Mr. Stephen Mulvany:

For example, the Haddington Road agreement gives us significant opportunities to reduce our costs and to do that safely. It is important to say that, as we put in the HSE service plan, we are seeking to ensure that our management of the safety and quality of services is put at least on a par with the management of our resource position. Each of those hospitals at local level, within its own management structure, is seeking to manage itself safely within the resources available to it and reduce its overall costs. In addition, the national division for hospitals is engaging, on a monthly basis, in performance management meetings to try to reduce that expenditure safely. The new national director for hospitals has sought additional cost containment plans from all hospitals in order to bring them towards break-even position. Those are due in this week. Separately, the director general has led a series of meetings with hospital board chairs, CEOs and clinical directors to give clear messages on the need for cost reductions with a view to bringing overall expenditure towards break-even before year ends. A significant effort is under way, bearing in mind that we have to look not only at the year-on-year position but at the position over the past five or six years.
During the past five or six years, hospital expenditure - while it has increased slightly, as the Director General said, between 2012 and 2013 - has fallen by between 11% and 11.5%, but the issue is that the budget has fallen by more, and the reductions in expenditure are not keeping pace with that. In that period, productivity has effectively increased because more services are being provided. That the increases in productivity are not keeping pace with the falling resource is a constant struggle in continuing to provide safe services - which, we have been very clear in pointing out, is the number one priority. In terms of providing clear messages and clear direction around the prioritisation of issues to be managed and the hierarchy of accountability, all of these have been reiterated recently at the highest levels, and this will continue towards the year's end.
We are using every opportunity, including the benefits of the Haddington Road agreement, to get as close as possible to break-even in that sector, but it does represent 75% of our overall challenge. It is clear from our performance assurance reportthat there are examples of additional costs in the hospitals sector, such as in agency services - of which the vast bulk is clinical agency, and the vast bulk of that is medical agency - which are not indicative of a lack of cost control in terms of more doctors on the ground. It is indicative of price effect that the cost of agency services is going up and up. Overall, 95% of HSE payroll costs relate to directly employed staff; about 5% overall relate to agency staff and overtime. In hospitals that cost is higher, at closer to 10%, and it has increased. While we have dropped overtime in recent years, our agency costs are rising. Efforts are being made, particularly on the hospital side, in medical and other areas, to further reduce agency costs by looking at particular strategies after we have got the full benefit of the additional hours from the Haddington Road agreement. As many levers as we can apply are being applied to safely reduce that cost towards break-even.