James Reilly (Dublin North, Fine Gael) | Oireachtas source

I thank the Chairman and the members of the joint committee for this opportunity to discuss health service issues. Both I and my Ministers of State, Deputies Kathleen Lynch and Alex White, will provide as much information and clarification as possible.

While I propose to keep my opening statement brief to allow more time for discussion, I must refer to a number of landmark developments that have recently come to fruition in the health service. I have no doubt my two Ministers of State will wish to speak to them as well.

The major new deal on the cost of drugs in the State, which was just mentioned, was recently brokered with the Irish Pharmaceutical Healthcare Association, IPHA. It will have a value in excess of €400 million over the next three years and will mean significant reductions for patients in the cost of drugs, a reduction in the drugs bill to the State, greater access to new cutting-edge drugs for certain conditions, which has always been a concern, and an easing of financial pressure on the health service in the future.

The agreement is of major benefit in two broad ways. Approximately half the value is related to reductions in the cost of patent and off-patent drugs. The other half is related to the State securing the provision of new and innovative drugs for the duration of the agreement in the current exceptionally difficult economic climate. We have discussed in the past that the Chief Medical Officer will initiate a new process around this involving not just the pharmaceutical companies, the policy makers, which is the Department, and the service providers through the Health Service Executive, HSE, but also clinicians and patient groups because we must realise there is a finite sum of money and if we are to make room for new drugs, the older drugs have to reduce in cost to allow that to happen. There is always a problem with that dynamic because some of the companies that are producing the drugs are not the same companies that are producing the newer drugs.

In addition to the new agreement with the IPHA, the Department of Health and the HSE have completed discussions with the Association of Pharmaceutical Manufacturers in Ireland, APMI. This group represents the generic drug industry and the agreement represents a significant structural change in generic drug pricing and should lead to an increase in generic drug prescribing.

Savings in 2013 will be in the region of €15 million and that figure will rise in subsequent years. The Minister of State, Deputy White, will want to address that when he makes his contribution, but I would say there may have been a sense that the enthusiasm for substituting for generics was somewhat diminished by the fact that many of the generic drugs were either the same price or a few cent less in price. That has been addressed through this agreement.

These landmark agreements come as legislation aimed at reducing the cost of generic drugs makes its way through the Oireachtas. The Health (Pricing and Supply of Medical Goods) Bill 2012 will introduce a system of reference pricing and generic substitution. I hope it will be enacted before the end of the year and it is currently being passed through under the watchful eye of the Minister of State, Deputy White. It will deliver further significant savings in the cost of medicines for the health service and for the private patient.

Our agreement with the private health insurers on the accelerated payment of €125 million to publicly funded hospitals in 2012 is a major part of our budget control as well. I am delighted it has been possible to reach agreement with the private health insurers in this regard. The arrangement will deliver a once off cashflow benefit in 2012 in the order of €125 million, providing much-needed funds for the hospitals. The money is a once off payment in respect of private patients who have been treated in publicly funded hospitals but where the detailed claims have not yet been received by the insurers. The effect of the arrangement will be to reduce the over-run in the HSE.

I fully acknowledge that the public hospital system has unacceptably long delays in regard to income collection, especially the completion and sign-off of claims by hospital consultants. To address this situation the HSE has instructed hospitals to reduce the value of claims awaiting signing off by consultants and also to target completion of the highest value claims. It is not that they will reduce the value of the claim but they will reduce the number of claims that are outstanding. In fairness, I hope the insurers also will co-operate in this regard.

The recent Cabinet decision to develop the new paediatric hospital on the St. James's Hospital campus activates the most important capital building project in the State. It is a key priority for the Government and no effort will be spared in expediting its completion. The decision to choose the St. James's site was led by clinical considerations. Co-location with St. James's and ultimately tri-location with a maternity hospital on the St. James's campus will provide the excellence in clinical care that our children deserve. The estimated cost of the development in the region of €500 million is considerably less than the projected cost of building the facility on the campus of the Mater Hospital.

