Mr. Liam Woods:

There were a couple of questions about how the HSE acquires capital. The traditional method has been the application of capital in the capital development plan to purchase equipment. Both members referred to what we would call managed equipment service, MES, contracts which are now being examined intensively as part of the national children's hospital proposal, which was mentioned, and also at a wider level for use across the HSE. We have looked at models internationally, such as the Karolinska Institutet, which has entered into a major MES, and into an innovation and joint venture arrangement with the Philips corporation, which was the successful applicant, on the back of that. We have done some assessment of that and we are very open to it. There is a certain amount of equipment leasing within our system at present. The HSE must seek prior approval to borrow, a point that arose previously. Leasing is a form of borrowing and it requires prior approval of the Department of Public Expenditure and Reform. That is not an obstacle. I am just stating that it is part of the process. We estimate we need approximately €62 million per year in capital to maintain the equipment base of the health environment. If we were to examine that on a funded basis over a five or ten-year period, clearly it is an annual amount which is not a capital sum but which would be required to be an increased revenue sum. The HSE is very open to the idea of considering accessing capital equipment in that way, which is somewhat innovative. It would still require revenue funding instead of capital funding to pay that increased cost.

On maintenance, we have a small number of biomedical engineers who are very capable. Our national lead is based in Cork and is very strong on all of this. It is his data I was quoting when I referred to €62 million. We have a small resource ourselves. Much of the contract maintenance is carried out by the providers of equipment. Some of it, and it is an increasing amount, has been taken on board by us as a cost efficiency measure. We do not have an excess of such people but we must maintain them because they help us to drive value and drive down the cost of maintenance contracts, which typically can last seven years and can be up to 7% of the cost of the equipment.

We are very open to the MES idea and we are pursuing it. We have carried out research on what is working best internationally. There has been mixed experience with this. In Sweden, when the full appraisals were carried out, they determined that it would make more sense for the county councils, which run the health environment there, to provide the capital but to proceed with an MES without the use of the private sector, because they were avoiding interest costs and a profit charge. There are a few variants regarding what that might look like and we are exploring those at present. The core point is that part of the wider future for the hospital and health environment is that there is a choice between funding a revenue stream or a capital stream, but it needs to be funded. It is not free if we go with MES, but it can prove productive. Typically, those contracts internationally are for two life cycles of equipment.