The VHI has no obligation to reimburse hospitals at rates charged by individual institutions, the company argued in the High Court yesterday.
VHI's position as the largest provider of health insurance was not a reason why it ought to behave in a manner which made no economic sense and which would be against its own interests and those of its members, Dr Bernadette Carr, VHI director of medicine, said in an affidavit.
She said the private hospitals challenging a new VHI payments system had presented no evidence that VHI's remuneration for scheduled treatments was below any objective assessment of the "cost" of providing such treatments, as distinct from the costs or charges sought by the hospitals.
Five private hospitals have brought proceedings against VHI over a payments system for private hospitals introduced last month. Pending a full hearing of the action, they want an injunction preventing VHI from seeking to impose new cash limits and volume restrictions without providing for increases in costs incurred by them.
The case has been taken by two Dublin hospitals - St Joseph's, Raheny and Mount Carmel, Churchtown and by Clane Hospital, Clane, Co Kildare; Galvia Hospital, Renmore, Co Galway; and St Joseph's Hospital, Garden Hill, Sligo.
Dr Carr said VHI tried where it could to take account of the circumstances encountered by individual hospitals. But it did not regard itself under a general duty to do so, or under a duty to examine their individual cost structures in order to make payments to match such structures or enable them to avoid losses. It did not "guarantee a livelihood" to individual hospitals.
Earlier, Mr Michael Heavey, chief executive, Independent Hospitals Association of Ireland, said in an affidavit that the plaintiffs thought it highly desirable that agreement should be reached with VHI on the level of reimbursement VHI would make.
However, the difficulty they had encountered in recent negotiations was that the VHI would not treat with them in any real way. Instead, VHI sought to impose a new payment system which failed utterly to compensate them adequately for their services to VHI members.
Having paid their premium, VHI members did not wish to be charged additional amounts over and above any VHI premiums. VHI members, therefore, would be diverted away from hospitals which "balance bill" them, he said.
That would have a devastating effect on the finances of such hospitals and their ability to provide a full range of services to patients.
VHI was trying to impose a penalty on hospitals that did not agree to the new payment regime it had unilaterally sought to impose, Mr Heavey said. VHI had an obligation on behalf of its members to ensure that increases in charges and the incidence of charges could in future be properly assessed.
Mr Heavey said he did not accept VHI had tried in any meaningful way to reach agreement with all hospitals, including the plaintiffs. Throughout the negotiations it had been made clear that VHI was prepared to enter into an agreement only on its terms. It could not be said there were true bilateral negotiations.
The hearing, before Mr Justice Quirke, continues.