Beacon disputes compensation levels in co-located hospital contracts

THE BEACON Medical Group, which has won tenders to develop three of the controversial co-located private hospitals around the country, is involved in a dispute with the State over the level of compensation to apply in the event of the contracts being terminated in the future

It is understood that Beacon and the consortium of banks which are to provide the funding for the projects are concerned with current proposals in this area. The Beacon Medical Group has written to the Minister for Health Mary Harney on the issue.

Beacon last year won tender competitions to develop co-located hospitals on the grounds of Cork University Hospital, Beaumont Hospital in Dublin and the Mid-Western Regional Hospital in Limerick.

It is understood that the project agreement allows for the termination of the contract in the event of certain criteria not being met.

A spokesman for Ms Harney declined to comment on the issue. He said that a process was under way to ensure value for money for taxpayers.

In a statement, the Beacon Medical Group said that, as provided for in the competitive dialogue and project agreements, it was currently discussing the compensation and termination provisions for the co-location projects with the HSE and its consortium of banks.

"There are many variations of compensation and termination terms as provided for by the central PPP [ public-private partnership] unit in the Department of Finance. We are discussing which ones are most appropriate for the co-location projects. We are confident that we will find the most appropriate terms, and anticipate procuring full banking approval prior to the granting of planning permission and going on site," it stated.

Beacon Medical Group chief executive Michael Cullen told a conference on Thursday that the new hospitals would cost €800 million and would provide over 700 beds.

He said that the co-located hospitals would be obliged to admit privately insured patients coming through the public hospital A&E departments 24 hours per day and if they refused, they could face substantial fines and possible eviction.

Mr Cullen said that the three new facilities in Cork, Limerick and Beaumont would be open by 2011, subject to securing planning permission. Beacon is also involved in the tender process for a fourth co-located private hospital planned for Tallaght.