€600m plan for three hospitals in tatters as US investor pulls out
Published 08/04/2011 | 05:00
PLANS to develop private 'co-location' hospitals in Limerick, Cork and at Beaumont in Dublin are in tatters after US investor UPMC pulled out of the €600m project last night.
It comes after the HSE refused to allow extra time to finalise contracts for the projects to build private hospitals on the grounds of the Midwest Regional Hospitals in Limerick, University College Hospital in Cork and at Beaumont.
Beacon Medical Group spent €30m over five years on the stalled projects, a spokesperson for Beacon confirmed last night.
In a response to the Irish Independent, US investor UPMC said it had now transferred its 40pc stake in the three co-location hospital projects back to majority partner Beacon Medical Group.
Last week the HSE refused to allow Beacon and UPMC extra time to finalise contracts for the co-location projects.
A spokesman for the Health Service Executive said an earlier extension of the contracts expired on March 31.
The HSE's move effectively terminated the contracts and halted the developments.
Last night's decision by UPMC means it is walking away from the projects, though Beacon Group is still interested in pursuing the issue.
Co-location was championed by former Health Minister Mary Harney. The plan was to increase bed numbers by allowing private developers to build new facilities on the grounds of public hospitals.
Fine Gael and Labour opposed the plans before coming to power. The latest developments mean the projects have now lapsed without a sod turned, leaving the developers massively out of pocket.
Beacon's commercial director Pauline Cullen said the contracts were pursued in good faith, but were impossible to finalise after the VHI said it would not cover co-located hospitals and because of a dispute with the HSE over the designation of public and private beds.
She said international banks, including Australia's Macquarie, were ready to finance the projects, but only if those issues were resolved.
Beacon Medical won the right to develop the three sites after competitive tendering processes back in 2007. Since then planning permission has been secured and detailed plans drawn up for the three sites.
US healthcare investor UPMC already runs the UPMC Beacon Hospital in Sandyford in Dublin and the Whitfield Cancer Centre in Waterford. Those facilities are not affected by the decision. A spokesman said UPMC remains committed to Ireland.
The spokesman said earnings before interest, taxes, depreciation, and amortisation (EBITDA) at the UPMC Beacon Hospital in Sandyford were positive in the 12 months from January 2010, the first full year under UPMC majority control.