A new system for payments to private hospitals introduced by the VHI could close some private hospitals, it was claimed in the High Court yesterday.
The claim was made in an affidavit by the chief executive of the Independent Hospital Association of Ireland, Mr Michael Heavey, in an action by five private hospitals against the VHI.
But, in another affidavit, the VHI medical director, Ms Bernadette Carr, said she did not accept the plaintiffs' contentions that the choice being furnished to them could in any way put their financial position or continued existence in jeopardy.
The case has been taken by Clane Hospital, Co Kildare; Galvia Hospital, Renmore, Co Galway; St Joseph's Hospital, Raheny, Dublin; St Joseph's Hospital, Garden Hill, Sligo; and Mount Carmel Hospital, Churchtown, Dublin.
The hospitals want an injunction, pending a full hearing of the case, restraining the VHI from seeking to impose new cash limits and volume restrictions on them without at the same time providing for increases in costs incurred by them.
Mr Heavey said each of the plaintiff hospitals was entirely private and did not receive any State funding or State subvention. As a consequence, each relied entirely on payments from patients to cover the cost of the provision of services. The vast majority of private patients discharged their bills by means of private medical insurance.
Although the VHI monopoly had now been removed, he believed approximately 90 per cent of the income of the plaintiffs' hospitals derived from patients whose bills were paid in whole or part by the VHI.
The plaintiffs believed the proposed new system of reimbursement was arbitrary and artificial. Each of them had very serious concerns about it.
The proposals had been put on a "take it or leave it" basis. If they agreed to the new proposals, this meant they would no longer have any control over the recovery of the cost of provision of services.
They would be largely stuck with a level of reimbursement fixed arbitrarily by the VHI, or have imposed on them a more uneconomic system of remuneration under the proposals for the "partially participating" hospitals.
Mr Heavey said the plaintiffs were particularly concerned that the effect of the new policy adopted by the VHI would be closure of certain private hospitals in the State. Already, the financial pressure brought about by the VHI system and payment regime had contributed to the closure of two private hospitals in the past two years.
Ms Carr, in her affidavit, said the VHI had had discussions with each of the plaintiffs regarding its financial affairs. Agreements being offered were based on the same principles and the same scheduled rates offered to the other hospitals with which the VHI had reached agreement.
If the plaintiffs did not wish to avail of these agreements, they were quite free to set their charges at whatever level they deemed fit or to "balance-bill" VHI members for any shortfall between VHI payments in respect of those members and hospital charges.
Ms Carr said the proposals had not been put to individual hospitals on a "take it or leave it" basis. The VHI, over a significant period, had sought to reach individual agreements with individual hospitals. It had been successful in doing so with acute private hospitals providing the majority of private beds.
The VHI did not accept that financial pressure brought to bear by it had contributed to the closure of two hospitals. Their closure had arisen from a variety of factors, many of which had nothing whatsoever to do with the matters at issue in the present proceedings.
The hearing continues.