Mr. Seamus McCarthy:

The Health Service Executive’s financial statements for 2023 record total expenditure of €25.8 billion. This comprises capital spending of €1.1 billion and non-capital or recurrent spending of €24.7 billion. Some €21.8 billion of the HSE’s funding for 2023 was from the health Vote. Funding for specialist disability services of €2.7 billion was provided to the HSE by the Vote for the Department of Children, Equality, Disability, Integration and Youth. Other funding, including charges for treatment, amounted to €888 million.

Non-capital expenditure in 2023 exceeded income by €575 million and this deficit was carried forward to be met from the funding provided from the health Vote in 2024. On the capital side, there was a surplus of €68 million.

I issued a clear audit opinion in relation to the financial statements. However, in my report, I drew attention to a number of matters disclosed by the HSE. First, Covid-19 vaccines that had been acquired at a cost of €86.5 million were written off in the 2023 financial statements. The cumulative Covid-19 write-off to 31 December 2023 is €181 million, representing 40% of the total cost incurred on Covid-19 vaccines.

The HSE also held stocks of antigen tests that cost €12.5 million at year end which were expected to reach their expiry date before they could be used. In 2023, the HSE incurred storage costs amounting to €2.3 million in respect of stocks of obsolete personal protective equipment and hand gel.

Health insurance claims to the value of an estimated €3.5 million were rejected by a private health insurer during 2023 because HSE hospitals had not submitted the claims within the agreed timeframe. Separately, the HSE committed to refund €30 million to a private health insurer in respect of the application of private patient treatment charges in the past.

Once again, my audit report for 2023 draws attention to non-compliant procurement which remains a significant issue for the HSE. A self-assessment exercise carried out by the HSE estimated that non-compliant procurement in 2023 was around 12% but I consider that this figure may not accurately represent the scale of the underlying problem.

In 2023, the HSE provided non-capital grant funding of €6.8 billion to voluntary hospitals and community sector agencies. Even by the year end, only 83% of the funding issued to such agencies for 2023 was covered by a completed bilateral agreement of the appropriate type.

The statement on internal control discloses weaknesses around the control and management of fixed assets in the HSE. I refer in my report to audit findings of inconsistencies in the treatment of assets across the HSE, including some capital project costs not included on asset registers and assets no longer in use remaining on registers.

I once again drew attention in my report to the highest remunerated staff member who received almost €1 million in total remuneration in 2023.

This included almost €700,000 for treating patients outside normal hours, under non-standard contract terms.

Finally, I drew attention to a termination settlement in one case of €1.6 million. This included €1.4 million in compensation for loss of potential private earnings during the period while the individual was suspended.

Chapter 17 of my report on the accounts of the public services for 2023 reviews progress and costs to date in the roll-out by the HSE of an integrated financial management and procurement system, IFMS. Once fully deployed, the IFMS will replace multiple legacy financial management systems in use in the HSE and in other in scope health bodies. The chapter also looks at how the IFMS has or will impact on the HSE's financial and other reporting processes, including HSE reporting to the Department of Health and production of the annual financial statements. The HSE submitted a detailed ICT business case for the IFMS to the Department in May 2015. The proposed project budget at the time was €82 million for capital and once-off costs and €50 million in recurrent spending for system support over an 11-year period. In late 2022, the HSE informed the Department that additional capital funding would be required, probably from around 2026, to complete the roll-out of the IFMS as the previously approved €82 million did not include VAT and was based on pre-tender estimates.

The 2015 business plan envisaged that the phased roll-out of the IFMS would commence in 2017 and would be fully rolled out in the HSE and the other in-scope health bodies by 2020. However, the IFMS only went live for the first phase implementation group in July 2023. Additional funding was provided in the health Vote for 2024 to accelerate the project. The HSE now plans to complete the roll-out of the system across the HSE in two phases, to be completed in 2025, with work on the roll-out to other health bodies to commence thereafter. By the end of June 2024, the HSE had recorded that a total of around €136 million had been incurred on the IFMS project, of which €60.2 million related to capital costs, €50.75 million for IFMS project in-house current expenditure, and €24.8 million in current software and operating costs. The full budget required to complete the deployment of the IFMS to the rest of the HSE and to the in scope health bodies has yet to be developed by the HSE.