'Fraud' and 'cover-up' exposed in failing semi-privatised Irish healthcare

Commerce has corrupted healthcare in the Irish semi-privatised insurance-based system. 

Jo Murphy-Lawless
19 August 2014

Image: Pharmaceuticals. Flickr/Waleed Alzuhair. Some rights reserved.

Late last year Senator John Crown revealed under parliamentary privilege in Ireland’s Senead that his own hospital, St. Vincent’s University Hospital in Dublin, had in 2002 billed the country’s largest private health insurer €1 million for the drug trastuzumab (Herceptin). But the drug had in fact been supplied to the hospital free by pharmaceutical giant Roche, as part of clinical trials for women with breast cancer.

This was not an inadvertent error as the hospital claimed, said Senator Crown, but deliberate financial fraud, which the hospital board had spent perhaps tens of thousands trying to cover up, employing ‘substantial intimidation’ to bury the matter.

Senator Crown is also Professor Crown, arguably Ireland’s most distinguished oncologist. He had been told of the fraud in 2002 and at once notified all relevant health authorities.

An investigation started, then stopped in its tracks. The hospital argued it had not known about this major research programme taking place on its premises.

The debacle had ended with the suspension of the drugs trial for a year, jeopardising the lives of women with breast cancer who might otherwise have participated in this important trial, said Professor Crown.

This was not the only instance of the hospital charging insurers for drugs which had been provided for free, he said (Seanad Eireann, 2013), but only recently had additional corroborating documentation come into his possession.

The bombshell about St Vincent’s creative accounting highlights several aspects of the unworkable two-tier Irish health care which should serve as a warning to English readers.

The growth in unaccountable private hospitals, Big Pharma’s protected presence in Ireland, and a rapacious private health insurance industry, and the very best paid consultants and managers. All of these have benefitted from the supposedly ‘non-political’ structures set up in recent years to oversee health provision.

'Taking politics out of health' - or taking democratic accountability out of health?

The Minister for Health no longer has any direct responsibility for the administrative running of the health services. He merely presents its expenditure plans, drawn up behind closed doors, to the Irish parliament for approval each year.

Instead, the Health Act 2004 established the Health Services Executive with promises that are eerily familiar to UK readers: modernising the health services, increasing efficiency and accountability, removing ‘political’ influences from the running of the health services, and opening up private health care options as a challenge to a public health care system made sluggish by being starved of finance for frontline workers and resources for decades.  

The HSE built on a chaotic system that has certainly served some well. Professor Crown’s revelations came on top of other scandals about the pay of senior managers in at least 13 other state-funded hospitals. Additional pay and allowances were being made outside of officially sanctioned salaries and budgets of the Health Services Executive (HSE). There were previously undisclosed top-up payments to many of these senior people from unacknowledged ‘private sources’.

A chaotic two-tier system of healthcare

Since independence in 1922, Irish healthcare has been a confused jumble of public and private provision. Former county workhouses for the indigent were converted into hospitals and the state also remained heavily dependent for buildings and nurses on religious charities. These latter hospitals often had private wings where doctors served the needs of the wealthy.

Irish people have never had access to a universal health care system. Instead they rely either on a means-tested medical card giving access to public state-funded care (currently, 1.86 million people out of a population of 4.59 million), or if they are not eligible, on private health insurance - or on taking their chances.

The insurance scheme at the centre of the cancer drug scandal, VHI, was set up in 1957 as a semi-state body with the Minister for Health as its sole shareholder. In the absence of state-funded care, it was meant to provide affordable health insurance, subsidised through income tax relief, for those above the eligibility limits for the medical card.

The VHI remains the largest single insurer. But its client base tilts towards an aging population, and might no longer be considered cutting edge compared to the range of services offered by newer entrants like BUPA since the opening up of the Irish health insurance market to competition from multinational insurance corporations from 1996 onwards.

Aside from covering the cost of illness, private health insurance means faster access to care facilities, though in fact waiting times are still a problem.

