on public medicine for his or her needs.

[1717]This allows us to tolerate shortcomings in the provision of public medicine that we would never tolerate if we had to go through the public system. It is one thing to read about and to empathise with the situation that other people find themselves in, it is quite another to experience these things for oneself. The existence of private medicine is something that allows us to wring our hands at what goes on in the public area, while at the same time we tolerate its continuance.

The second reason is that a two-tier medical structure creates a two-tier society with life or death consequences. It is a shocking indictment of this country that the further up the socio-economic scale one happens to be, the healthier a person one is. This applies to the ultimate sanction of death. The better off one is, the longer, on average, one lives. The further down the socio-economic scale one is, the more likely one is to contract and die of a whole range of diseases.

Professor Ron Hill of the department of political science in Trinity College spoke to the Committee on European Affairs today and pointed out that life expectancy in Russia has dropped dramatically in the past 20 years. In Russia, a man’s life expectancy is now in the late 50s and a woman’s in the mid 60s. It appears that this is a result of the destruction of the state health system after the collapse of communism. Similarly, infant mortality has jumped in this period.

There are many reasons for the disparity in Ireland, but some of the most important relate to the availability and quality of medical care. I do not mean to suggest that the quality of medical care in public hospitals is in any way inferior to that in private ones, but a crucial element in successful medical care is identifying and treating problems early. A public system that makes one wait for diagnosis and treatment is a system that will inevitably have worse outcomes than one which offers instant diagnosis and immediate treatment.

Both of these are good arguments against private medicine, but there are arguments on the other side as well. An important point is that private medicine creates competition in the provision of services. I believe that competition is a good thing and is a necessary factor if we are to provide efficiency and quality in any marketplace. I disagree with Senator Ryan on this point. I have had experience of attending private hospitals in the United States and I was impressed by the service delivered. I was also impressed that, unlike what I expected to be the case, I was not overcharged when I had to go to hospital there.

If we banned private medicine in the morning and brought it all under the umbrella of the State, we would create a monster monopoly, which I very much doubt would be in the public interest. Another argument is the difficulty of getting from where we are now to that point. We have a mixed public-private medical system here and it has served us for many years, although I am not sure [1718]it has served us well. Even if we wanted to, I am not sure that in practice it would be possible to move from what we have to a single system. All of this leads me to conclude that our mixture of private and public medicine is something that is probably desirable and is not likely to change in the foreseeable future.

However, that does not imply we should sit back and allow the balance between the two sectors to take any shape the marketplace may determine. In other words, I would be worried about the marketplace being the only element determining that. We need a to establish a careful balance to ensure that, to the maximum possible extent, the two parts of our medical provision complement each other in the interests of the country as a whole.

I welcome the Tánaiste to the House. I recall from my university days a principle in economics called Gresham’s law. Gresham’s law argues that bad money will always in the end drive out good money. When it comes to co-operation between the public and private sectors, the same kind of principle applies. Marketplace economics tends to win out in the end. When we reflect on what has happened here in the past decade or so, we tend to find that when the public and private sectors get into bed together, the private sector always fares best in any such encounter. Whether such partnerships apply to airlines, hotels or other sectors, invariably the private sector wins.

Therefore, we are right to be wary of partnerships between the public and private sectors. We do not seem to have yet devised a way of operating that guarantees the public interest will not end up being sacrificed on the altar of private profit. I am sure there are as much brains in the public sector as in the private sector, yet the public sector does not yet seem to have found a way to manage this issue successfully. I am not only referring to medicine but to public-private partnerships in sectors in general.

We need to be particularly careful when it comes to making available to the private sector public sector assets that are in short supply. This is a crucial aspect. This is a dangerous game, because it usually tends to have a zero-sum outcome in that what one side gains, the other side loses.

When we talk about using public hospital lands to build private businesses we are not, therefore, talking about a normal commercial operation. Those lands are a rare and valuable asset, which may not be fully used by the public sector now but may very well be needed at some point in the future. There can be no doubt in anyone’s mind that in the future the public medicine sector will need to expand greatly, even if it is only to keep step with the increasing demands an ageing population inevitably will bring. Our population is ageing, and the signs are that our people will need more medical treatment. Even though we may not need public hospital lands now, we may need them in the future.

[1719]For public hospitals to sell off some of their lands now for a short-term gain, which will largely profit private rather than public interests, appears to be a policy that sells future generations short. While Senator Glynn made a good case for doing that, I take a long-term view. We risk creating a situation in which we undercut what our children and grandchildren will wish to do by giving away what should have been an asset that was preserved for their needs.

We need to establish a careful balance between the private and public medical sectors. Preserving such a balance is best achieved by refusing to sell off public hospital lands, and for that reason I am pleased to support this motion. I understand the other point of view, which Senator Glynn explained very well, but on balance we need to be careful in regard to such a policy, and taking account of the long term, I support the motion.

  Ms Harney: 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 [1720]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 [1721]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.

[1722]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 shortl[1723]isted 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, or 25%, 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.

