Professor Noel Whelan:

It is short as I know the committee has a busy day. We are here today because although the group believes it is compliant with public sector pay policy for the health sector, the HSE regards the group as being non-compliant. As a national and international organisation and service, we need to come before the committee and explain the matter so that eventually - I hope very quickly - the group will be accepted by the HSE as being compliant with public sector pay policy. I will address that soon.

To help the committee understand the group, I will outline some brief details. St. Vincent's Healthcare Group Limited is a not-for-profit organisation. It is a private company limited by shares; it is owned by shareholders, the Religious Sisters of Charity, and it has charitable status. It comprises three operating divisions, which are St. Vincent's University Hospital, St. Michael's Hospital in Dún Laoghaire and St. Vincent's Private Hospital. Of these, the two hospitals in Elm Park are on private land owned by the shareholders of the group. Separate trading names were registered for each division within the company, and St. Vincent's Private Hospital was established in 1974 with the primary purpose of providing additional capacity for public patients by providing a private hospital for insured patients or those who could afford to pay. This also allows the hospital to attract consultants of the highest calibre, ensuring the best service for all our patients. Any surplus generated by the private hospital is reinvested in the group and no dividends, fees or remuneration for being a director or bonus payments are paid to the company's directors. We contribute thus in a voluntary capacity.

The integration of the three then separate hospitals into a single group was completed by decision of the shareholders in 2003. It was considered that this provides the best model of care for patients and ensured that we could move insured patients from the public hospital to the private hospital, thereby freeing additional capacity in the public hospital and maximising patient choice. This unique model has worked extremely effectively for patients over the past decade. It has increased capacity, improved access and provided high-quality and safe health care. As the group is at the core of today's committee meeting, I dearly wish to tell about its expansion, its many accomplishments and developments, etc., all of which are of specific benefit to Ireland's health sector, but I would go over my speaking time in doing so. I will put the information in an appendix which I hope will see the light in due course.

I will come to the core issues I presume are before the committee today. The first is public pay policy. We are before the committee today because of public pay policy as it relates to the health sector. A significant focus remains on remuneration arrangements for three staff in St. Vincent's Healthcare Group Limited. We believe the group is in compliance with public pay policy in the health sector; this belief is based on legal advice, and we can expand on that if required during questioning.

We had not divulged any information in relation to the salaries of the small group of executives involved as there were issues involved, including contract law, individual contract rights and data protection, and they had to be considered. Critically, also, there were no public or charity funds involved. Let me stress that so there is no ambiguity about it. No funding was used from charitable donations. The group's charity fundraising body is St. Vincent's Foundation. It is run entirely on a voluntary basis. The funds raised philanthropically go towards the aims and objectives of St. Vincent’s Foundation. So there is no charity money involved.

As members of the committee may be aware, I, as chairman, and my colleague the vice chairman met the director general of the HSE and his colleagues on Thursday last, 9 January, to discuss the pay policy issue. This was the week suggested by the HSE for the meeting. We again met the director general and his colleagues on Tuesday, 14 January 2014.

We are in current discussions with the HSE which we hope will lead to an agreed process that will result in there being no issues with the HSE regarding pay compliance. As members can appreciate, there are complex issues to be worked out and we must, of course, ensure that the law is upheld in the process. The HSE’s own circular has asked agencies not to break the law as situations are dealt with. In a letter of 5 November that was also emphasised to us by the HSE.

To be specific here, while the current group model has worked excellently for our patients - and we believe fervently it has - the group board is, in the public interest, willing to adapt it. Subject to the early successful outcome of the process I have just referred to, the net result should be, and I hope it will be, as follows: there will be no pay compliance issues with the HSE; the salary of the group CEO will be paid entirely from funds generated by the private hospital and thus outside the purview of public sector finances as such; and the roles of group CEO and CEO of St. Vincent’s University Hospital will not be occupied by the same manager. There has been, as members know, sound logic for the incorporation of the two roles in one person. We can expand on that later if members wish. That is our position in net form regarding public service pay.

I turn to corporate governance, which is kind of related to pay as well. There has been a lot of discussion about the integration between the public and private hospitals of the group and whether there is the appropriate level of corporate governance in place to ensure that public investment in health within the group is appropriately safeguarded. My colleagues and I will be very glad to expand on this if required during question time, but let me first mention a few points relating to governance here.

First, two hospitals of the group, St. Vincent’s University Hospital and St. Vincent’s Private Hospital, have been accredited by the Joint Commission International, JCI. This is a prestigious, internationally recognised independent organisation for accrediting health-care organisations worldwide. St. Vincent’s University Hospital is the only academic teaching hospital in Ireland to be accredited. First we were accredited in 2010 and then we were re-accredited in 2013. One of the key international benchmarking standards - which is why I raised this in the governance context - of JCI is “Governance, Leadership and Direction,” and we have consistently met this high standard. This is on the basis that the group board and St. Vincent’s hospitals have clear responsibilities, accountabilities and authorities defined at each level in the organisation.

I come to my second point about governance. Financial clarity exists between the three hospitals in the group. The financial accounts and the bank accounts for the three hospitals are separate. Money provided by the HSE for the treatment of patients under the service level agreements with St. Vincent’s University Hospital and St. Michael’s Hospital is, of course, extremely closely monitored on an ongoing basis by the HSE.

Of prime concern to us is upholding the public interest in our corporate governance arrangements. We want to do that. We have noted the fair comment from, among others, members of this committee and we accept that it is not just about protecting the public interest but being seen to do so as well. Consequently, the board of St. Vincent's hospital group is willing to add immediately to our existing board committees a public interest committee of the board. Nobody is forcing us to do this, but we would wish to do it to put a clear focus on this. This committee will monitor, on an ongoing basis, issues arising from the public interest which may be of relevance to the group. This committee will be an addition to our existing committees - audit, remuneration, nominations, risk advisory, clinical governance, and mission effectiveness. Each of these committees and the board itself would like to think we keep the public interest in mind at all stages, but we are going to add this committee to give a clear, acute, laser-like focus to public interest as we go forwards.

The points I mention are but a few points from a very broad canvas relating to governance, which I know some members of the committee have raised legitimately in public. I hope we can respond further to the governance issue as well as the public pay issue if members wish.

The last point I want to stress in my statement is the release of information on remuneration. We know there has been disquiet on the part of the Committee of Public Accounts about the release of the information on remuneration levels on 23 December, just before Christmas. While we will go into it in questions if members want to, there was an explicable reason for this and I hope we can address it during question time.

My colleagues and I will endeavour honestly to answer as fully as possible any questions members may have.