DESPITE being widely credited with cutting hospital waiting lists, the government's National Treatment Purchase Fund (NTPF) faces an uncertain future, raising the prospect that the state's private hospitals may lose a lucrative state income stream.

The NTPF, which was established in April 2002, aims to remove patients from public waiting lists by providing them with free private treatment.

Since its establishment, it has provided funding to more than 140,000 patients, but its budget has tripled in recent years, raising questions over whether the NTPF merely perpetuates the problem of public waiting lists.

According to new figures, last year saw the NTPF's expenditure on private care hit a new peak of just under €100m.

As in previous years, the majority of this money went to a small number of private operators, with the Mater Private in Dublin accounting for almost 20% of the NTPF's expenditure.

But the most eye-catching and controversial large recipient of NTPF money is the public hospital system, which is essentially responsible for the public waiting lists. In 2008, public hospitals received almost €10m in funding as a direct result of their inability to treat patients quickly.

Cappagh National Orthopaedic Hospital and University College Hospital Galway, for example, received more than €4m from the NTPF between them, last year despite having more than 2,300 patients on their waiting lists.

It is this anomaly which threatens to sink the NTPF, with Fine Gael already promising that they will abolish the agency if they enter government.

"The NTPF has introduced huge distortions into the system. Consultants are being restricted for budgetary reasons from carrying out additional operations in the public sector and then encouraged by the NTPF to operate on the same patients in a parallel private system funded by the state," said a recent Fine Gael health strategy.

Even the NTPF's supporters acknowledge that the system needs to be reformed, with Blackrock Clinic founder and Galway Clinic chief executive Jimmy Sheehan arguing that the agency should be barred from giving money to the public sector.

"I don't think any public hospital should receive a source of income from the NTPF, because this is causing a situation where the state is paying twice for the treatment for public patients," he said.

But Sheehan said it would be dangerous for the state to abolish the NTPF entirely without putting some alternative, such as universal health insurance, in place. "If there wasn't an NTPF, some of the lists would be five years long. I think the NTPF does a superb job and they are able to get a good deal from the private hospitals."

Sheehan said that his support of the NTPF was not linked to the income stream received by the clinics he is involved in. In 2008, the Blackrock Clinic received more than €12.9m from the NTPF, while the Galway Clinic was paid a further €11.3m.

"It's not the income that matters to me, it's a small percentage of our income. I'm more interested in giving public patients access to private hospitals so they can receive the treatment they need."

Official figures from the NTPF's National Patient Register underline Sheehan's concern that access to treatment remains an issue for public patients.

Its latest report, issued in November, indicated that more than 1,800 patients had been waiting over a year for surgery, including 365 children.

Meanwhile, a recent report from the Adelaide Hospital Society indicated that a fundamental reform of the Irish healthcare system would be necessary to eliminate waiting lists.

According to the report, the NTPF merely addresses the "problems created by the incentives that favour the treatment of private patients over public patients in the public hospital system".

Despite this, it seems likely that private hospitals will continue to receive sizable incomes from the taxpayer through the NTPF for some time to come, although it seems likely that they may decline as the recession bites.

In recent weeks, health minister Mary Harney cut the NTPF's budget by €10m as part of a bid to shore up the HSE's finances. The NTPF has told the Sunday Tribune that it would not be drawn on the implications of this cut until its annual report launch in a few weeks' time.

But Fergus Clancy, the chief executive of the Mater Private, believes the cut will have a major impact on the number of patients receiving treatment through the NTPF.

"A reduction in the NTPF's budget would inevitably cause reductions in the number of people being treated and the number of patients languishing on waiting lists will rise," he said.

Although Harney has argued that the NTPF should take advantage of the recession to negotiate better deals with private hospitals, industry sources argue that it would be impossible to achieve a 10% cut in treatment fees.

"There are good deals to be had with hospitals, but nothing like 10% off, especially as medical inflation, which is driven by technology, is still running at 6% per year," said one source.

A spokesman for the NTPF said it remained focused on its work of arranging treatment for the longest-waiting public patients.

He defended the practice of purchasing treatment from public hospitals, stating that it is allowed to purchase up to 10% of its capacity from the public hospital system, where it does not affect core hospital activity.

"This is typically reserved for complex or specialist procedures for which there is limited consultant expertise in the country, where there is limited private hospital capacity or where, for patient safety reasons, it is deemed clinically necessary to perform the operation in a public hospital. These operations include some neurosurgery, paediatric cardiac surgery and colorectal surgery," he said.