Mr. Seamus McCarthy:

The Health Service Executive's financial statements for 2022 record total expenditure of €24.5 billion. This comprises capital spending of €1.2 billion and non-capital or recurrent spending of €23.3 billion. Operating expenditure in 2022 exceeded income by €185 million and this deficit was carried forward to be met from the funding provided from the health Vote in 2023.

On the capital side, there was a surplus of €47 million. It is a matter for the Minister to direct whether the HSE retains the surplus or returns it to the Exchequer.

The revenue, income and expenditure account analyses expenditure by spending type. Pay and pensions cost a total of €7.8 billion in 2022. Grant funding transfers to section 38 and section 39 agencies amounted to €6.3 billion. Spending on primary care and medical card schemes, including drug refunds, amounted to €4.2 billion. The bulk of the HSE's funding comes from the health Vote, amounting to a total of €23.3 billion in 2022, including funding for capital projects. Other much smaller sources of income for the HSE were retained employee pension contributions deducted from HSE and section 338 agency staff salaries, which amounted to approximately €384 million in 2022, and receipts of €370 million in respect of patient charges for hospital treatment or long-term residential care.

I issued a clear audit opinion in respect of the financial statements. However, in my report, I drew attention to a number of matters disclosed by the HSE. In 2022, Covid-19 vaccines that had been acquired at a cost of €94.4 million were written off. Vaccines to the value of €33.7 million had not been used before the manufacturers' expiry date.

Vaccines that cost €60.7 million were written off because they were expected to reach their expiry date before they could be used.

Separately, the HSE incurred storage costs amounting to €1.7 million in 2022 in respect of stocks of obsolete personal protective equipment, PPE, and hand gel. The costs of the obsolete stock were written off in 2020 and 2021.

Once again, my audit report for 2022 draws attention to non-compliant procurement. A self-assessment exercise carried out by the HSE on individual invoices costing above €25,000 estimated that non-compliant procurement in 2022 was around €128 million, representing 7% of the value tested. I concluded for technical reasons that this estimate rate of non-compliance with procurement rules may not accurately reflect the scale of the underlying problem but I am satisfied that non-compliant procurement remains a significant issue for the HSE.

Voluntary and community sector agencies, referred to as section 38 bodies, provide health and personal social services on behalf of the HSE and are considered part of the public health system. Section 39 agencies provide services similar or ancillary to those provided by the HSE. As mentioned previously, HSE grant funding to the agencies amounted to €6.3 billion in respect of their recurrent operations. A further €532 million was provided to the agencies in respect of capital investments, which included €340 million transferred to the national paediatric hospital development board. An appendix to the HSE’s financial statements lists the transfers in 2022.

In the statement on internal control, the HSE outlines its system for oversight and monitoring of those grants, including the arrangements for agreeing on what is to be delivered for the funding provided and for reporting on the outcomes. There appears to be a downward trend in the proportion of annual funding covered by timely formal contract agreements. As a result, even by the end of 2022, only 83% of the funding issued to section 38 and 39 agencies was covered by a completed funding agreement of the appropriate type. This compares with 96% in 2017.

Finally, note No. 7 to the financial statements analyses the HSE’s direct payroll costs into bands. This indicates that eight staff members each received remuneration in excess of €500,000, with the highest remunerated staff member receiving €974,000. All of these staff were medical consultants and almost all the payments related to their service and entitlements in respect of 2022. An HSE internal audit report identified some potential internal control gaps around payments to highly-remunerated staff under local working pattern arrangements.