  Mr. Cummins: I welcome the Tánaiste. Many consultants and developers have come together in many parts of the country to build private hospitals mainly because of the tax breaks which emanated from the 2002 and 2003 Finance Acts. My colleague, Senator Browne, alluded to the fact that for every €100 million invested, the taxpayer will contribute €42 million. This is a massive gift from the taxpayer. The State will not own one brick in these hospitals. This may seem a bad deal for the taxpayer but to have a policy where [1724]private hospitals can be built on the land of existing public hospitals is a step too far. As Senator Quinn mentioned, this land may be required for the development of public services in the future. Did the Tánaiste consider that when she announced her policy?

6 o’clock

This policy deserves careful scrutiny not alone by the Houses of the Oireachtas but by the Comptroller and Auditor General before any further commitments are made on it. This is the people’s land and should be used for public beds for the people. We need more public beds, especially step-down beds, particularly in Dublin. My party has made it clear that lands in public hospitals should be used to provide public health facilities. The State lands should not be given to the developers of private hospitals.

The key to public private partnership initiatives is that the risk is genuinely transferred to the private sector. There will be a 42% subsidy for the hospital buildings and 20% subsidies for their operation. I doubt they will provide accident and emergency departments. All the routine work will be moved to the private sector, the most lucrative area within the system.

It is estimated by investment promoters for these projects that every €75,000 invested will yield a cash profit of €62,000. This will go to high income earners, particularly those with large rental incomes. No wonder this proposal is being presented as an attractive property deal. Will the Tánaiste spell out whether separate facilities such as laboratory services, x-ray services, CT and MRI scanning facilities as well as intensive care units will be provided in these for-profit hospitals adjacent to our public hospitals? If the public facilities continue to be used for private patients the public patients will have to wait longer for diagnostic tests and procedures.

Despite the Tánaiste’s plan to introduce public-only contracts for hospital consultants she recently stated that consultants in public hospitals will be allowed to treat their private patients in the new private hospitals. Will this also mean that the private consultancy rooms they occupy in public hospitals will also be transferred to the private hospitals?

Studies in medical journals have demonstrated that for-profit care is expensive and the health outcomes compare unfavourably with those for non-profit care. The plan to have private hospitals on the grounds of public hospitals makes neither good health policy sense nor economic sense. There is a fundamental difference between building 1,000 new public beds and the plan which the Tánaiste has announced.

The not-for-profit governance model for acute hospitals in Europe is based on a commitment to patient care rather than profit. Dr. Fergus O’Farrell recently suggested that such a model is cheaper for the taxpayer, will lead to better care for all patients through a single high quality stan[1725]dard of care provided by the same health care teams within one hospital.

Market forces seem to dictate everything nowadays. Dr. O’Farrell says some aspects of life, such as care for the sick are too precious to entrust to the market. The Minister has failed to solve the crisis in accident and emergency units although she has been in office for some time. This policy will also result in failure.

  Mr. Minihan: I second the amendment and welcome the Minister of State at the Department of Health and Children, Deputy Tim O’Malley to the House. I also thank the Tánaiste for her comments and her address to the House. In reaction to the Tánaiste’s speech I offer Senator Browne the opportunity to amend or withdraw his motion.

  Mr. Browne: Definitely not.

  Mr. Minihan: On that note I will continue.

  Mr. Browne: I am more convinced than ever.

  Mr. Minihan: I am delighted that this subject is before us this evening. I was very disappointed in the motion moved by Fine Gael and the Labour Party. As the Tánaiste said, rarely has there been in this House such a poorly thought-out or worded motion. I do not know whether this is a result of Labour’s influence on Fine Gael or the other way around but if this is the standard that is the result of the Mullingar accord——

  Mr. Cummins: The Senator will know a lot about it in the future.

  Mr. Minihan: ——the voters, and most importantly the patients will be rightly nervous about what is coming down the track. The wording of the motion denies the reality which is in fact known to Members opposite. Seldom does useful or quality work emanate from wilful self-delusion. This is no exception. The opening line of Senator Browne’s motion refers to the giving away of public land to private developers. Only 22 days ago, on 9 May, Senator Browne was in his seat when I stated the following:

The Opposition bizarrely objects to the plan to deliver 1,000 new public beds by private sector investment. Typically clouded leftist Labour thinking managed to describe this as privatisation. Fine Gael seems to base its opposition on the mistaken view that public land will simply be given away. It will not. Public land will, of course, have to be leased or bought at commercial rates.

The Tánaiste reiterated this a few minutes ago.

  Mr. Browne: What will happen when the lease is up?

[1726]  Mr. Minihan: Although this was made crystal clear three weeks ago, Fine Gael does not want to let the facts get in the way of its agenda. It is sad that we cannot have a clear and realistic debate.

The Opposition’s motion deliberately gives the impression that land is being made available, with no strings attached to private developers. It is not. Even if the Opposition dosed not want to listen to me or to the Tánaiste the tender notice published by the HSE on 19 May, prior to the tabling of this motion makes the conditions clear. The e-tenders website is open to the public. The tender document states that the contract will include:

. . . restrictions in relation to the use and management of the site. Tenderers will bear full risk, cost and responsibility for the construction and operation of the new hospital facilities. The hospitals will be private hospitals who, in addition to providing private medical health care services, will be required at the discretion of the contracting authorities to enter into contractual arrangements for the provision of medical services to the contracting authorities.

