The continued failure of Voluntary Health Insurance (VHI) to appoint a full-time chief executive means it is paying £250,000 a year for a consultant to run the company on a part-time basis. The payment is £100,000 more than a proposed pay package for the position, which was refused by Cabinet in December.
The VHI board had approved the appointment of the National Lottery director, Mr Ray Bates, before Christmas, with a remuneration deal believed to be worth £150,000. However, the Government refused to sanction the package because it breached the terms of the Gleeson pay guidelines.
Mr Aidan Walsh, a partner at Price Waterhouse, accountants, has been asked to continue in the position of temporary chief executive, despite an intention to leave the health insurance company at the end of last year. It is believed Mr Walsh reduced the time spent on VHI business recently to three days a week. However, according to sources, he is available to devote further time if necessary.
The health insurance company is also believed to have paid more than £120,000 to Price Waterhouse for a report on the future corporate structure and ownership of VHI, and a similar sum is being paid for a report to address the forthcoming White Paper on health insurance.
The report on the company's future was presented to the Minister for Health, Mr Cowen, in March. Another on cost containment, being carried out by Arthur Andersen, will cost more than £100,000. Deloitte and Touche, VHI's auditors and tax advisers, are currently carrying out a review of the company's financial division.
A spokeswoman for the company said yesterday that Mr Walsh was the "acting chief-executive on a full-time basis". Details of his remuneration were a matter between the VHI board and Price Waterhouse, she said. VHI was not prepared to comment on details of confidential commercial arrangements it had with other companies.
Mr Walsh became chief executive for an initial six-month period after Mr Brian Duncan resigned in July 1996 and the company had difficulty replacing him. The £70,000 salary, which the VHI board considered to be out of line with industry norms, proved a stumbling block.
Following the Cabinet's rejection of the Bates package the company had said it was seeking another consultant for a 12-month contract. At that time the VHI chairman, Mr Derry Hussey, said it would clearly be better if a full-time, committed chief executive was appointed, rather than a consultant for 12 months.
For more than a year VHI has been in competition with BUPA. It has been repeatedly acknowledged that the company, which has experienced a number of financial difficulties in recent years, needs a permanent chief executive. However, according to some sources, having someone permanent may not be ideal if a strategic alliance was to occur. This option had been suggested in the report by Price Waterhouse on VHI's future.
"If a strategic partner were to take 50 per cent it might be better if there were not a permanent person in the job. That sort of package could cost up to £1 million."