The VHI has warned that if recommendations contained in a report into the way it manages claims were implemented, doctors would lose the right to determine the type of care patients required.

Last summer, Minister for Health Mary Harney commissioned the US consultancy firm Milliman to examine the VHI’s claim costs and how they have increased over recent years.

Last night, Ms Harney said the report had found the VHI was paying out too much to hospitals and could make savings of up to 10 per cent if it managed its dealings with them more aggressively.

According to the VHI, the main recommendation of the Millliman review is that it should look towards becoming a US style healthcare company, which would see it involved in the treatment from the start. It says this would mean the insurer would switch from being an organisation that funds its customers' healthcare needs to one that actually determines what level of care and the type of treatment was needed.

Under this system, the VHI says the ability of a consultant in a hospital to determine a course of treatment would be diminished. At present, consultants determine a course of treatment which is then paid for after the fact by a health insurer.

While such a system is without precedent in the Republic, it is commonplace in the US, where patients need to get the green light from their insurer before they can receive certain treatments.

“Becoming a US style healthcare utilisation company will require VHI Healthcare to invest in and set up significant pre-authorisation processes, concurrent review processes and post care review processes,” the company said this morning.

This pre-authorisation process would require the consultant to receive approval for a course of treatment. Without it, an insured person’s healthcare costs would not be reimbursed. VHI staff would also have to continuously monitor the health status of patients to determine whether they should still be treated. Post-care reviews would see the company assessing whether the patient should have received the treatment.

The VHI board said the Milliman review had not demonstrated that “the theoretical savings were either tangible or achievable in the medium term”. It also said moving to such a system would require “a very significant upfront investment and would be a long and complex journey.”



It said its internal costs would have to increase significantly. Internal administration costs for US health insurers per customer currently average between €230 to €300, up to five times what the VHI spends. of VHI.

The VHI said it had reduced its annual healthcare and internal costs by €100 million in recent years and spends 96 per cent of its income in meeting the healthcare needs of its customers.

Chief executive Jimmy Tolan said the company faced “very significant healthcare funding challenges over the next 10 years” as its customer base continues to age.

“We anticipate that we will have to deliver significantly more care in critical healthcare areas such as cancer, cardiac, orthopaedic and managing chronic conditions. We welcome all constructive inputs including input from Milliman and the Department of Health and Children as we grapple with the challenge of funding our customers’ healthcare needs.”