The Labour Party base its objection on the nonsensical belief that this initiative is some form of privatisation. That is incredible. How can anyone describe getting the private sector to create 1,000 additional public hospital beds as privatisation? It beggars belief. The party has some problem with both the private and public sectors investing in new hospitals and new public beds. The Labour Party’s rusty statism creates an automatic reflex against private investment, without recourse to analysis or the application of logic. The taxpayers must be made aware that the Labour Party is determined that they alone must pay for every single new public hospital bed, including those beds reserved for private patients.

While the Labour Party’s position on this worthy and commendable initiative is typically and unsurprisingly potty, Fine Gael’s position is a little more puzzling. The former Fine Gael health spokesperson, Deputy Olivia Mitchell, said in May 2004:

It is only with the introduction of competition that we can capture for patients the benefits of the market and ensure that the health services benefit from innovation, from financial and operational efficiencies, from the use of technologies, has the incentives to control costs, improve standards and of all of the other dynamic benefits that operate automatically in the system in which competition flourishes . . . I believe [private provision] is the direction in which we must go. Otherwise there are simply no inbuilt incentives to provide value for money, to innovate, to respond to changing demands, changing circumstances.

  Mr. Browne: She did not mention public lands.

[1727]  Mr. Minihan: There we have the Fine Gael view. Not only are Fine Gael’s new health ideas bad ideas, but as Deputy Olivia Mitchell’s statement shows, it has totally abandoned any good ideas it had on health.

  Mr. Browne: No it has not.

  Mr. Minihan: l will conclude with the following questions. When, at the cost of the private sector, 105 additional public beds become available in Tallaght, will the local Fine Gael and Labour representatives object? Will they object when the 118 additional beds become available at Limerick regional hospital or when the additional 85 beds for public patients become available at Waterford regional hospital? Will Senators Cummins and Browne oppose them? When the 118 additional beds for public patients become available at Cork University Hospital, I will commend the Tánaiste and not let blind ideology convince me good is bad. Will Senator Ryan be flaunting this motion then? I suspect not.

How will the public look back on this Fine Gael and Labour motion when 99 beds are freed up for public patients at St James’s Hospital or 106 beds at Beaumont or 21 in Blanchardstown? What will it think when Sligo general gets 78 additional public beds, Galway 116, Letterkenny 58 and Drogheda 112, all provided by the private sector? Where will the Fine Gael and Labour Deputies, Senators, councillors and representatives be when these additional 1,000 beds are opened in their local hospitals? They will be welcoming the fruits of the initiative they oppose today.

This is a worthwhile and correct policy. Members need not just take my word for it. A recent letter to The Irish Times from a consultant at Waterford general hospital read: “This co-location strategy is not only the antithesis of privatisation but is a sophisticated political mechanism to get the independent sector to fund improvement of the Irish health service and to do it rapidly”. I commend the Tánaiste and the Government on this great initiative and encourage all Members to do likewise for the sake of the thousands of public patients it will benefit.

  Mr. Finucane: Was the Senator’s speech written by himself or was it handed to him by the Department of Health and Children?

  Mr. Minihan: On a point of order, for the record, I spoke to no official from the Department of Health and Children nor was I handed any script by anyone from the Department. I ask for the Senator’s suggestive comment to be withdrawn.

  Mr. Finucane: All right, the Senator has answered the question.

[1728]  Ms O’Meara: That is not a point of order.

  Mr. Finucane: I do not need a script for what I have to say on the motion.

  Mr. Minihan: It was a false accusation. I make no apologies for my preparation. If Fine Gael had prepared its motion, it would not be in the mess it is in now.

  Mr. Finucane: If I had my way, I would ban the use of scripts in the House. Many years ago I was on the joint committee dealing with State sponsored bodies, as was an eminent Limerickman, former Deputy Desmond O’Malley. At the time, we were reviewing the operation and performance of the voluntary health insurance board. We were disappointed that people did not have freedom of choice in the Mid-Western Health Board Area because there was no private facility in the area. We felt this was unfair and that there should be a private hospital facility in the area so that people would not have to travel long distances.

Now the area has a very good facility in Barrington’s hospital, although this is just a short-term surgical day care type facility. It is run well and does much work for the national treatment purchase fund. As well as that, there are also proposals for a private facility development on the campus of Adare Manor and for a private health facility at Blackberry Park outside Limerick. On top of these we now have a proposal from the Department of Health and Children for a facility on the campus of the regional hospital. Having suffered the embarrassment of a dearth of private beds in the past, if these proposals go ahead, we will have an embarrassing richness of private beds.

My only regret about this motion is that I do not think the Department is looking at the issue properly. When people go to hospital they are often there for three or four days longer than they should be. It would be more effective to have a step-down facility in the campus of the regional hospital to accommodate people for a while to free up beds in the hospital proper. The same could be done in many hospitals around the country. This was brought home to me forcefully last January by the situation in Cork University Hospital where there was congestion in the accident and emergency unit. The cardiac surgeon came into the hospital several days to do scheduled operations, but all the intensive care beds were occupied by accident and emergency patients. It is not rocket science to know what should happen in such situations. There should be a convalescent facility on the campus to ensure people vacate these beds and they are available.