The numbers of in-patient beds have been cut by over 5,000 since 1981, and have not been compensated for by increases in day places. Cuts to public bed numbers have contributed to growing inequalities of access, and waiting for a hospital bed in the public hospital system has become an everyday experience.

The system has been characterised as ‘Irish Apartheid’ (1). The government, won over by the enticements of privatisation and treating health as a commodity, has sleepwalked its population into a major health disaster.

The government has proposed replacing the HSE with an interim board and setting up a system of ‘universal health insurance’ promoted by the globalised private health insurance industry to promote ‘competition’. Each person would be required to purchase a ‘basic’ health care package from a private insurer and the state would pay the basic package for those with no means.

In effect, this is American healthcare system - and the one some see the UK rushing towards.

The globalised health care market increases health inequalities

In 1981 hospital consultant doctors were given a ‘contract to die for’ (2), with a very generous public salary for work in public hospitals, unlimited access to beds in public hospitals for their private practice, and a commitment that they need spend as little as six hours a week in actual public work as long as they had registrars to cover for them.

In 1988, hospital consultant doctors earned a public salary of €42,000, with average annual earnings of €30,500 from their private practices. The average industrial wage was just under €23,000. These differentials have widened painfully with the explosion in private health care. A senior hospital consultant can count on a combined income between public and private practice of approximately €350,000, whilst newly qualified nurses and midwives are paid a starting wage of just €22,000. 

The greed this stimulated fitted all too well with the expanding agendas of global privatised health care. Purely private hospitals mushroomed, many also offering beds to the over-stretched public health care system for the more profitable procedures. By the early 2000s, many Irish consultants cum businessmen had joined the ranks of private multinational healthcare conglomerates, such as the American UPMC, seeking new markets.

Hospitals lack democracy and accountability

Since the economic collapse, these private hospitals have faced mounting problems.

The Mount Carmel private maternity hospital faced a High Court liquidation order on the morning of 24 January, 2014. Within an hour, business firms supplying pharmaceuticals and medical equipment arrived at the hospital to remove their goods from the premises to the shock of patients (including public patients referred for orthopaedic procedures) and frontline staff who had not been informed of the impending court action. The hospital closed its doors a week later.

There are a number of other private hospitals facing stressed financial circumstances and closure or sell-off, including the UPMC Beacon Hospital, and Waterford’s Whitfield Clinic, a specialist cancer centre whose loans are being sold off by KPMG.

The same hospital board of which John Crown speaks, St. Vincent’s, has no public representation on the board. Accountability is impossible. It has found it easy to glide between its obligations as a publicly state-funded hospital meant to serve Irish citizens and a private hospital on the same site which needs to seek greater profits for its shareholders.

St. Vincent’s hospital’s CEO earned a state-funded salary of €145,000 and received top-up payment of at least €50,000 from undisclosed sources. He brokered a deal in 2010 using the public hospital as collateral to raise loans for an expansion of the private hospital.  

IMF-imposed cuts leave families muddling through on a wing and prayer

More cuts have flowed from the imposition of the EU/IMF troika deal on all public services as the price for the billions loaned to the Irish state in 2010 as part of the so-called bailout programme. A and E overcrowding is a constant in people’s lives. People can wait for years for diagnostic tests and consultant appointments in the public system and these delays have cost some their lives (1).   

The gap between health outcomes for best off children and the poorest has doubled since 2010 with terrible long-term repercussions (3).

There is a sharp downturn in numbers paying private health insurance since 2007 with over 250,000 people leaving insurance schemes. Huge wage cuts, new taxes, unemployment, and endless rises in insurance fees have left people with no choice but to cancel cover, especially those with young families. With no medical card, they are muddling through on a wing and a prayer.