Publication of the strategic framework for health reform, which occurred last week, is a very important moment for us because it lays out very clearly the main health care reforms that will be introduced in the coming years as key building blocks for the introduction of universal health insurance. People have sought the plan for a long time and, in many cases, we have mentioned aspects of it but it is now laid out in a clear document with actions to be taken and a timeline around all those actions. It is called Future Health and it contains a set of specific actions that will prepare the way for universal health insurance. Future Health will bring about a major reshaping of the health system by restructuring our delivery service and improving our organisational, financial, governance and accountability systems in the primary, community and hospital care sectors. These changes will be introduced in a step-by-step manner on the basis of good evidence.

A White Paper on universal health insurance to be published in 2013 will provide the basis for more detailed actions. We have already commenced communicating this to those in the system. We had meetings in Cork and Waterford with both service providers and the health forum and yesterday we had similar meetings in Naas, Tullamore and Dr. Steevens' Hospital. We will go to the west later this week to Sligo, Galway and Limerick and the following week to the north east of Dublin to involve all those areas as well. The point of this is that we engage with those in the system. It is a two-way conversation. It does not stop there; they will have an input back to us. This is very important from the point of view of ensuring we do this in the best possible way because while we can see all the road signs, we cannot see all the potholes. The people working on the ground can see them better than us and know best how to deal with them.

From the actions outlined above, the members will note that I am determined to press ahead with the health service reform promised in the programme for Government. Robust governance and management arrangements will be crucial to drive, manage and monitor implementation of the reform programme.

I will therefore establish a programme management office in the Department of Health to act as a central overarching and co-ordinating function for health reform.

These major initiatives which I have outlined are positive developments. However, I must also refer to the serious challenges facing the health system, the scale of which surmounts anything previously experienced. The HSE is facing a serious budget deficit and is still required to make significant savings in the current year. The contributing factors to the overrun include increased hospital activity. While one might complain about certain activities that are elective, one certainly cannot do anything about a 6% increase in emergency department admissions. Those are the most acutely ill people in society.

There is increased expenditure on medical cards and drugs, which is a result of the economic downturn. Although we planned for 105,000 additional medical cards, we have issued in the region of 150,000 so far this year. The income from private health insurance has declined, which is also reflective of the economic downturn. The number of staff who availed of the grace period to retire was much greater than that provided for in the national service plan and that had an impact in terms of lump sums that had to be paid out.

However, a programme of measures has been initiated to address this deficit. In addition, I have put in place a financial improvement and new programme management arrangements which will transform the way financial management is handled across the health system. This will strengthen governance and improve consistency and continuity in financial reporting, performance management and data collection. That is easily said but this is a major area of concern and this is the first time it has been tackled in a serious fashion. It was pretty worrying and astonishing to find when we reviewed the situation that only 10% of the people in charge of the financial end of the service have a finance or accountancy qualification.

It is clear that further savings are required in the health sector and the 2012 health sector action plan prepared under the Croke Park agreement contains a demanding set of measures. They include a comprehensive review of rosters, changes in skill mix, productivity improvements and a focused approach to reducing sick leave levels. Further significant cost reductions will be required in 2013 and 2014, requiring substantial savings to be made to the cost base of the health sector. My Department is working intensively with the HSE on a range of substantive proposals for submission to Government in the context of the 2013 Estimates. Both my ministerial colleagues and I will be happy to answer questions from the committee on these and other issues in greater detail during the course of the meeting.

Putting the patient first in a real way is at the core of what we are doing. Everything we do must be focused on improving the outcomes for patients. In the past there has been far too much focus on inputs – how much money, how many doctors and how many nurses. We need to measure outcomes for patients because that is what the service is about.

Concern has been expressed by several committee members, and we have all expressed our sympathy to the family of the late Savita Halappanavar, but I must inform the committee, as the Taoiseach did, that there have been changes to the membership of the team in Galway investigating the incident. I would like Mr. Tony O’Brien from the HSE to address the issue during the course of his opening contribution.