Most of the private hospitals operating around the country have been incentivised by generous largesse from the Government, introduced originally after a private conversation between the former Minister for Finance, Mr. McCreevy, and [1729]a prominent person involved in private hospitals. The seed sown by this idea has been taken up and is now very much profit driven. Capital costs can be paid off within seven years as a result of tax-based concessions and this costs the Exchequer significant amounts of money. We need to consider whether all the private hospitals we have currently operate to full capacity and whether we need the type of private hospitals projected. We also need to find out whether we will get an imbalance within the system to the detriment of public beds in favour of private beds. This could happen.

Despite the fact we know our elderly population is growing, we have already seen that it is physically impossible for many of them to get places in homes for the elderly — St. Ita’s and St. Camillus’s in my region — because of the shortage of beds. These public beds are not increasing in number because the same incentive operates in the case of private nursing homes and people are encouraged to use those facilities. No recognition is made of the cost of a nursing home for a person with a pension. The onus is supposed to fall on the elderly person, but in many cases it falls on their families to make up the difference. Often people who recognise the excellence of the facilities in St. Ita’s and St. Camillus’s request places there, but they cannot get in. I am sure the same is true throughout the rest of the country. It is becoming impossible for people to get into the public nursing homes and hospitals. We have a contraction in the number of public beds despite the demographic trends of our exploding population.

For example, a private hospital in Galway that made a facility available to the National Treatment Purchase Fund was extremely disappointed. I understand that just 7% of clients have come through the NTPF mechanism, even though it has been made available, if possible, to approximately 50% of patients.

I wonder what will be the reaction to the creation of a private hospital within the campus. We heard a great deal of talk about such matters in recent times. The Taoiseach had to apologise for his statement that Willie Walsh was trying to “steal” the assets of Aer Lingus. Such criticisms have been made in many cases. In this case, are we trying to strip the assets of a public facility in the form of our hospital network? I am concerned about the direction in which we are going. I would not be as discouraged by this approach if I thought fewer private hospitals were being made available by private companies. As I pointed out at the outset, we could end up having an embarrassment of private beds in Limerick Regional Hospital.

I believe we are going down a dangerous road. I was contacted at a clinic last Monday by a person who told me about an elderly gentleman in his 80s who is being discharged after four weeks in hospital. I was informed that he cannot afford to go to a private nursing home, but he has to be [1730]discharged nonetheless. I was told that it would be good if the man in question, who has suffered a minor stroke, could be kept in the facility for another few weeks. He will not be considered by the hospitals for the elderly even if he can sustain it financially and medically. Financially, his income would have to be taken into consideration, and on the medical side, he would have to be in category 1 or category 2 to be considered.

One has to have a serious stroke or be deemed incapable before one can be considered for our public hospitals. One does not have to be a rocket scientist or have a great deal of imagination to know why beds are being taken up within our hospitals system and why there are not enough step-down facilities. We would have addressed the shortage of beds in our hospitals if we had realised this.

There has been a great deal of talk about primary care, but it needs to be borne out by action. On the Order of Business this morning, I raised the case of an 85 year old man with a serious medical condition who lives at home. It is wrong that he is not considered for an hour of home help because he has two pensions. I ask the Minister of State, Deputy Tim O’Malley, who is familiar with the mid-west region, to examine the pilot nursing home care package project.

I will conclude by highlighting the case of a person who is eligible for home help, is means tested by the local community welfare officer and is validated on the medical and financial sides. If that person wants to get extra help through a nursing home care package, he or she will be financially means tested all over again by different people within the health system. That does not accelerate the long process that is involved. There was never a greater amount of duplication or more of a need for simplification. It is a pity that it cannot be examined. We should not be hypocritical by saying we are spending €150 million per annum on primary care at a time when an 85 year old man cannot be considered for an hour of home help because he receives a second pension from the county council. That is wrong.

I do not know the means testing criteria which are used. I would like to see some flexibility and common sense in the system, which has become layered with bureaucracy and administration. There are not enough people at the coal face.

  Mr. Lydon: Mr. Charles Haughey said once that the job of the Opposition is to oppose. I understand that the Opposition has to submit various motions on various topics. I would like to examine this motion in a little detail. While some of it is good, I want to make clear that some of it is not so good.

This debate was started by the Tánaiste’s announcement in July of last year of an initiative that will provide private beds on the campuses of public hospitals. The aim of the initiative was to enable up to 1,000 beds in public hospitals which are currently used by private patients to be redes[1731]ignated for use by public patients. How could anyone disagree with that? As a number of speakers have said, the initiative brings together a number of Government policies. Co-location is already a feature of a number of hospital campuses. The experience of the co-existing bodies will be taken into account.

The motion before the House “condemns the Government for pursuing a policy which will give away the lands of public hospitals to private hospital developers”. That is not what will happen, however. As the Tánaiste said earlier in this debate: “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”. That does not mean that land will be given away.

The Opposition motion also calls on the Government to “abandon its plans to give the lands of public hospitals to private developers”. Lands are not being given to private developers. That is not what this is about. It is about providing 1,000 additional beds for public patients over the next five years.

