The VHI has rejected criticisms levelled at it by the founder of the Galway Clinic, James Sheehan, following the loss of jobs last week at the private hospital.
In a statement, VHI Healthcare said it was the first insurer to provide cover for the Galway Clinic and it entered into a three-year agreement with the clinic in June 2004.
"We agreed reimbursement rates for treatment for VHI members at this point in time and since then the Galway Clinic has benefited from increases in reimbursement rates for the last two years," VHI's head of corporate communications Brighid Smyth said.
"The latest increase was applied in June this year. The current agreement runs until June 2007.
"The Galway Clinic had originally envisaged a 50-50 split between public and private patients," Ms Smyth continued. "Their projections were incorrect and currently 90 per cent of their business comes from the private sector."
Mr Sheehan said that a combination of the Health Service Executive's (HSE) failure to refer many National Treatment Purchase funds (NTPF) patients to the private hospital and insufficient insurance cover by the VHI had led to the financial situation which has been described internally as "serious".
He said that the VHI was giving "inadequate remuneration" for many procedures.
If Galway Clinic was losing money, "the problem lies with its business plan", Ms Smyth countered.
"VHI Healthcare has fully met the terms of the agreement entered into in June 2004 even though the payments made on behalf of our members have far exceeded the projections set out by Galway Clinic at that time," she said.
