Jim Daly (Cork South West, Fine Gael) | Oireachtas source

Gabhaim buíochas leis an gCathaoirleach agus na baill den choiste chomh maith. I thank the select committee for the opportunity to bring this Supplementary Estimate for Vote 38 before it. The total additional funding I am seeking for 2018 is €655 million. Of this, €10 million is to compensate for a shortfall in appropriation-in-aid, €20 million is towards capital works and €625 million is towards overspends in current expenditure in various areas of the HSE. I acknowledge that the amount sought is significant, representing as it does 4% of overall health expenditure in 2018.

This year, the anticipated level of overspend by the HSE is linked to the HSE's first charge in 2018 arising from the 2017 deficit, a shortfall in income, winter planning, growth in 2018 activity beyond plan, including the primary care reimbursement service, and additional funding required in the State Claims Agency. Health funding remains a major challenge. Demographic pressures, including a rise in chronic diseases and an ageing population, mean we face challenges into the future. We are implementing our strategic responses to these challenges, while continuing to focus on effective management of resources to ensure that services are delivered in line with the national service plan.

Ensuring the health service is financially sustainable is a key strategic goal of Sláintecare. The significant increases in the health Vote in recent years reflects the Government's commitment to improve access to health and social services for the people of Ireland, through investment across community and hospital services. We need to keep the recovery going and the economy strong in order that we can continue to develop our health infrastructure and the provision of health services into the future.

Next year, the Health Service Executive's national service plan will be framed through the lens of the Sláintecare implementation strategy. The strategy provides the framework within which a system-wide reform programme for the health service will be advanced, and focuses on establishing the building blocks for a significant shift in the way in which health services are delivered in Ireland.

I will now set out the items that make up this year's Supplementary Estimate. On the 2017 first charge of €90 million, the HSE's recorded deficit for 2017 is €139 million. Under the Health Service Executive (Financial Matters) Act 2014, any excess expenditure must be charged to the income and expenditure account the following year and is effectively a first charge on the following year's budget. My Department and the HSE completed a comprehensive review of the anticipated outturn for 2018 and identified a number of once-off savings that will be allocated against the 2017 first charge, with the balance of the funding requirement being met from the Supplementary Estimate.

There has been a significant reduction in the level of private patient income for public hospitals in 2018. Health insurers, as members will be aware, commenced a campaign in 2017 aimed at discouraging members from using their private health insurance to avail of private inpatient services when they are admitted via an emergency department. Instead, they have encouraged their members to consider being treated as a public patient, as is their right provided for under the Health Act 1970. This, inevitably, is leading to a drop in income as more patients are opting to be treated publicly rather than privately.

The allocation for the winter plan of €10 million from the Supplementary Estimate allows for the commencement of a range of measures aimed at alleviating pressure on the acute hospital system during the busy winter period. Timely discharge of patients is vital to ensuring that a ready supply of beds is available to those patients requiring to be admitted through emergency departments. Delayed discharges are a major contributory factor to emergency department overcrowding and adversely affect patient flow throughout the hospital. It is essential that, insofar as is possible, egress meets demand and that hospital and community healthcare organisation, CHO, processes support timely and safe discharge.

Integrated hospital and community plans are the cornerstone of the 2018-19 winter plan, with nine key sites of concern selected based on previous winter performance. Enhanced measures across acute, primary and social care will focus on critical demand pressures on the nine sites during a four-week focus period between 17 December 2018 and 13 January 2019.

With regard to the non-achievement of the €150 million savings target, the value improvement programme included in the national service plan is a single overarching programme with three broad priority themes: improving value within existing services, improving value within non-direct services and strategic value improvement. It is anticipated that none of the targeted savings under the strategic value improvement will be achieved at year end.

Acute hospitals are running at an expenditure level from 2017 which is over their approved funding level. This level of expenditure was to be matched to the approved level of funding through achieving the savings attributable to the service level and corporate value programmes embedded in the division’s hospital budgets. The forecasted underachievement of targets under the corporate value programme by year end is contributing significantly to the estimated overspend. Increasing bed capacity in public acute hospitals continues to be a priority in addressing the causes and challenges of emergency department overcrowding. My Department is undertaking a health service capacity review in line with the Programme for a Partnership Government commitment, the findings of which are due to be published shortly. In the meantime, there continues to be an urgent need for capacity in acute hospitals. On that basis, it is proposed to allocate €5.7 million to acute hospitals to address critical bed capacity deficits in 2018.