I do not believe anybody in this country doubts the Tánaiste’s bona fides. When she took on the role of Minister for Health and Children, which is one of the most difficult ministries, she went straight at it in a sensible and rational way. As she knows she cannot fix everything in a week, she is planning ahead. She has adduced her plans and made radical changes so far and will continue to do so. She is determined and intelligent and she will get the job done. It might take her five years to do it, but I am sure she will continue her work over the next five years. While she might change her portfolio, I hope she will still have the same job after the next general election.

The Tánaiste mentioned many of the advantages of her approach in her speech. It encourages the participation of the private sector in generating extra capacity and maximises the potential use of public hospital sites. I know of many hospital sites where many acres of land were not being used. They were lying vacant without any plans to build on them. This measure will encourage such construction.

The Fine Gael motion says that public lands should be used “to build much needed public health facilities”, to provide “more in-patient beds” and to make “more step-down and rehabilitation facilities for the elderly” available. That seems laudable until one remembers that 1,000 more inpatient beds are being provided. I must confess that I do not know whether more step-down and rehabilitation facilities for the elderly will be made available, but such facilities may well result from the Tánaiste’s approach.

The additional revenue cost to the Exchequer of 1,000 beds is the result of having to replace the income lost by public hospitals in transferring private work to the new private hospitals and a small increase in consultant numbers. The staffing [1732]of the beds will remain in place in the public hospitals, there will be no change in that. The tax foregone in relation to capital allowances in respect of investment in private hospitals is available whether private hospitals are on green field sites, hospital campuses or elsewhere. The tax breaks are the same.

What is the advantage of this approach? The two hospitals will be located together. The transfer of staff, expertise and training will be linked. That is what it is about. I do not want anyone to say there will not be a link because there will be. Doctors will move from one facility to the other, etc. To provide 1,000 hospital beds in public hospitals would cost the Exchequer in excess of €500 million capital and €300 million revenue per annum, but that will not happen in this case. I do not need to restate the figures the Tánaiste gave in her speech, but I will do so:

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.

How could one not agree with that? This is a good deal. Any businessman who looks at such a deal would say we are getting more beds for half price, or almost nothing. We hear complaints about the scarcity of beds every day, but we are providing them now in this way. I cannot understand how anyone can attack the Tánaiste, who has the backing of the Government in this regard, for her plans.

The only aspect of the Opposition motion that is important is the reference to meeting the need for “more step-down and rehabilitation facilities for the elderly”. We are not discussing such services, but I am sure they will be provided. However, the main thrust of this motion, about giving away land, is somewhat disingenuous. It is good that the Opposition opposes by tabling such motions, because it provides an opportunity to put the real facts before the public. The Health Service Executive has advertised and has received many expressions of interest in this regard.

There is a philosophical argument to the effect that we should not have private medicine at all and that everyone should be catered for by the health services. While that is all very well, I ask whether a single Member on the Opposition benches does not have insurance from VHI or BUPA? Members should be frank.

People will use such facilities, if they exist for private care, and in the meantime, public hospital beds will also be available. Moreover, this initiative will provide an opportunity for a value for money assessment of any proposal. It will take account of all developments, as well as the cost of the tax expenditure and so on. In addition, [1733]there will be full adherence to public procurement law and best practice.

When one listens to debates on such matters without going into details, one might come to believe that the land is simply being given away and that some developers will buy it to put money in their pockets and so on. Of course such developers will make a profit. While people assert that profits should not be made in health, there is a profit to be made in this sector. It is usually ploughed back into the services and I do not see anything wrong with that. I see a need for beds and I see the Tánaiste providing these beds through a unique scheme. She proposes to use land that was lying derelict, not by giving it away, but by selling or leasing it on normal commercial terms. She is to be lauded and praised for this initiative, and not condemned.

  Ms O’Meara: With the agreement of the House, I wish to share my time with Senator O’Toole.

  Mr. Kett: Is that agreed? Agreed.

  Ms O’Meara: I welcome the motion and the opportunity to debate an important matter, namely, the use of public resources in the health area. I commend the Fine Gael Party for tabling the motion and the Labour Party is happy to support it. The other aspect of the issue pertains to the question of the development of private health facilities and the impact it is having and will continue to have on public provision in respect of health. This is a matter of enormous interest to the public, given the present state of our health services and, in particular, given the concern about public facilities such as accident and emergency departments in many publically-funded hospitals.

The public knows that at some levels, the public system is underfunded and examples are not hard to find. For instance, it emerged last week that Nenagh General Hospital is short of money and is underfunded to the tune of approximately €1 million this year. This means that cleaners are not being brought into some parts of the hospital and one nurse will be let go from the surgical ward. There are several other implications for the hospital, including the non-renewal of short-term contracts. Such measures have a severe impact on the delivery and quality of service in a public hospital.

Meanwhile, as Senator Finucane has pointed out, private health care facilities are popping up everywhere in the mid-west region. As he noted, this did not happen 20 years ago. Such developments have only begun to happen since the country, happily, has developed great resources and has become prosperous. At present, Ireland has the capacity to fund its public health service to a desirable level. It has the capacity, as private developers have clearly discerned, to develop [1734]private facilities in a profitable environment. As Senator Quinn observed earlier, this inevitably leads to the development of a two-tier system. This is a major public policy issue and consequently, a debate is very important.

