But many of those working in healthcare fear that by incentivising growth in private hospitals . . . some with explicit religion-driven restrictions . . . the state could be on a collision course

JAMES Sheehan, the Irish orthopaedic surgeon who has founded three private hospitals in Dublin and Galway, is a devout orthodox Catholic who runs his clinics according to his personal religious ethos. Patients seeking to undergo procedures, such as tubal ligations, which are available in state-run hospitals, are unlikely to be accommodated in the Blackrock, Galway or Hermitage clinics.

Sheehan belongs to a lay Catholic club for wealthy businessmen, Legatus, the brainchild of Tom Monaghan, the Irish-American who founded Domino's Pizza and who is currently building a Catholic city in Florida. The project, called Ave Maria, will be run on strict Catholic church teaching. Monaghan has been a generous supporter of Operation Rescue, the American pro-life group that staged sit-ins in abortion clinics.

A spokesman for the HSE says co-located private hospitals will be bound by joint clinical governance, a strategic partnership board under the direction of the public hospital, and a veto on proposed changes in services or buildings. Many medical workers are worried, however, that, under the current law governing the Irish health service, the Department of Health has no jurisdiction over private hospitals and is not empowered to assert citizens' entitlement to certain treatments on their premises. This was graphically illustrated by the Department of Health's and the HSE's 19-month delay before breast cancer treatment was suspended at the privately owned Barringtons' Hospital in Limerick this month because it did not come within the jurisdiction of the state.

Furthermore, the legislative ambiguity about abortion is open to wildly differing interpretations. The unresolved dilemma about female patients' reproductive rights surfaced in the Mater Hospital two years ago when a planned cancer drug trial was suspended because it might have entailed participants taking the contraceptive pill.

Moral agenda

Medical treatment and research are riddled with 'moral agenda' issues and many of those working in the area fear the state-incentivised growth in private hospitals, some with explicit religion-driven restrictions, is the laying of a collision course.

The Beacon Hospital in Sandyford, Dublin was the first venture in Europe by the American healthcare company Triad. Its parent company, Columbia/HCA paid $1.7bn in the biggest fraud settlement in history to the US Justice Department. The Beacon's chief executive, Deborah Brehe, was previously the chief executive of San Leandro Hospital in San Francisco and Mission Bay Hospital in San Diego when they were owned by Triad. Both hospitals featured in a list of more than 200 HCA hospitals contained in a 2003 legal agreement under which the company paid an instalment of 631m to the Justice Department.

There is no suspicion she was involved in the insurance fraud investigated by the FBI under the US False Claims Act. The Beacon Medical Group has been awarded three of the state contracts for co-located private hospitals in Limerick, Cork and Dublin.

In the legislative desert governing insurance fraud and statutory protections for whistleblowers, An Garda Siochana would be ill-equipped to investigate any similar practices here.

"What Columbia/HCA was doing was submitting false patient claims for reimbursement to Medicare and Medicaid. The level of fraud in the private healthcare business in the US defies imagination, " claims Marie O'Connor, author of Emergency: Irish Hospitals in Chaos, which was published before the general election. "But at least they can do something about it. They have the False Claims Act and an anti-kickback statute and whistleblower law in the US. We have none of these safeguards here to protect citizens and patients against corruption.

"Although it's not marketed as such, Beacon is a Triad hospital, " she says. "Its employees are Triad employees. Triad leased the building and received a percentage of its profits. It entered into an agreement to manage Beacon. Triad has a policy of offering its medical staff shares in their hospitals. This kind of shareholding by physicians is generally unlawful in the US, unlike Ireland. We prefer to turn a blind eye to the conflict of interest between the doctor-as-healer and the doctor-as-shareholder."

At an international finance conference in Spain last summer, it was stated that Irish private healthcare offered the best investment opportunity in Europe. This view was reflected in the more than 50 expressions of interest in co-location developments received by the HSE. Contracts have so far been awarded for six sites: St James's Hospital, Dublin (Synchrony/Capio Health); Mid-Western Regional Hospital, Limerick (Beacon Medical Group); Cork University Hospital (Beacon Medical Group); Beaumont Hospital, Dublin (Beacon Medical Group); Sligo General Hospital (Mount Carmel Medical); and Waterford Regional Hospital (Bon Secours Consortium).

The tendering process at Connolly Hospital in Blanchardstown is finalised and will be going before the steering group and the board of the HSE for sign-off next month. Invitations for tenders relating to Tallaght Hospital will be advertised at the same time.

