The VHI and its money are there for its members, not to provide comfort for commercial developers, writes Dr Bernadette Carr.
It is important that a factual response be made to the article by James Sheehan that appeared in The Irish Times under the heading "How VHI has hindered private hospital facilities".
The author either misunderstood or misrepresented the role of VHI Healthcare. In doing so, I think it is important that we set out clearly VHI's obligations to its members and set out how they may differ significantly from those of a hospital developer.
VHI exists solely to service our members' needs, we are a not-for-profit organisation and we are here to provide the best possible medical care for our members. Last year alone VHI Healthcare paid out over €3 million a day in claims on behalf of our members, ie €752 million per annum.
VHI Healthcare aims to provide access to the most modern, affordable and best practice healthcare available today. In this competitive environment we strive to ensure that we get the best value for our members. We would not be serving our members if we did otherwise.
We engage in a continuous process of negotiation with a wide range of service providers. We do not stand in the way of the development of new hospital capacity.
However, we are not in the business of using the subscriptions of our members to provide comfort for commercial developers.
It has been consistent government policy since 1957 when VHI was established that private health insurance be provided as economically as possible so as to maximise its take-up within the community at large. Successive governments have supported this policy by extending tax relief to health insurance premiums and by insisting that community rating principles be applied in establishing premium rates.
VHI Healthcare has never faced government pressure to increase premium rates. On the contrary, it has had to battle frequently with various ministers for health to secure premium rate increases required to support advances in medicine. Mr Sheehan, on the other hand, believes that health insurance premium rates are far too low.
Let us consider the three principal points made in the article:
1. VHI has prevented the development of private hospital facilities:
VHI's role is to work on behalf of its members to ensure the provision of quality healthcare at prices that represent good value for money.
We do not stand in the way of the development of new hospital capacity. It is not the job of VHI Healthcare to provide comfort to the developers of hospitals or any other type of facility. Our policy in this regard has been articulated quite clearly: we will deal with all hospital providers on an arm's length basis. No hospital has more than a one-year agreement of cover with VHI Healthcare.
VHI Healthcare was the first insurer to enter into agreement in respect of the Galway Clinic and we will continue to look at new developments on a case-by-case basis in a proactive manner.
Over the past 20 years VHI Healthcare has been instrumental in bringing about many changes in how private health procedures and treatments have been managed, and huge increases have resulted in the productivity of existing capacity.
With the active co-operation of hospitals and medical personnel there has been a consistent year-on-year decrease in the average length of in-patient stays and a substantial increase in the proportion of procedures carried out in daycare and side room settings - where multiple procedures can be accommodated without increasing bed capacity.
Almost 70 per cent of procedures for VHI members are now carried out in a daycare setting. This productivity reduces cost significantly and clearly benefits our members in other ways as well.
2. VHI Healthcare does not pay hospitals the full rate for procedures:
When members on occasion complain that we overpay for procedures and hospitals claim they are underpaid, one is tempted to believe that we must be getting this complex issue reasonably right.
The fact of the matter is that the majority of private hospitals in Ireland are returning profits. Most are not satisfied with the return they are generating on capital employed. This has become a more difficult issue in our annual negotiation with hospitals as the influence of religious orders retreats and more commercial norms are applied. We are not opposed to concepts of return on capital but in our negotiations insist that internal efficiencies rather than price be the first point of focus for hospital management. Of course, as new hospital developments take place and new hospitals are built, they will have to compete with each other and existing hospitals on the basis of price, choice and quality.
3. Hospital development should be controlled and indiscriminate use of tax incentives avoided:
VHI is in full agreement with Mr Sheehan on this point. VHI Healthcare has always argued that in the absence of overall (both public and private) bed capacity planning, the indiscriminate availability of tax relief is ill-advised. VHI Healthcare believes that proper capacity planning would identify particular requirements, which in turn could then be targeted for tax relief.
The PwC report, which Mr Sheehan dismisses, was carried out as our contribution in the hope that serious work on capacity planning would be undertaken. It was not - as suggested - commissioned as part of a strategy to block the development of private hospitals.
On the contrary this report, updated every two years, establishes a five-year projection of private bed requirements in order to ensure that there are sufficient facilities to meet our members' needs.
Finally, the article queries the role of VHI Healthcare in relation to the Tánaiste's proposal for 1,000 private beds. These will not, as was suggested, be additional private beds, but will replace 1,000 private beds currently provided in public hospitals.
We have expressed concerns to the Tánaiste on behalf of our members over the cost implications for private health insurance arising from this decision. However, this is a matter of public policy for the Minister to decide and we will support the implementation of the decision on that basis.
The most pressing issue of all for VHI Healthcare is the introduction of risk equalisation in the private health insurance market which will help ensure the stability of the community rated market which is in the interests of our members and the market generally. I am aware from my meetings with Mr Sheehan that he too fully supports the operation of risk equalisation in our community rated market.
Dr Bernadette Carr is medical director of VHI Healthcare