I have a major concern regarding the underfunding and under-development of public facilities and in respect of the dependence on private facilities to shore up public facilities in some way. The Minister of State at the Department of Health and Children, Deputy Tim O’Malley, is familiar with the situation in Limerick. When I query the Health Service Executive locally about matters such as overcrowding in the accident and emergency department in Limerick Regional Hospital or the length of time for which people must wait for service, I am informed that the private hospital is coming on stream and that thereafter, there will be no difficulties.

However, I will respond to this assertion with a quick example. It refers to someone to whom I spoke recently, who was being treated for cancer in Galway. During the course of his treatment, which, happily, has been a success, a certain medical problem developed and a top consultant told him that he needed to go to University College Hospital, Galway. He needed to be admitted to a general hospital which provided an entire range of acute medical services. He spent a day and a half in the accident and emergency department of University College Hospital, Galway, trying to gain admission. Although this man was quite willing to pay for his care entirely privately, at one stage he required admission to a public hospital.

This simply illustrates my argument and that of other Members, namely, private hospitals do not and will never provide the full range of services provided by general hospitals, and in particular by acute general hospitals, because many such services are not profitable. Accident and emergency services are not profitable. Hence, private hospitals will cherry-pick those areas of care which can be provided at a profit. Clearly, that is what they do. It is not hidden and no one operates under any illusions. However, health care should not be about profit. If one is dependent on private hospitals, one is dependant on developers and this leads to the introduction of a two-tier and divided system. As other Members have argued, this is not a good use of public resources.

  Mr. O’Toole: I thank Senator O’Meara for sharing her time with me. I deeply appreciate it. I also welcome the Minister of State to the House. I had fully intended to speak strongly and vehemently in support of the Fine Gael motion. However, having listened to the Tánaiste’s views, my position has changed quite substantially, albeit perhaps not completely. My opposition had been on the basis that something was to be given away to the private sector. I shared the view of [1735]the Fine Gael Members — as they understood it to be — that this was completely unacceptable.

Where does this leave me? While I have had many differences of opinion with the Tánaiste over the years, she has never been less than truthful in her dealings with me. I take people as I find them and I accept the point she clearly made to the House to the effect that not a square inch of public land will be given away and that any land to be used for private purposes will be sold or leased at the going rate. I appreciate that and it changes matters significantly.

That said, I still do not like this development. Having listened carefully to the arguments put forward by the Tánaiste, her position is logical. Nevertheless, I do not see why it must be on land which is available at present in hospitals. I take the point made by a number of speakers that the private sector should look after its own business. However, I do not object to private investment in the health services, if that is what people want. I object to taxpayers’ money subsidising it in any way.

I have been infuriated by the idea that up to the present, certain public beds owned by the State in public hospitals were under the control of private consultants. If I was obliged to make a choice between that practice and the Tánaiste’s proposals, I would prefer the latter. The idea that there is an empty bed in a hospital which the hospital authorities cannot assign to anyone because it is under the control of a consultant is one of the reasons why I believe the consultants’ contracts should be changed completely.

This measure should be fitted together with the renegotiation of the consultants’ contracts. The Minister of State may recall this point, as he was in the House on the last occasion when this issue was discussed. Enough money should be paid to new consultants to attract the best people possible into the public health service. My suggestion, which is on the record, is that an opening offer well in excess of €300,000 should be made. Senator O’Meara’s point is correct. If only one of these measures is adopted, Members will be supporting the introduction of a two-tier system.

However, I have seen such a system work in other countries where the consultants in public hospitals were being paid at a rate that attracted the very best people who wanted to stay in well-paid secure employment where they could give a good service. The amount of money offered is insufficient to allow this to happen. We should move all those on existing consultant contracts to the private sector, where they can grow old, doing that business. Let us attract new energetic enthusiastic and ambitious consultants into the public health service and give us back the beds we own.

I like much of what the Tánaiste has proposed, provided that everything mentioned in her speech actually happens. If public lands are given away to private interests I strongly support the point [1736]made by Opposition parties. It is our duty to ensure this does not happen. I have seen the reverse happen in education, where the State built public schools in private land owned by the churches. I also objected to that as we invested money into facilities that we did not own afterwards, which no right-thinking person would do. It has nothing to do with the church; we should not do it in any circumstances. If we are to have a variation of this in health I would be equally opposed.

However, the suggestion that this is a cost effective manner of releasing or producing an additional 1,000 beds in the public sector is an attractive proposition. It will only work if it is matched by consultants of quality. If this is not so, what Senator O’Meara suggested will undoubtedly happen. We will simply have a two-tier system in which the consultants will leave the public sector. We will have given them the best start-up with brand new hospitals, etc., and we will ultimately lose out.

  Mr. Moylan: I welcome the Minister of State, Deputy O’Malley. I compliment the Tánaiste and Minister for Health and Children, Deputy Harney, on her statement which spelt out clearly the Government’s intent. I support the Government amendment to the motion. The Fine Gael motion condemned the Government. It would be very hard to support a motion that condemns anyone for providing extra beds in the system. It is immaterial whether the hospitals are public or private once the beds are available to care for patients.

