THE HSE has dropped all mention of co-located hospitals in its action plan for 2011.
It is the first time there has been no reference to the controversial proposal to build private hospitals on the leased grounds of eight public hospitals. Former Health Minister Mary Harney got government approval for the proposal in 2005 in order to free up 1,000 beds for public patients but not a brick has been laid.
Although most have planning permission, the backers of the hospitals are struggling to get funding from banks and the State is under pressure to give more guarantees in the event of the facilities getting into financial trouble.
And although Fine Gael and Labour are opposed to co-location, they are legally obliged to honour contracts -- and if they are involved in the next government they would have to enter negotiations to make any changes, otherwise the taxpayer would be liable for compensation.
The HSE was unable to respond to queries yesterday on why co-location was not included in its service plan setting out its actions for 2011.
In an update Ms Harney recently said that preferred bidders had been selected for six co-located hospital projects at Beaumont, Cork University, Limerick Regional, St James's, Sligo and Waterford Regional.
"Project agreements have been signed and planning permission has been granted for the first four of these," she added.
The Connolly and Tallaght Hospital projects were still at the earlier stages of the process. She added: "The co-location programme is a complex public procurement process. A core principle underlying the co-location initiative is that the private sector should bear all normal business risks.
"It is a matter for each successful bidder to arrange its finance under the terms of the relevant project agreement. The co-location initiative, like other major projects, has to deal with the changed funding environment. The HSE is continuing to work with the successful bidders to provide whatever assistance it can to help them advance the projects."
The Beacon Medical Group was the successful bidder to build the hospitals at Beaumont, Cork, and Limerick Regional. Synchrony Healthcare was the successful bidder to build the hospital in the St James's campus.
The Department of Health was anxious the first co-located hospital be built in Limerick because of high number of private patients using the public hospital.
However, a VHI spokesman told the Irish Independent yesterday that while the insurer "cannot comment on specific hospitals" it was "currently unable to fund any additional capacity" and believed that "there is sufficient private capacity".
This will be a further deterrent to securing funds from nervous banks in the current climate. The fall in the numbers of people with health insurance is also likely to have an impact on proceeding with a hospital on some sites in Dublin.
The HSE can confiscate the hospital from the developer if it is not satisfied with its performance, a clause which banks have attempted to get changed.