Sunday 18 February 2018

Reilly availed of lucrative tax breaks on nursing homes

Eilish O'Regan Health Correspondent

THE lucrative tax incentives which Health Minister James Reilly and his other investors availed of more than a decade ago were aimed at increasing the number of private nursing homes in the country.

In 1997, the Department of Finance designated nursing homes as industrial buildings. This change introduced tax breaks for the building or refurbishment of the homes.

The capital allowances were available over seven years at a rate of 15pc per year for six years and 10pc in year seven.

It meant the total costs of building the nursing home could be offset against the tax paid on taxable income or profits.

For self employed people such as Dr Reilly -- who was a practising GP at the time -- the tax saving could be as high as 47pc.

The incentives paid off as the number of private nursing homes jumped from 408 in 2003 to 447 in 2010.

But it was an uneven jump. In some areas of the country, like the west, it lead to an over-supply of nursing home beds.

However, in areas of north Dublin, hospitals such as Beaumont and the Mater still have a major problem with so called "bed blockers" -- people who remain in hospital because there is a shortage of private and public nursing home beds to take them.

The tax incentives were also blamed for a lapse in standards as critics claimed they attracted investors and developers who had no interest in running nursing homes and were just in the business for the money.

This accusation gained traction around the time of the Leas Cross scandal of 2007, when serious neglect was uncovered at the north Dublin nursing home.

In recent years the Health Information and Quality Authority (HIQA), the safety watchdog, took over the inspection of private nursing homes and it enforces high standards covering staffing and the general care of residents.

The private nursing homes are now heavily sustained by payments from the State which subsidises the care of residents under the Fair Deal scheme. This provides a steady and reliable income -- even though many operators are critical of the sums involved.

More people who qualify for the Fair Deal are opting to go to private nursing homes instead of outdated public facilities.

Hundreds of these HSE-run public nursing home beds are closing down this year, and some homes are shutting entirely due to health and safety regulations and the cost of staff.

The residents are transferred to the private nursing homes. However, many are high dependency and more expensive to care for.

The nursing home business is profitable but because of the huge amount of investment needed in facilities and staff, the return is more in the medium and long term.

There are now around 20,000 beds in private nursing homes compared to 15,000 in 2003.

But building is also set to slow down as the tax incentives were ended in 2009.

Any new home which had not opened for business by July of last year was no longer eligible for the lucrative breaks.

Irish Independent

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