The Beacon Medical Group, which is due to build three co-located hospitals, has confirmed to RTÉ News that it has implemented redundancies and pay reviews for senior staff.

The group said that following a review of the current economic conditions, six head office staff have been let go and senior management have agreed to pay reviews.

BMG employs 550 staff and says there have been no redundancies at the Beacon Hospital or its other medical facilities.

In July 2005, Minister for Health Mary Harney unveiled her hospital co-location plan to free up 1,000 public hospital beds by transferring them to new private facilities to be built on public hospital grounds.

The locations chosen were Limerick, Waterford, Cork, Sligo and in Dublin at St James's, Beaumont, Tallaght and Connolly Hospitals.

The Beacon Medical Group won the HSE tenders to build three of the co-located hospitals at Beaumont, Cork and Limerick.

The group's co-location projects are estimated to cost €850m and have already been delayed by planning appeals.

No legally binding contracts to build any of the BMG co-located hospitals have yet been signed with the Health Service Executive.

A leading economist has said that the economics of the hospital co-location plan do not stand up to scrutiny at this time.

Jim Power, Chief Economist with Friends First, said the availability of bank credit had to be a major issue for developers.

Mr Power said that if the projects were to happen, they would create a lot of employment during the construction phase and probably thereafter.

But he said there had to be serious questions about co-location proceeding in the current environment.