Minister for Health Simon Harris has said new Government proposals on pay for hospital consultants aim to end the "bizarre practice of allowing private practice in public hospitals".
He said it will also give much greater access to public beds for public patients.
Minister Harris said he plans to hold meaningful talks with the Irish Medical Organisation and the Irish Hospital Consultants Association in January about pay and other matters including access to theatre and rosters.
Speaking on RTÉ's Morning Ireland, he said that every day 15 to 16% of beds in public hospitals are being used for the benefit of private health insurance companies.
He said he is "fed up" of funding the profits of insurers saying "we are not going to do it anymore".
The minister said the Government will phase out the gap (of €553m last year) left by moving away from private healthcare in public hospitals, with a "very affordable" funding from government of €36m in year one, rising to €76m after three years.
Minister Harris said the new public-only contract for consultants requires a commitment to public health services and will allow equity and fairness in the health service while also increasing salaries for new consultants.
He said it is not normal that we train doctors and they leave and he does not want doctors to feel they must subsidise their work by working in private practice.
He said he accepted there is a retention challenge but he is saying this is one of the highest salaries in the OECD and he urged doctors to work with him.
He said he is not forcing anyone to switch contract, but future contracts will all be the new consultant contracts.
The minister said that private hospitals and private healthcare can continue but in public hospitals people should be treated "on the basis of need not the size of their bank balance".
Under the new proposals, hospital consultants are to be offered a salary of €250,000 a year to commit to a new public-only contract.
The contract will be offered to new consultants and existing consultants who agreed to only do public work.
Minister Harris said he expects to appoint 120 new consultants next year and said the new proposals will see 1,000 more consultants working to drive down public waiting lists over ten years.
There are also 500 vacant consultant posts.
The Vice President of the Irish Hospital Consultants Association welcomed the pay proposals.
Dr Laura Durcan, a Consultant Rheumatologist at Beaumont Hospital, said first time that there is recognition of the recruitment crisis, at the highest government level.
She said that since 2012 patients have really felt the effect of cuts, which has resulted in 500 unfilled roles.
Dr Durcan said that Ireland has around half of the consultants it should have.
Comparing Ireland to Scotland, which she said has similar population and healthcare needs, she said Ireland has around 40% less consultants.
In addition Scotland has around twice the number of beds.
Dr Durcan said the vast majority of patients referred to a specialist in Scotland are seen within 12 weeks, while patients in Ireland can wait up to two years for an appointment.
Dr Durcan said most patients, even those with private insurance, will present to a public hospital first in crisis and the current funding model currently means that €650m in the system comes from insurance sources.
She warned that the new proposals would take a huge chunk of funding out of an "already creaking system."
She said while the proposals would result in a better financial outcome for her, she would have to question if her patients would be better off, if that money is removed from the system.
Dr Durcan said she wanted to work in an excellent system where patients and doctors flourish.
She said the current situation, where patients spend days on trolleys, is an "absolute affront" and the experience is "nothing short of misery" for the patient.