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

I would like to conclude because it is important to put these matters in perspective.

Between now and 2017, the proportion of the population aged 65 and over will increase by approximately 20,000 per year. This is good because it reflects improving longevity and better quality of life. We must fully celebrate that fact but also take cognisance of the implications it has in the context of service provision. The third point is that at the other end of the lifecycle, fertility rates in Ireland remain the highest in the EU. Equally, this is also great.

A study carried out by my Department on the projected effects of these demographic pressures on the health services indicates that annual cost pressures of approximately 1% will be encountered in the health services as a result of the pure demographic effect of population growth. In particular, population ageing drives the overall cost pressures. For the proportion of the population over the age of 65, annual cost pressures of approximately 3.5% are projected and this has clear implications for service provision. In addition to these demographic pressures, the health service faces further unavoidable pressures due to the economic situation, which has resulted in increased numbers on medical cards. There are now in excess of 1.8 million people with medical cards. This number is projected to grow further in 2013, adding to the pressure on the drugs budget of the HSE.

Given that expenditure on pharmaceuticals is approximately €2 billion per annum, any arrangements which will mitigate this expenditure are to be welcomed. Significant progress has been made in recent years to improve value for money through changes in wholesale and retail mark-ups and reductions in payments to community pharmacy contractors. In addition, in October I announced a new agreement with the Irish Pharmaceutical Healthcare Association, IPHA. This new agreement will have a value in excess of €400 million during the next three years and will mean significant reductions in the cost of drugs for patients; a reduction in the drugs bill to the State; greater access to new cutting-edge drugs for certain conditions; and an easing of financial pressure on the health service in the future. As well as the agreement with the IPHA, the Department of Health and the HSE have completed discussions with the Association of Pharmaceutical Manufacturers of Ireland, APMI. The latter represents the generic drug industry and the agreement represents a significant structural change in generic drug pricing and should lead to an increase in the prescription of generic drugs. Savings in 2013 will be in the region of €15 million and this figure will rise in subsequent years as more drugs come off patent.

Another serious challenge for 2013 is that we will be obliged to derive further savings through reducing the numbers employed, even though a significant reduction has already been achieved within the health sector. Since its inception in 2010, the public sector agreement - better known as the Croke Park agreement - has helped the health sector to manage the reduction of staff numbers by over 6,000. Another significant success of the Croke Park agreement in the health sector has been the redeployment to date of some 3,500 staff within the services. Other achievements include an extended working day in hospital laboratory and radiography services, the ongoing revision of rosters at local level and co-operation with clinical care changes in hospitals

A major achievement for the health sector in the context of the existing Croke Park agreement was the recent conclusion of the agreement between hospital consultants and health service management at the Labour Relations Commission. The breakthrough, reached initially after intensive talks last September, allows for a series of major changes to the benefit of patients in particular. The negotiations to which I refer provided for agreement on 24-7 rostering. Consultants will be available for rostering for any five days out of seven, as opposed to weekdays as is currently the case. The agreement also gives greater strength to the system of clinical leadership in hospitals throughout the country. The move will allow for greater effectiveness in the organisation of day-to-day work in hospitals and a greater capacity for efficient forward planning.

In simple terms, with these changes, we will be able to treat more patients more quickly. The new powers conferred on the clinical director are a real improvement and will have a major impact in this regard.

The agreement also puts on a formal basis a range of productivity flexibilities which allows for considerable advancements in the use of hospital beds. Notwithstanding the significant progress made to date under the Croke Park agreement, it is clear that further change is required and at a faster pace if we are to be able to reduce the impact on services. In this context, I welcome the Government's recent decision to initiate discussions with the public sector unions on an extension of the Croke Park agreement. In the interests of safeguarding public services to the maximum extent in the face of the continuing very serious fiscal situation, I am fully supportive of this process which will be led by the Department of Public Expenditure and Reform at central level and is aimed at achieving substantial savings in the 2013-15 period. My Department and the HSE will engage positively with the process with a view to putting forward measures that can achieve the savings required and are fully thought through in terms of what they are intended to achieve and how they will be implemented.

The Government is fully committed not just to more efficient ways of delivering services but to a fundamental reform of the Irish health service. This was never going to be an easy task. We are implementing many reforms and introducing initiatives to improve the quality of service at a time of serious economic challenge. The current health system is deeply flawed, it is unfair to patients, often fails to meet their needs fast enough and fails to give value for money. We have committed to a complete rewriting of the current system in a very ambitious but necessary programme of change. Reforms are all the more important in the face of the economic crisis with extremely challenging savings to be achieved in the months and years ahead but they are needed because the current system is simply not sustainable. I am on record as having said that even if we did not have an economic difficulty to deal with we could not have maintained the service in its current form.

On 15 November last, together with my colleagues, the Minister of State, Deputy Kathleen Lynch, and the Minister of State, Deputy Alex White, I launched Future Health - A Strategic Framework for Reform of the Health Service 2012-2015. The major reforms in Future Health are aimed at improving fairness by removing the distinction between public and private patients, driving down costs in order that we can live within difficult budget limits, ensuring high quality services and developing a health service of which we can all be proud and in which patients can feel safe. A new focus on health and wellbeing, moving away from simply treating ill people to a new concentration on keeping people healthy, is core to this framework. Also core to it is reforming our services to ensure we deliver care at the lowest level of complexity. We need to enhance primary care and refocus hospital and social care. Also core to the framework are reforming our structures in order that we deliver services effectively and efficiently, and reforming our financial system in order that we can enhance financial control and create the incentive to deliver cost-effective care. I mentioned in the past two reports, the Ogden report and the PA Consulting Group report, which both highlight the difficulties within our system, the lack of clarity around finance and the recommendations we are implementing.

Notwithstanding the difficult financial environment, very substantial progress has been made on the health reform agenda in recent months, including a reduction of 24.3% in the number of patients waiting on trolleys between January and November of this year compared to the same period last year - this equates to 19,135 fewer patients waiting on trolleys. There are still too many and we have a long way to go. In addition, the number of adults having to wait more than nine months for inpatient and day case surgery was down 91% at the end of September.

The reforms are working, the progress to date underlines this and underlines the Government's commitment to health service reform and the implementation on universal health insurance. With the involvement and support of all the main stakeholders in the health system, I know we can deliver on our objectives in the best interests of patients. I have travelled around the country and have had 14 or so meetings with staff and with health fora. I believe everybody wants to see the system change and that there is support for this. I know different people have different views on how it can be achieved and I welcome their input and advice. The extent of the financial crisis facing Ireland and the challenges which this poses for the health system in particular at a time of growing demand means the Government must press ahead with major health sector reform.

Our health services are essential to the functioning of our society. Our citizens expect and demand a modern, high-quality, safe single-tier health service which guarantees access to care based on need, not on ability to pay. We need to build a health service that is continually evolving and improving, and delivering services more efficiently and more effectively with fewer staff. It is the intention of the Government to provide such a health service for current and future generations. The 2013 allocation for the health services, although very challenging to deliver, will be an important mechanism in enabling the Government's reform agenda for the health services to proceed. I thank the members for their attention. I am happy to respond to any questions members of the committee may have but before doing so, as there is no name plates before my colleagues, I will introduce my colleagues on my right, Ms Bairbre Nic Aongusafrom the Department of Health, Mr. Liam Woods from the HSE and Mr. David Smith.