Huge waiting lists in a system that can’t cope, increased affluence and generous tax breaks fuelled by a political willingness to solve a seemingly intractable problem are the kind of ingredients that attracts entrepreneurs to any business — and healthcare is no different.

Corporate financiers have been working overtime dealing with the glut of developers and investors who have suddenly turned their financial guns towards the sector, drawing up increasingly elaborate plans for the construction of private hospitals. There are already 20 of these in the state, and the further 15 supposedly in the pipeline will represent a combined outlay of about €1 billion over the next five years.

Many of the usual suspects have arrived on the scene, including the beef baron Larry Goodman, the developers Sean Mulryan and Bernard McNamara, and the Musgrave director Seamus Scally.

Driving this unprecedented interest is the extension of tax relief to small hospitals rushed through by Charlie McCreevy, the former finance minister, in 2001, and the health minister Mary Harney’s stated intention to move 1,000 private beds in public hospitals into new private hospitals to be built on existing hospital grounds.

But if the government believes tax breaks for private hospitals will be the panacea for the ills besetting Ireland’s creaking health service, it may yet be forced to swallow the bitter pill of disappointment. Entrepreneurs who have already made their fortunes from private healthcare warn that the likely casualties will be individuals lured into the market by faulty prognoses.

PAUL HIGGINS, a director of Goodbody Corporate Finance, says the completion of the Galway Clinic last year has encouraged a rush of would-be investors, but he doubts if many of the proposals doing the rounds will ever see the light of day.

“There is an enormous rush at the moment, but I would be surprised if even half of them get built,” he said. “There is still substantial risk for developers. If you build a hotel that isn’t making money it is possible to convert it into luxury apartments, but hospitals are specialised, purpose-built units. Walls that are 10ft thick for hosting radiation equipment may be great for noisy neighbours, but they are harder to flip and far harder to get equity to build.”

Jimmy Sheehan, the former surgeon who fronts the Blackrock Clinic and the consortium behind the €90m Galway Clinic, also believes the vision will never materialise.

“People will moot anything, but they couldn’t possibly survive — I don’t think any hospital with less than 100 beds is viable because you simply wouldn’t have the throughput to sustain the overheads,” he said. “The tax break is a help, but it is not make-or-break and anyone who treats it like that doesn’t have the right picture; this is a very complex business.”

Dealing with illness is also very big business. The healthcare system accounts for about 23% of total government funding and has mushroomed from a €7.1 billion budget in 2001 to more than €10 billion in 2004. The sector is the largest public service employer in the state, with an approved employment ceiling of 96,000 employees, up from 67,000 in 1997.

On the face of it, private healthcare would appear to be a licence to print money. The consortium fronted by the former CIE chairman Brian Joyce, which paid about €52m for the Mater Private in 2000, has made a healthy €48m capital return in the past five years as the hospital is now valued at €100m.

The hospital also made pre-tax profits of €13.5m last year, up from €7.8m in 2003. The owners of the Bon Secours chain in Cork and Dublin made €7.4m in 2004 and the Blackrock Clinic turned a €6m profit in 2003, according to its latest accounts.

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