The Health Service Executive (HSE) Mid-West said an investigation found 45 extra patients a week could undergo surgery if unofficial tea breaks were abolished, and if the nurses worked their full contracted hours.
The HSE said the performance blackspot is costing the hospital over €500,000 a year.
Tánaiste and Health Minister Mary Harney said the HSE report raises serious questions about irregular and unacceptable practices.
"It demonstrates the weakness of having 11 health boards as separate employers in the past," Ms Harney said.
"We cannot have a situation where somebody is paid a salary for a specific time period and they don't put in those hours. If it means the theatre is not being used appropriately and operations have to be postponed or cancelled, that is not satisfactory, particularly when the staff are there and the staff are being paid.
"I hear complaints about the lack of staff and the need for more staff but this is a situation where we have the staff but the staff are not working the hours for which they are being paid."
The Limerick hospital estimates the equivalent of 9.27 nursing jobs a week are wasted.
The HSE maintains if the tea breaks were abolished and nurses worked their full hours, 1.5 extra theatres could be used at the hospital each Monday to Friday, enabling 45 extra operations a week to be carried out.
A HSE spokesman said work practices "appear to have evolved over many years and include late starts, early finishes, unofficial tea breaks and unofficial time off. They arose from an historic situation whereby nurse management granted flexible arrangements to staff in exceptional circumstances which were subsequently interpreted as the norm".
However, Irish Nurses' Organisation's (INO) industrial relations officer Mary Fogarty denied nurses were responsible for the cancellation of any operations.
"This is an infantile, misleading and erroneous attempt by hospital management to create a smoke screen to deflect attention away from management's own ineptitude," she said.
Ms Fogarty said the HSE statement was antagonistic and totally unhelpful in addressing shortcomings of services at the hospital.
She said that the INO was demanding an external review of theatre practices.
A meeting was held on Tuesday between the HSE and SIPTU and the INO and a further meeting is planned for January 18.
* The irregular practices appear to apply to 70 out of 76 nursing staff.
* Beginning roster half- an-hour late and finishing shifts a half-an-hour early each day resulting in an average loss of 2.5 hours of nursing per week.
* Unofficial tea breaks during rosters results in an average loss of 3.77 nursing hours per week
* Unofficial time taken following an on-call roster results in an average loss of three nursing hours per week.
* Ending this loss would mean additional theatre slots each day resulting in the treatment of a further 45 patients per week.
* This would take 1,800 patients off the surgical waiting list each year.
- Figures from Health Service Executive