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Cost-cutting model is too expensive, VHI claims

The VHI last night hit out at a new report which insists it can cut costs by controlling its use of hospital services.

The government-commissioned review insists the VHI can reduce its €1.3bn bill for claims each year by bringing in new measures to cut out unnecessary care.

But the VHI has insisted that bringing in this so-called "utilisation management" model would require huge investment -- and be far too complex.

The comments come in the wake of anger at the VHI's decision to hike its premiums.

The report by actuarial advisers Milliman insisted that the VHI currently lacked the infrastructure needed to determine if it was getting value for money.

It said it could not find out if it was paying for treatments which have a proven medical value -- or if such treatments were taking place in the most cost-effective setting.

But by introducing a "utilisation management" model, the VHI could exercise more control over claims costs by agreeing limits within which consultants would operate.

And it said the VHI could look at the differing lengths of hospital stays for the same conditions across different hospitals to see how it could cut out inefficiencies.

The report admitted that bringing in the model would mean increased administrative costs -- but said the benefit outweighed this.

But it warned that if the VHI kept paying for healthcare without making any changes the cost of such treatments would be passed on to customers through price increases.

However, last night the VHI rejected the report's recommendations.


"Becoming a US-style healthcare utilisation company would require VHI to invest in and set up significant pre-authorisation processes, concurrent review processes and post-care review processes," it said in a statement.

This, it said, "would require a very significant upfront investment and would be a long and complex journey".

However, the Department of Health -- which commissioned the review -- insisted the model would not mean a transition to a US-style company.

It said the report had advised that the VHI should review all options to control claims costs.

Irish Independent