I support the building of private hospitals adjacent to public hospitals, as it would attract to both the general and private hospitals the very best professional people. We want to attract back to this country the very best professionals. Irish professional people are doing a great job throughout the world. We want to have hospitals that will encourage them to come back here to practice.

I support adding private wings to general hospitals. Patients will all go in the front door to be treated. The Minister of State has supported the area of psychiatric services. We have added wings for psychiatric patients to our general hospitals and closed down the big units with high walls. We now find that patients no longer spend as much time in these wings as was the case and are far better when discharged.

The professionals can be available regardless of whether they are in private or public hospitals once they are in close proximity. I speak from personal experience. Last year I was taken by ambulance from Tullamore to the public hospital in Dublin where my consultant worked. Within minutes he was available in the private setting. This is why we can have the very best available to us in either public or private once they are in close proximity.

[1737]The Tánaiste spoke about 1,000 new beds and a saving to the Exchequer of €520 million which can be put to good use elsewhere in the health services. She mentioned 11 new developments of private hospitals. In addition some private developers are looking to provide other units close to general hospitals. Where people must pay for hospital car parking, with the private and public hospitals adjacent to each other that car park can be utilised for both. There were some exceptions such as the private nursing homes, which have done an excellent job in providing step-down facilities. The more beds we have the better will be the care for our patients.

The Tánaiste spoke of in excess of 13,000 public beds and 2,500 private beds. Why not add another 1,000 beds to the system? Patients do not worry about being in public or private beds. They want top class care and I know we will be able to give them such care in any new developments that take place.

I compliment the Tánaiste and the Health Service Executive on developments taking place in day procedures in our hospitals. A few years ago I went to a major hospital in Buffalo in America. Adjacent to the hospital was a hotel where patients stayed prior to day procedures and then stayed in the hotel for a few days when recuperating. We may need to consider such an option here. There is an opportunity for the private sector to provide such facilities to allow us to maximise the use of the expensive facilities in our general hospitals.

Any extra public or private beds are welcome. We now have many more hundreds of thousands of people who because of their financial position can afford private health care cover. In these circumstances why not let the private sector provide the facilities in which they can be treated? I compliment the Tánaiste for her work. Throughout the years we have had problems with the health service. At the same time, great strides have been taken. I support the amendment. It is a good amendment but while I am a little disappointed with the motion, every Member of the House is entitled to table one. I wish the Minister of State well.

  Ms Terry: I welcome the Minister of State to the House. I support the motion. While we are all interested in providing additional hospital beds and I am supportive of any individual who would like to build a private hospital, our objection is that the Government proposes to provide public land to developers to build such hospitals. These lands are in public ownership and the people have a right to demand that they should be retained in public ownership or should be used to deliver public services. The best use the land could be put to is to provide step down beds, which are badly needed. This, in turn, would release beds in public hospitals. We have spoken ad nauseam in the House about the need for step down beds but the best way to provide them is to [1738]use public lands, thus reducing the cost of doing so. By giving land to private developers, we are reducing our capacity to deliver step down beds and to develop our public hospitals.

Tomorrow the Government could decide to give a number of acres of public land to a developer to build a private hospital but, in five years or more, if additional land is needed to extend public hospitals, that will not be possible because the Government will have given away the land. I live in Dublin 15 and it is proposed to build a private hospital on the grounds of the James Connolly Memorial Hospital. I was a member of Fingal County Council when we had to take a tough decision to sell some of the hospital’s land for private development. Given that the hospital had a lot of land, we were safe in the knowledge that even if the land in question was sold, there would still be acres available for the future development of the hospital.

I am concerned that additional public lands will be sold to people who are only interested in profit. They will not be involved to provide health services to the people because they will have seen an opportunity to make a profit. While there is nothing wrong with that and I support the free market, anyone who sets up a business must source land and pay the going rate for it before making a profit. The State should not part fund the sale of these lands.

We must look to the future and how additional beds will be provided. First, they should be provided in hospitals on public land. Beds should also be freed up by ensuring elderly people are not kept in hospital for longer than they should be. Our primary care system should be developed. For how long have we heard about the need to develop such care? What progress has been made? If more general practitioners were available at night and on weekends, more beds would be freed up and this would release the pressure on accident and emergency departments. The Minister needs to do much more to free up beds.

The Government is being led by the Progressive Democrats down the privatisation route and we only need to examine the US health service to see how badly people are being served. A two-tier society is being created in the State and those with private health insurance will pay more for services. That is happening in the US where private companies are vying for business but inequities are emerging. That is the route the Government is taking and that represents a bad day’s work. On the question of whether the Government is closer to Berlin than Boston, the State is moving closer to Boston every day and this decision is another step in that direction.

Fine Gael is not opposed to private enterprise and to people developing private hospitals if they wish but they should not do so at the expense of the taxpayer. While there is a need for additional hospitals beds, this is not the way to do it. Private developers will get involved to make profits and [1739]they will cherry pick sites. They will also cherry pick staff from public hospitals. Eleven new hospitals will compete for staff at a time the health service is experiencing a staff crisis. Staff can be attracted from abroad and while we are happy to have recruited excellent foreign doctors and nurses, that is not sustainable in the long term. In addition, other countries are being deprived of their best medical staff. The Minister did not refer to how these hospitals will be staffed.

