Mr. Bernard Gloster:

I thank the committee for the invitation to attend today to discuss the HSE financial statements for 2022. I am joined by my colleague, Mr. Stephen Mulvany,CFO, Dr. Colm Henry, chief clinical officer, Ms Anne Marie Hoey, national director of human resources, and Mr. David Walsh, national director of community operations. I am supported by Mr. Ray Mitchell from parliamentary affairs and Ms Sara Maxwell from my office.

In the context of addressing the financial statements for 2022, I am aware the committee has indicated particular interest in losses related to obsolescence of Covid-19 vaccines and PPE as well as high remuneration payments to certain employees.

I wish to take this opportunity to acknowledge the recently highlighted difficulties for children with spina bifida and scoliosis and their families. The outcomes from two Children’s Health Ireland, CHI, reports – an internal report and a Boston report – are concerning at the higher end of the scale. The additional revelations regarding the use of unauthorised springs as internal devices are most concerning and have seriously damaged confidence in this most sensitive area of our healthcare system. To the parents, advocate groups and, most importantly, the children, I apologise and give my assurance as CEO that these matters will be fully examined and responded to as part of the independent expert review commissioned by the HSE, to be led by UK-based orthopaedic surgeon, Mr. Nayagam.

Addressing the committee agenda for today, I direct attention to the briefing paper provided in advance of the meeting. The briefing details are instructive on the evolving financial position of HSE building from 2019, the impact of the pandemic and once-off supplementary allocations. The resulting pressures for 2023 are evident.

The current challenges in closing out 2023 are best described under three headings: non-pay, increased demand and control environment. Regarding non-pay, inflation is typically higher in a health context and non-pay is also driven by higher volume spend associated with higher volume activity. Increased demand for health and social care services is higher than expected, with both post-Covid pent-up demand, increased morbidity and complexity within parts of that demand and also demographic pressures, resulting in unprecedented levels of people requiring services. The third component is the control environment. There is no doubt that as we move past the Covid years, the control environment requires improvement. Significant attention is being paid to this at the close of 2023 and will be required throughout 2024.

The briefing submitted to the committee details the historical challenges with existing level of service, ELS, funding and outlines the requirement for full funding of ELS prior to any additional or new developments in 2024.

Covid-19 vaccine obsolescence for 2022 was circa €33 million for out-of-date and €60 million worth of vaccine with no further utility due to change in health guidance and the related excess of supply over demand. PPE write-offs were in years predating 2022 and have previously been the subject of detailed hearings of the committee. However, continued storage costs of obsolescent PPE were recorded in 2022 at €1.7 million. The briefing sets out the options and challenges for disposal. I am committed to a resolution of this cost, subject to the result of various assessments regarding safe and cost-effective disposal.

Currently, an HSE employee is defined as a high earner if they are earning above €300,000. This is likely to require adjustment as the new consultant contract will mean that a significant number of employees will be above that figure when all dimensions of the contract are factored in. That noted, there are improvements required regarding the control environment and inconsistency of approach that results in some of the high earnings recorded. Despite contractual entitlement and legally correct application of terms, I do not accept that we can continue at a position where eight staff earn more than €500,000 - in one case, more than €700,000 and the highest more than €900,000. Based on the internal audit reports and the resulting action plans, we are working to address this issue.

In parallel with the financial context, 2022 saw the HSE return to increased normal operational business across all services. The outturn for 2023 in service terms will show one the of highest rates of activity ever across many services. The main focus for the remainder of this year is on the waiting list action plan and the management of unscheduled emergency care, in both of which we continue to make improvements.