They must weigh up the possibility of becoming ill and, without insurance, needing to cover fees such as these:

€45-€65 for a GP visit

€100 for treatment at a hospital A and E unless one has a GP’s letter of referral

€150 average cost of an appointment with a consultant doctor

€75 per day for a hospital bed to a maximum of ten days, after which that fee is capped

Ireland spends more on drugs than any other country - why?

Pharmaceuticals, another global growth area, also has had a specific impact on Irish healthcare.

Multinational pharmaceutical producers have located their production plants in Ireland under favourable financial terms, including the low Irish corporate tax rate. They accounted for almost 57% of all exports from Ireland in the Celtic Tiger years of the 90s and noughties. With 72 factories established here by 2004, Ireland outdistanced even Switzerland in exporting drugs (4). The pressures for medicine board regulators ‘to be overly responsive to commercial imperatives’ (Löfgren, 2009) may account for the high purchase price in Ireland of drugs produced by these companies.   

According to 2009 OECD figures, Ireland was spending more per capita on drugs than any other developed country. Drug costs for individuals are highly problematic. The state reimburses a person for drug costs over €144 a month. Up to that ceiling, s/he must pay out of pocket. There is a limited list of serious conditions for which drugs are free, regardless of medical card status, but many conditions are excluded such as asthma: a preventative corticosteroid inhaler with beta agonist, as currently recommended by NICE for asthmatic patients, costs €87 per month.

Retrieving a proper sense of the political and the ethical  

From the outset, the board of the HSE has reflected private financial interests and has been a revolving door between those companies and corporations with an increasing stake in how health services are run because of the profit-taking opportunities (1). Opaque, unreachable, top heavy with a swollen bureaucracy, with frontline staff left in the dark as to how management is actually working, the HSE has provided a consistent stream of serious health care scandals to a disillusioned and weary general public.

Ordinary people are the ones who have suffered. Compared with European averages and even compared with Northern Ireland, Ireland has earlier mortalities, a higher burden of morbidities and chronic long-term illness, and poorer outcomes and survival rates for a range of cancers. 

The Irish case makes clear why health is a core social need which requires a well-functioning state presence to secure a health system that is genuinely not for profit and is accessible to all. As it stands, we have created a toxic society in Ireland of rampant health inequalities, premised on greed and profit-taking.

We urgently need to construct the political arguments for health and health services as a personal and social good that must be funded by the state, that is, the wider community of us all. We all need good health services at some point and when that point arrives, my need is not greater than yours simply because I am rich and you are an average wage earner or someone who is unemployed. Health cannot be left to the ideology of private profit-taking from whatever direction.

This sense of the political, as an urgent open-ended public project to which all contribute, as articulated by the philosopher and defender of genuine democratic engagement, Sheldon Wolin (5) makes us think about the wellpool of resources there for all to ‘promote and protect the wellbeing of the community’.

As John Crown has written so powerfully, ‘we have to dream to end the nightmare’, to have ‘an Irish health service where every woman, every man and every child could see the same doctor in the same hospital or clinic following the same reasonable wait if they have the same illness, regardless of their financial circumstances.

English people trapped within the false premises and corrupting ideology of the Health and Social Care Act should take note of the Irish experience.


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 (1) Burke, S. (2009) Irish Apartheid: Healthcare Inequality in Ireland. Dublin: New Island Books.

(2) Wren, M-A (2003) Two-tier system of care, propped up by a contact to die for. Irish Times, Monday, June 2, 2003.  

(3) O’Brien, C. (2013) The Year the Sun Came out for Some, Review of 2013. Irish Times, Saturday, 28 December, 2013.

 (4) O’Donovan, O, Glavanis-Grantham, K. (2008) Power, politics and pharmaceuticals in Ireland in the global context. Cork: Cork University Press.

(5) Wolin, Sheldon (1994) Fugitive Democracy. Constellations, Volume 1, no. 1, December, 1994, Pp. 11- 25.

Duncan, P. and Wall, M. (2013) Queries to three maternity hospitals go unanswered. Irish Times, Wednesday November 20, 2013.

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