Mr. Tony O'Brien:

Good evening, Chairman. I would like to add my own seasonal good wishes to everyone present. The national service plan was formally submitted to the Minister for Health on 25 November 2013, in line with the provisions of the Health Act 2004, and is the first annual plan presented by the directorate of the health service following the enactment of the Health Service Executive (Governance) Act 2013. The service plan is also the first since the publication of the report of the Mid-Staffordshire NHS Foundation Trust public inquiry, known as the Francis report, in February 2013, the findings of which highlighted in the starkest of ways the need for a renewed collective commitment to providing the highest quality care in the safest of health care environments. The Keogh report which followed again identified poor standards of patient care in a further 14 hospital trusts and set out the help and support required to assist health care providers in accelerating improvements in the quality of care provided while also tackling the causes of poor care. Similar findings and recommendations were echoed in the investigations by the HSE and Health Information and Quality Authority into the safety, quality and standards of services provided to patients after the death of Ms Savita Halappanavar at Galway University Hospital.
The service plan for 2014 sets out the type and volume of services, as required under legislation, which will be delivered within the funding provided by the Government. At the heart of the service plan is the commitment to the delivery of safe, high-quality health and personal social care to patients and clients and the reform of our services. The gross current voted Estimate for the health service in 2014, including children and families, is €13.12 billion. The reduction in the health service budget between 2008 and 2013 amounted to €3.3 billion, and when coupled with reductions in 2014 the total budget reduction over six years amounts to almost €4 billion. In its initial assessment of health service requirements for 2014, the HSE approved a formal submission to the Department of Health reflecting the need to sustain safe services at the current levels, while at the same time responding to known pressures, demographic requirements, critical service priorities, programme for Government commitments and service developments and quality initiatives.
There is an underlying projected deficit of €419 million, including full-year costs for 2013 developments, coupled with a reduction to our funding base and additional savings targets of €619 million. This means the health service is facing a significant financial challenge in 2014. This challenge comes at a time when the demand for health services is increasing every year, which in turn is driving up costs. Managing ill health resulting from an ageing population and an increase in chronic conditions is a major driver of health care costs. Future projected increases in chronic disease are largely attributable to behavioural factors that the Minister has already listed in his opening remarks.
In 2013 the Government published Healthy Ireland, a cross-government framework for improved health and well-being. A 2014 service plan priority will be development of a three-year health service implementation plan for Healthy Ireland, and this will be led by the new health and well-being division, whose director is Dr. Stephanie O'Keeffe, who is with us today. During the course of this service plan, it will not be possible to meet fully all of the growing demands being placed on the health services. In particular, some service priorities and demographic pressures may not be met. However, the budget management approach outlined below has allowed the health service to invest in a number of significant and critical service priority areas in 2014, while at the same time ensuring that the health service maintains patient safety and improves the quality of services, protects core services, and drives the delivery of the reform programme.
Quality and safety will continue to be a system-wide priority for the health services in 2014, and this is threaded throughout the national service plan. The key message is that patient safety is paramount. All health service staff, individually and collectively, have a responsibility for the quality of the services they deliver to the patients and service users in their care and must ensure that maintaining quality and safety is core to their work and practice. A number of key quality and patient safety initiatives will continue in 2014, including improving patient experience, preventing health-care-associated infections, further implementing national early warning score systems, and improving medication management.
Our approach to the reduction in the gross Estimate of €272 million, or 2%, includes the following. Additional savings of €619 million will be made, of which €108 million pay savings remain unspecified and will be held centrally pending a separate verification process. A further €80 million in savings relating to the Haddington Road agreement will also be held centrally in the first instance pending an assessment of the most appropriate allocation of the savings across each service location. This exercise is currently under way. There is also a projected incoming deficit of €419 million, which includes the full-year costs for 2013 service developments.
In developing the service plan for 2014, a multifaceted approach to budget management was adopted in order to protect core services. It is important to stress that the principal focus is to continue to deliver the same level of front-line services with a reduced budget, particularly in areas such as provision of home help hours, home care packages and disability services, while at the same time ensuring that quality and safety is not compromised in any way.
The specific elements of this multifaceted approach to budget management include a reduction in the lump sum provision for pensions, which will be used to offset, in part, the incoming deficits from 2013; making use of savings which will accrue from the phased implementation of new developments during 2014; and additional savings targets of €129 million in areas such as procurement at €30 million, shared services at €10 million, value for money initiatives at €10 million, hospital reconfiguration at €7.5 million, energy efficiency savings at €15 million, and the full delivery of cost containment plans for hospitals, initiated in 2013, at €56.5 million. Specific actions in respect of the additional €619 million savings target include pay and flexibility reductions totalling €268 million, of which the Haddington Road agreement will facilitate up to €140 million. As mentioned previously, €108 million of this relates to unspecified savings and will be held centrally pending a separate process.
By adopting this approach, it will be possible to provide funding of €304 million for a range of initiatives, of which €178 million will be invested in a number of new critical service developments, initiatives to meet some demographic pressures and programme for Governmentcommitments. A further €126 million will be provided on a once-off basis to address the full-year cost of developments started in 2013, which will continue in 2014. Full details of these new investments are set out in appendix 1 of the service plan and are included in the printed version of my statement. I will not repeat the list that the Minister has already covered. However, I would like to stress that the health service will provide home help and home care packages to approximately 56,000 recipients, maintaining the 2013 approved service levels. The nursing home support scheme will continue to support more than 22,000 people in long-term residential care at a cost of €939 million. In shifting the emphasis of the model of care to home and community supports, we will maintain services to allow an additional 1,000 older people to continue to live in their own homes.
Health reform is also a critical priority for the health services in 2014, and a systems reform group has been established to oversee the governance and enable the management of change across the broad portfolio of reform projects being undertaken. These reform projects include continued implementation of the national clinical programmes; phased implementation of the money-follows-the-patient approach to the funding of acute hospital services; transition to hospital trusts and community care organisations; the development of commissioning functions; the development of a three-year implementation plan for Healthy Ireland; the establishment on an administrative basis of the new patient safety agency; the establishment of the new Child and Family Agency on 1 January - I would like to take this opportunity to wish our colleagues well in that new agency - and the further roll-out and reform of shared services.