Community services incorporates the delivery of primary care, mental health, disability and older persons health and social care services. The main drivers of the overall deficit in community services include emergency placements for people with disabilities, costs associated with HIQA compliance and costs associated with Storm Emma.

Support services incorporates a number of central corporate services including finance, health business services, legal, communications, health system reform, chief information officer and the office of the director general. Expenditure in the area is running ahead of plan for a number of reasons, including the number of large legal cases, professional service costs for the programme for health service improvement and increasing software and professional fees related to support of acute hospital initiatives such as maternity and newborn electronic records.

In 2018, there has been a significant increase in the number of payments made under the treatment abroad and cross-border healthcare schemes. With the trend continuing upwards throughout the year, there is a need for supplementary funding to address this area of growing demand.

The increasing costs of the clinical indemnity scheme are not due exclusively to the increasing numbers of claims but rather to the increasing costs of awards and the high costs associated with catastrophic injury claims. In 2017, significant progress was made on legislation which is expected to lead to a reduction in costs over time. From a health perspective, the most important aspect is the provision for periodic payment orders. Courts will now have the power to award damages by way of periodic payment orders, where appropriate, having regard to the best interests of the plaintiff and all the circumstances of the case. With the enactment of the Mediation Act in October 2017, which provides a wide-ranging statutory framework to promote the resolution of disputes through mediation as an alternative to court proceedings and to reduce the stress for parents and families that often accompanies court proceedings, it is hoped that more families will opt for this route. In addition, €46 million is sought towards the projected deficit in 2018 in the State Claims Agency.

Funding will be provided for a number of GP fees and allowances including €4.85 million towards the cost of providing free cervical check consultations.

The greater than budgeted number of medical cards is driving an increase in the number of items dispensed and it is proposed to allocate €3 million to cover this increased cost. It is proposed to allocate €30 million to cover the continuing increase in high-tech drug costs for treating conditions such as rheumatology, cancer and cystic fibrosis. With regard to long-term illness, €7 million will be allocated to cover the cost of treating long-term illnesses, the most prevalent being diabetes and epilepsy.

Appropriations-in-aid are received by Ireland from the UK in respect of health services provided under EU regulations. The amounts received are based on the Ireland-United Kingdom healthcare reimbursement arrangement. Costs associated with UK pensioners residing in Ireland account for the major portion of the total payment. Historically, each country's pensioner liability was agreed based on the results of sample pensioner surveys undertaken every few years. More recently both administrations have agreed in principle to work towards the introduction of a revised methodology for determining pensioner liability. Trends in demography and migration between the two countries indicate a reduction in the number of pensioners for whom the UK is liable. Initial discussions with the UK indicated that receipts in 2018 might be in the region of €225 million against a provision of €280 million, a difference of €55 million. Detailed discussions have recently finalised and a total payment in 2018 of €270 million has been agreed, leaving only a difference of €10 million.

There is an ambitious programme of capital investment in health reflecting priority accorded to capital spending in the programme for Government position that health capital spending would be a priority. Priority Government projects, most of which are either under way or about to commence, account for a substantial proportion of the health capital allocation in 2018 and the coming years, resulting a high level of commitments. During 2018, extensive measures to actively manage the capital budget have been applied. This has involved balancing as much as practicable the fulfilment of contractual commitments, delivery of projects and managing equipment and infrastructural risk issues, such that capital expenditure remains within profile. Following this extensive engagement and management of issues, capital spending in 2018 remains within profile. The HSE has informed the Department that, with the provision of an additional €20 million in 2018 and the management of the projects' budgets, there will be no overrun in 2018 capital funding.

A significant increase in funding for the health services has been achieved in recent years. As I stated previously, the issue of health funding is a major challenge, not just in Ireland but internationally. Dealing with a growing and ageing population, more acute health and social care requirements, increased demand for new and existing drugs and the increasing costs of health technology will continue to pose a financial challenge into the future.

Sláintecare gives us a new roadmap to support the delivery of high quality care to our citizens. Improving the way services are organised and delivered and reducing costs to maximise the ability of the health service to respond to growing needs, must remain our focus. It is essential that those managing and delivering the service continue to demonstrate good practice by delivering the best healthcare within the significant resources that have been made available by Government for 2019. This additional funding in 2018, combined with the 2019 budget provision, is a practical example of this Government’s commitment to use our economic growth to restore much needed funding to our health service. The above items together with cash projections to year-end involve an Exchequer requirement of €655 million.

I seek the committee’s approval of the Supplementary Estimates for Vote 38.