Galway Clinic lets staff go as VHI refutes allegation of low cover rates

WHEN it opened two years ago, bearing none of the down-trodden, overcrowded hallmarks of our public hospital system, the splendour of the Galway Clinic drew justifiable comparisons with a luxury five-star hotel.

With its stylish architecture, spacious individual rooms and StarTrek-style nursing stations, it held the promise of tailor-made patient care in delightfully comfortable surrounds.

Clients were greeted by an automated grand piano in the atrium, delicately poised aloft a handwoven V’Soske Joyce carpet. It smelt of success and its founder had a history of success behind him.

Orthopaedic surgeon Jimmy Sheehan was also the founder of Dublin’s prestigious Blackrock Clinic and this time, beef baron Larry Goodman had come aboard his Galway venture. The recipe, at a time when the Government was granting generous tax breaks to developers of private hospitals, was one for success.

Fast forward to June 30 2006 and, in the shadow of the grand piano, 18 staff at the clinic found memos at their desks yesterday telling them their services may no longer be needed.

The letter informed staff that because “activity levels are lower than planned, during the upcoming weeks a review of all departments will take place with a view to cost reduction. This may lead to some restructuring”.

The letter, signed by the interim chief executive of the Galway Clinic, Bernadette Teehan, concluded “it gives no pleasure to have to take these steps but the situation leaves us with no option”.

Mr Sheehan blames the VHI, saying their remuneration rates are barely in line with medical inflation, leaving the clinic facing serious financial losses. In contrast, rival health insurers Bupa and Vivas are “very satisfactory” he says.

The losses have resulted in the decision to let staff go and to freeze a salary increase due this month.

“I don’t know how long it will go on for — until we can get the place on a sound footing,” he said last night. The 101-bed hospital has 350 staff and restructuring may lead to more redundancies.

The VHI rejects Mr Sheehan’s blame-claim outright, saying the situation the clinic finds itself in is of its own making.

VHI Healthcare was the first insurer to provide cover for the Galway Clinic and entered into a three-year agreement in June 2004.

“Since then the Galway Clinic has benefited from increases in reimbursement rates for the last two years; the latest increase was applied in June this year. The current agreement runs until June 2007,” a VHI statement said last night.

It said the clinic had originally envisaged a 50:50 split between public and private patients but that its projections were wrong and the clinic was almost wholly reliant on the private sector.

“If Galway Clinic are losing money then the problem lies with their business plan. VHI Healthcare have fully met the terms of the agreement entered into in June 2004 even though the payments made on behalf of our members have far exceeded the projections set out by Galway Clinic at that time,” it said.

The lack of public patients being treated at the Galway Clinic, which has plenty of spare capacity, has been flagged by Mr Sheehan for some time. He has offered to carry out breast screening while women in the west wait for the roll-out of the national BreastCheck programme, but this offer was turned down.

He has frequently emphasised the clinic’s capacity to carry out far more treatment on public patients under the National Treatment Purchase Fund but to date, just 7% of the clinic’s clients are NTPF referrals.

Galway already has a private hospital, the Bons Secours, and, if Government plans to build private clinics on public hospital grounds go ahead, it could end up with a third.

That, according to Mr Sheehan, would be “a crying shame”.

Last night, Mr Sheehan said the crisis engulfing the Galway Clinic would not compromise patient care, despite a reduced staff. Nor had it caused jitters among investors who, he said, “are all on board and are very supportive”.

But the experience of the Galway Clinic, after just two years in existence, will send out warning signals to other developers considering joining the Government’s plan to build even more private hospitals.