In the area of human resources, since September 2007 the health service has reduced its workforce by 12,505 whole time equivalents, WTEs. During 2014 a target of approximately 98,000 WTEs has been set for the health service workforce. This challenge will require a focused approach to management of our staff resource while controlling payroll and related costs. In this regard the Public Service Stability Agreement 2013-2016, the Haddington Road agreement, is a key enabler to deliver this service plan and to health services reform, having regard for financial and human resources.

The national service plan is set out on the basis of the new service divisions, which are acute hospitals, primary care, social care, mental health and health and wellbeing, established in 2013. Operational plans are currently in development for each of these divisions and will be published in due course.

In conclusion, it is acknowledged that the 2014 service plan has been formulated in the context of one of the most financially challenging years yet faced by the health service. The implications of the combined budget reductions and additional savings targets mean that a specific financial management strategy is required in 2014 to ensure the impact of the budgetary challenge on service delivery is kept to a minimum.

During the course of this service plan, it will not be possible to fully meet all of the growing demands being placed on the health services. In particular, some service priorities and demographic pressures may not be met. However, the budget management approach outlined above has allowed the health service to invest in a number of significant and critical service priority areas in 2014. Implementation of the health service reform programme is also key.

I wish to take this opportunity to acknowledge the health service employees' contribution and continued commitment to improving patient experience and outcomes, despite reduced budgets and staffing levels. I conclude by reiterating that the health service is committed to safe quality care underpinned by clinical effectiveness. To this end, the national service plan focuses on quality and safety, service reform and service delivery. This concludes my opening statement.