Steady stream

One of the main attractions of the co-location deal is that the state will supply a steady stream of patients to operators of private hospitals who will be required to give 20% of their bed capacity to public patients. The 100m Galway Clinic, for instance, provides breast cancer services to the state.

Economy-watchers predict property developers will be at the head of the queue as the construction industry suffers a downturn. One of the biggest property developers in Europe, Sean Mulryan of Ballymore Properties, is a primary investor in the 110m Hermitage Clinic which opened in Fonthill, west Dublin last December. Harlequin Healthcare Holdings, which already owns three private hospitals in Kilkenny, Sligo and Limerick, is headed by another property developer, Jerry Conlan.

Under the Finance Act 2001, substantial tax exemptions are allowed for the building and refurbishment of buildings used as private hospitals. In practice, this means a top-rate taxpayer investing 1m qualifies for a tax break of 410,000 over seven years.

"There's a number of schemes marketing these investments in private hospitals to highincome individuals like lawyers and consultants, " says Labour Party spokeswoman on finance Joan Burton. "Potentially, we are building up to 30 hospitals with a hundred beds or less in each of them. If you take it that they cost 30bn, the tax write-off, at 40%, comes to more than 1.2bn. A lot of the very rich people who benefited from the car-park tax reliefs are going to benefit from this too.

Washes her hands

"The worrying thing is that very, very little is actually known about the whole private hospital area because, since the establishment of the HSE, accountability in relation to the health service has fallen very dramatically, " she adds. "Any time the minister is asked a question on this, ever since the decision was made, she just washes her hands and says, 'Nothing to do with me, ask Professor Drumm.'" US healthcare conglomerates see Ireland, where over 50% of the population has private insurance, as a gateway to the untapped European market. One of these giants is UPMC (University of Pittsburgh Medical Centre) which heralds its "recognition as a medical provider by the Irish government" as an open door to the UK.

UPMC's vice-president, Chuck Bogosta, is quoted on the company's website as saying: "It's an enormous breakthrough. It's already had significant implications in the UK, where very advanced stages of discussion are underway."

In 2002, UPMC Health System paid over 2m in settlements under the False Claims Act for unlawfully charging government insurers for cardiac surgery using experimental devices.

CASH CURES: the four main players in the private hospital scene

LARRY GOODMAN

A BACKER of the 110m Hermitage Clinic in west Dublin and both the Galway and Blackrock Clinics, the multimillionaire "beef baron" is the sole shareholder in Irish Food Processors, an unlimited company.

His property portfolio includes the Earl of Kildare Hotel ( 17m) and the Setanta Centre ( 85m) in Dublin.

Charles Haughey famously recalled the Dail to pass an examinership law rescuing Goodman's empire in 1990, where the late FF TD Liam Lawlor was a director. The beef tribunal uncovered highly organised tax evasion in the Goodman meat operation. More recently, Goodman Holdings withdrew its legal action against the state over 100m worth of export credit insurance.

SEAN MULRYAN

A MAJOR investor in the Hermitage Clinic, the 52-year-old property developer lies 13th in the Sunday Times Irish rich-list with assets estimated at 883m, primarily through his company Ballymore Properties.

Born in Co Roscommon and a bricklayer by trade, he lives on a 230acre stud farm in Co Kildare where the punk pop band Blondie performed for his 50th birthday party.

He once said: "I don't know how many horses I own now; somewhere between 50 and a hundred."

It was revealed at the planning tribunal that Ballymore paid Liam Lawlor 63,500 between 1994 and 1998.

JAMES SHEEHAN

POPULARLY known as the orthopaedic surgeon who invented a form of artificial hip, he developed the Blackrock Clinic in Dublin, before following it up two decades later with the 100m Galway Clinic. The Hermitage is his third such venture.

A respected surgeon, he is a devout Roman Catholic, a patron of the Iona Institute and a member of Legatus, the international organisation set up by Domino's Pizza founder Tom Monaghan to promote "a Catholic ethos".

A gynaecologist at the Galway Clinic initiated High Court proceedings last year after being informed certain medical procedures such as tubal ligations could not be performed there.

JERRY CONLAN

THE Kildare property developer founded Harlequin Healthcare Holdings in 2003.

The company owns hospitals in Sligo and Kilkenny, as well as Mount Carmel, a south Dublin hospital with a substantial maternity service, from the Sisters of the Little Company of Mary. The company is now called the Mount Carmel Medical Group.

Conlan made his name in the contract catering business in Dublin and has interests in hotels and golf courses.

A Catholic, he is a member of the Order of St Lazarus of Jerusalem, dedicated to the defence of the Christian faith. Members are expected to pray daily and to remain faithful to their marriage vows.