A private enterprise will set its own pay scales and there could be inequities between the pay of private and public hospital staff. Many issues need to be thought out but the Minister’s proposal to sell public land, even at commercial rates, is not the way to address them and that is our major concern.

  Mr. J. Walsh: I fully support the amendment to the motion. It is not sensible for us to take a definite position on public versus private hospitals. Many of those who utilise the health services are working class people who pay private health insurance to access the health system. I fully agree that access to health care facilities should be on the basis of medical need rather than on ability to pay and the Minister has stated on a number of occasions that she is extremely anxious that this should be the basis of the health care system.

I agree with Senator Moylan that private hospitals will complement public hospitals where they are built on the same site. The facilities and expensive medical equipment in both hospitals will be available to both public and private patients. The health care system must be considered in a new and innovative way and serious attempts are being made to do that. Recently, I visited New Zealand, where health care is also the subject of media attention. Over the past nine years, we have tripled our investment in health care but we have not seen a commensurate increase in outputs from that sector.

Senators have remarked on the need to investigate the people who control beds. Unfortunately, an elitist system has developed in the public service and the health care sector. The Tánaiste is right to want to review the contract arrangements for consultants because vested interests must be confronted. Rather than take ideological positions, we must be pragmatic in ensuring that our health care system meets the needs and demands of the public and taxpayers.

  Mr. Browne: I am more convinced than ever that Fine Gael was correct in tabling this motion. My party is in favour of private sector involvement in the health service and welcomes the provision of 1,000 additional private beds. However, [1740]we are asking whether this is the best way forward. The Members opposite are being disingenuous when they accuse us of opposing 1,000 new beds. Of course we welcome these beds, just as we welcome the prospect of competition in the health sector. However, will Members be able look back on this matter in 20 years time and say, “That was a good deal”? We are all aware of the M50 bridge fiasco. It is easy now for us to see that as a bad deal but will we be open to the same charge in respect of health care?

The Tánaiste referred to lease arrangements for the construction of private hospitals on public lands. What will happen once these leases are up? Will the State take the land back from the developer? This issue gives rise to uncertainty but we need to ask the questions now. The Comptroller and Auditor General has expressed his unhappiness with previous examples of misspending, such as the Beaumont Hospital carpark. That is why scrutiny and debates such as this are needed.

We have to ask ourselves whether the arrangement represents a good deal and, if so, for whom? Will it benefit taxpayers and patients? I became nervous when I heard a Member say that the arrangement won a ringing endorsement from a consultant. I would rather ordinary patients and taxpayers to consider it a great idea than to have it supported by consultants.

Senator Terry hit the nail on the head when she said the private sector will take part in the hope of making money. I do not blame the private sector for wanting to make profits but we must ask ourselves whether we are negotiating a bad deal on behalf of the public. The public interest does not refer to consultants and private developers but to taxpayers and patients. It is of great concern that these hospitals will not need licences to open.

If it costs €100 million to provide 100 public beds but €42 million for 100 beds, how will the shortfall be met? Patients will end up paying, even though they are already paying for private health insurance and, through their taxes, funding the public hospitals. The Tánaiste made no reference to these increased patient costs.

7 o’clock

Senator Moylan referred to the nursing homes repayment scheme. I made a request under the Freedom of Information Act in that regard because the HSE advertised for people to administer the scheme but then re-advertised when it did not receive the applicants it wanted. If questions arise with regard to the ability of the HSE to administer the procurement process, I am not confident it can manage these major projects.

I look forward to support from all Members for my party’s motion and hope Senators from Fianna Fáil will vote with their conscience this time.

Amendment put.

[1741]The Seanad divided: Tá, 26; Níl, 20.

    Brennan, Michael.

    Callanan, Peter.

    Cox, Margaret.

    Daly, Brendan.

    Dardis, John.

    Dooley, Timmy.

    Fitzgerald, Liam.

    Glynn, Camillus.

    Hanafin, John.

    Hayes, Maurice.

    Kenneally, Brendan.

    Kett, Tony.

    Kitt, Michael P.

    Leyden, Terry.

    Lydon, Donal J.

    MacSharry, Marc.

    Minihan, John.

    Morrissey, Tom.

    Moylan, Pat.

    O’Brien, Francis.

    Ormonde, Ann.

    Phelan, Kieran.

    Scanlon, Eamon.

    Walsh, Jim.

    White, Mary M.

    Wilson, Diarmuid.

Níl

    Bannon, James.

    Bradford, Paul.

    Browne, Fergal.

    Burke, Ulick.

    Coghlan, Paul.

    Coonan, Noel.

    Cummins, Maurice.

    Feighan, Frank.

    Finucane, Michael.

    Hayes, Brian.

    McDowell, Derek.

    McHugh, Joe.

    Norris, David.

    O’Meara, Kathleen.

    Phelan, John.

    Quinn, Feargal.

    Ross, Shane.

    Ryan, Brendan.

    Terry, Sheila.

    Tuffy, Joanna.

Tellers: Tá, Senators Minihan and Moylan; Níl, Senators Cummins and O’Meara.

Amendment declared carried.

[1742]Question, “That the motion, as amended, be agreed to”, put and declared carried.