Mr. Seamus McCarthy:

The Health Service Executive’s financial statements for 2024 record total expenditure of €28.3 billion. This comprises recurrent spending of just under €27 billion, and capital spending of almost €1.4 billion. A total of €24 billion of the HSE’s funding for 2024 was from the health Vote. Funding for specialist disability services of €3 billion was provided to the HSE by the Vote for children, equality, disability, integration and youth. Receipts from retained employee pension contributions and other payroll deductions totalled €447 million. Income from patient charges amounted to just under €334 million. Receipts from the National Treatment Purchase Fund amounted to €26.7 million. Non-capital expenditure in 2024 exceeded income by €760 million and this deficit was carried forward to be met as a first charge from the funding provided from the health Vote in 2025. On the capital side, there was a deficit of €29 million in 2024. I issued a clear audit opinion in relation to the financial statements. However, in my report, I drew attention to a number of matters which I will briefly outline now.

The HSE incurred charges of €22.7 million in respect of stocks of personal protective equipment and €11.1 million in respect of vaccines held at the year-end, which will reach their respective expiry dates before they can be used. In 2024, the HSE also incurred storage costs amounting to €2.1 million in respect of stocks of obsolete personal protective equipment and hand gel from prior years. My audit found from a sample of eight HSE hospitals examined, that losses of private patient income totalling €2 million were incurred in 2024 as a result of delays in submitting completed health insurance claims.

The executive estimates that losses for the remaining hospitals it manages amounted to a further €2.1 million, resulting in an estimated total loss of €4.1 million for 2024.

As in previous years, my audit report for 2024 drew attention to non-compliant procurement, which remains a significant issue for the HSE. Some €1.5 billion, or 28% of the HSE’s spend on procurement of goods and services, was subject to review. From this subset of invoices, HSE managers reported that 9%, or €132 million, had been procured in a manner that was not compliant. In itself, this is a significant non-compliant procurement level. However, the true rate of non-compliance could be higher because the procurement within the scope of the review may not be representative of the executive’s overall procurement of goods and services.

An arrangement was put in place with the supplier of a medical device without either a competitive procurement process or a formal written contract. This supply arrangement continued from 2020 until 2024 with prepayments being made to the supplier each quarter from mid-2022 to mid-2024 for supply of a standard number of devices, to be drawn down as required by individual hospitals. The HSE did not maintain central records of the total number of units paid for. The number of devices received by hospitals or paid for and remaining undrawn from the supplier is not known. The HSE also identified a duplicate payment of €723,000 made to this supplier that was not recovered. I understand the chief executive officer has provided the committee with an update in regard to this matter.

The HSE’s internal audit reported concerns around procurement of clinical services by University Hospital Limerick from companies owned or part-owned by HSE employees in apparent insourcing arrangements. The audit found that, without undertaking competitive procurement processes, the hospital had paid external service providers a total of €14.2 million from HSE access to care funding to reduce waiting times. Within those service providers, it was found that two providers were companies that were owned or part-owned by the hospital’s own staff members and a staff member from another HSE hospital was a director of a third supplier company. The payments under the three contracts totalled just over €2 million. Even though holding a contract for the supply of goods or services to a public body is a standard category of declarable interest, the HSE was unable to provide required declarations of registerable interests from the employees concerned.

In 2024, the HSE provided non-capital grant funding of €7.7 billion to voluntary hospitals and other health sector agencies. Even by the year end, only 74% of the funding issued to such agencies for 2024 was covered by a completed bilateral agreement of the appropriate type. This percentage has been falling in recent years. Furthermore, within the group of grant recipients that had signed agreements, the audit noted a number of instances where the grant-aided bodies had issued side letters to the HSE disclaiming aspects of the agreements, such as budget targets or projected levels of activity. In my opinion, such side letters undermine the validity of the funding agreement process and the executive’s capacity to hold grant-aided bodies to account for performance of the agreed terms.

I noted that the statement on internal control discloses weaknesses around the control and management of fixed assets in the HSE. These include inconsistencies in the application of HSE financial regulations, instances where assets no longer in use remained on asset registers, and capital projects where some costs were not included on asset registers. I also referred to the writing off of €800,000 in respect of the depreciated value of an asset that had never been used for its intended purpose since its acquisition in 2009 at an original cost of €1.4 million.