DEVELOPERS of the government's planned co-located private hospitals have been granted an effective reprieve from the abolition of tax breaks for private health developments in the Finance Bill.

Under the bill, they will be able to claim full tax breaks on their developments as long as they lodge planning applications by the end of this year and construction is finished by the end of 2013.

All but four of the co-located hospitals have already passed the first hurdle and they are expected, despite the credit crunch, to be finished by the construction deadline.

"This reaffirms the government's commitment to co-location," said Michael Cullen, chief executive of the Beacon Medical Group, which is due to build three hospitals.

The other big potential beneficiary of the move is Synchrony, a consortium backed by Boundary Capital, which has the contract to build a private hospital beside St James's Hospital in Dublin.

But doubts remain over the future of the four remaining projects, which are due to be built at Tallaght Hospital, Waterford Regional Hospital, Sligo General Hospital and Connolly Hospital in Dublin.

Industry sources said planning applications for these projects were unlikely to be submitted in time to qualify for the tax breaks.

But the Department of Health said that it had no intention of dropping any of the co-location projects and the HSE would continue to work with the successful bidders "to provide whatever assistance it can to help them advance the projects".