€50m Limerick private hospital stalled over VHI impasse

Mike Dwane


Mike Dwane

Developer Shay Sweeney at the site of the Limerick Private Hospital on the Dock Road, where the foundations are poured but the project can progress no further until agreement with the VHI is reached. Picture: Michael Cowhey
THE developer of a stalled private hospital on Limerick’s Dock Road has this week claimed that the VHI’s refusal to provide cover is threatening a €50 million project which would create 225 healthcare jobs.

THE developer of a stalled private hospital on Limerick’s Dock Road has this week claimed that the VHI’s refusal to provide cover is threatening a €50 million project which would create 225 healthcare jobs.

Shay Sweeney says 275 construction jobs would also be created in the development of Limerick Private Hospital and that the project has the support of a wide range of stakeholders from consultants and health service managers, the UL Graduate Entry Medical School and other insurers.

“Other insurers are on board and one of them, so great is their desire to see a facility in this region, offered to accompany us to banking if it would advance the project. But finance is not our issue,” said Mr Sweeney.

Lenders had stuck with him right through the recession, he said.

“I have funded this hospital three times, once with an Irish bank and then with two companies outside of Ireland and all three of those never once questioned the need or the business case. That was reconfirmed by a financial institution in November 2014,” he said.

And Mr Sweeney says he can bring to Limerick an international operator – who he does not wish to name – with a proven track record in running hospitals to the highest standards in Europe and North America.

But he this week expressed his frustrations at failing to reach agreement with the VHI on providing cover.

He said the closure in 2011 of the Cork Medical Centre –developed by the same family behind the Blackrock Clinic and the Galway Clinic – was a cautionary tale for new entrants.

“What happened in Cork has changed the landscape forever in Ireland. And we cannot let events in Cork jeopardise our hospital. A brand new hospital with 75 beds was built at a cost of €90 million plus; it was opened and VHI refused to cover it. So we must tread cautiously here if we can learn from others,” he said.

Negotiations with Ireland’s largest health insurer had initially gone well, Mr Sweeney said.

“They said, ‘Come to us six months prior to your opening and we will open a line in our budget’. And then they actually approached us, VHI Swiftcare, to enter into a joint venture partnership and we honoured all of our end of it,” he said.

When the VHI had expressed concern over demand, Mr Sweeney said Limerick Private Hospital (LPH) had agreed to reduce the scale of the project from a 92-bed to a 36-bed hospital.

And he claimed that when LPH resubmitted its proposal to meet VHI requirements, it had been rejected by the state-owned insurer on the grounds of substitution, a policy Mr Sweeney said he had heard nothing about from the VHI in advance.

Substitution, he said, required the closure of a hospital bed elsewhere in the system for every new private bed opened, something Mr Sweeney said he had no control over.

The VHI declined this week to comment on its policy of substitution but did issue a statement to the Limerick Leader on its criteria around quality and accreditation.

“VHI does not comment on the specifics of discussions with individual providers or hospitals, particularly those that might be ongoing,” a spokesperson said.

“VHI considers applications for new facilities having regard to perceived need for the services offered, their appropriateness in terms of quality and their cost and the likely economic impacts for VHI and its customers. In order to be approved for VHI insurance coverage, providers of new facilities must be independently accredited for quality purposes and either:

a) Demonstrate that they meet an important medical need with is not met by existing facilities and do so at competitive cost relative to those of providers of facilities that can be reasonably be compared with them;

or, b) Provide medical services at prices which are sufficiently competitive as may enable VHI Healthcare to obtain lower prices for such services generally in a significant area.

“VHI has already considered an application for Limerick Private Hospital in 2012. That application failed to satisfy our policy but we have advised that we are open to considering any new proposal if received in accordance with the above policy,” the spokesperson said.

Mr Sweeney rejected that he is planning anything that might duplicate existing services in the region, whether that was private facilities like Barringtons Hospital, which he said “provides excellent services”, or in the public system. Mr Sweeney said his hospital would if anything alleviate pressure at University Hospital Limerick. There was “a huge pent-up demand” for a private hospital in Limerick, he said.

“The first proposal from LPH to VHI was made in July 2011. The VHI turned down this proposal on the basis that we did not meet their criteria. VHI changed their criteria mid-way through assessing our proposal. The proposal was judged based on the new criteria rather than against the existing criteria on which our proposal had been made. VHI did not inform us or give us the opportunity to amend our proposal in light of the changed criteria.

“The second proposal submitted in March 2013 was adapted substantially following several meetings with VHI, including reducing bed capacity from over 90 beds to 36. At no time was substitution raised as a requirement in these discussions. It was only outlined as a requirement to us when our second proposal was rejected by VHI. The VHI know that this is a demand outside our control, so suggesting they are prepared to talk to us is meaningless until they remove this demand.”

On accreditation, Mr Sweeney said it was his intention “to secure international accreditation for our hospital from JCI, one of the largest international healthcare evaluators in the world”.

“As we are building a modern, new hospital, rather than retrofitting an older hospital, we do not believe there will be any issue with us achieving JCI accreditation.

“The VHI has also met with the operator of our hospital. They are fully aware of the credentials of our operator, who have an outstanding track record in operating hospitals and delivering superb patient care. The quality of the hospital and our operator is not an issue and never has been an issue.

“This hospital is about excellence in patient care and giving patients throughout the Mid-West the very best care. The demand exists for a new hospital in Limerick regardless of what the VHI might say. Not only is there a demand for it, the people of the Mid-West deserve it.”

Mr Sweeney said that as well as benefitting the economy directly, having a private hospital of significant scale would allow Limerick better compete with Cork and Galway for foreign direct investment.

“One of the things companies look at is access to healthcare and we are probably below the mark. If we had a facility where we could tick that box for the region, we could bring in more,” he said.