A CONFIDENTIAL report by the economic thinktank, the ESRI, could provide finance minister Charlie McCreevy with the ammunition to kill off key elements of health minister Micheál Martin's ambitious ?13bn healthcare plans.

In a bombshell for Martin, the ESRI has provided a report for McCreevy which questions the need for 3,000 extra acute hospital beds ? the centrepiece of the ?13bn health strategy announced two years ago.

Informed sources said that McCreevy has now sought the Department of Health to attend a meeting with Department of Finance officials and the ESRI to discuss the implications of the report.

The health department has argued that the additional beds are necessary to tackle waiting lists and long queues.

McCreevy, who has been lukewarm in his support of the strategy, has told the health department that there will be no money for extra acute beds under the strategy next year.

In the current spending estimates campaign for 2004, the finance department has argued that there should be no additional developments next year ? including extra medical cards ? as part of its policy of simply maintaining existing levels of services.

However, it will be left to ministers to determine politically sensitive issues such as whether the number of medical cards should be increased or whether new medical facilities , which have been fully built, should be brought into use.

The government is committed to providing 100,000 additional people with free GP care under the terms of the strategy. However, informed sources said that McCreevy has offered ministers a choice between increasing social welfare payments and raising the number of medical cards.

Meanwhile, Martin will publish on Wednesday the longawaited Hanly report on medical manpower which is the third and most controversial leg of his healthcare reforms.

The Hanly reforms will be piloted in Dublin and the midwest and will involve consultants providing more direct services to public patients and working outside normal hours.

The government will also announce the appointment of a new committee to look at the controversial issue of rationalising hospital services as proposed by Hanly.

The Hanly proposals would see some small hospitals lose out on maternity and accident and emergency services as part of a new hub.

However, the government has decided that because of their geographic location hospitals in Letterkenny, Sligo and Waterford should retain all services.