Mary Harney (Dublin Mid West, Progressive Democrats)

I welcome the opportunity of addressing the financial challenges that confront the Health Service Executive for 2009. Within the next three weeks or, as the Taoiseach stated, in early April, the Government will introduce a new set of financial and spending measures for 2009. Therefore, to some extent, this debate is somewhat premature, because it would be my intention to either revert to the House or to a committee of the House to deal with the issues arising for the HSE in the context of the financial measures agreed and introduced in the House on that date. Health expenditure for 2009 is €16.4 billion, of which 93% will be spent by the Health Service Executive and 7% by the Department of Health and Children. The Department's budget of €531 million includes more than €100 million for the National Treatment Purchase Fund, the allocation to the Health Information and Quality Authority and funding for a number of other agencies which come within the remit of the Department and are independent of the HSE. The budget of the Minister of State with responsibility for children is €548 million, the bulk of which is spent on the early childhood payment.

In total, the public health service accounts for 25% of the money spent on running the country. This year, based on forecasts for GNP, it will account for 11% of national income. I note the Governor of the Central Bank today forecast a contraction in GNP of approximately 6% this year. When the €4 billion spent in the private health sector is included in the figures, health expenditure as a proportion of national income increases to 13.5%. This figure is on a par with the highest spending countries in the European Union.

The fiscal and expenditure challenges facing the country are unprecedented. Earlier, Deputy Bruton asked a question on forecasts for tax revenue. While I am not an accurate forecaster, I understand we are working on the basis that in 2009 tax revenue will be between €34 billion and €35 billion, current expenditure will be approximately €50 billion and net capital expenditure will be approximately €8 billion. One does not need to be a genius to understand that a deficit well in excess of €20 billion is not sustainable from the perspective of the public finances or as a member of the eurozone.

In light of the financial challenges facing the country, the health service will be challenged to deliver greater efficiency for the resources allocated to it and greater flexibility in terms of how and where people work. This year, we will spend more on health than we are forecast to collect from VAT — €13 billion — income tax — €13 billion — and food — €12 billion.

The HSE submitted a service plan to me early this year based on its initial allocation and the figures on which we were working in December last. The plan indicated that, notwithstanding the financial challenges it faced, the executive would operate the same level of services as it did in the previous year. Its allocation for 2009 was between 3% and 4% higher than in 2008. The HSE gave a commitment that it would maintain existing levels of services to patients. This was to be done by increasing day case activity which is 12% lower than the OECD average and only 50% of the best performing countries such as Canada. Even within Ireland, there are variations in day case activity, with some hospitals performing well and others performing not so well.

The average length of hospital stay also need to be addressed. The HSE has been doing amazing work in reducing the average length of stay. Despite recent improvements, however, the average length of stays here are between 0.6 and 1.9 days longer than for similar procedures in the United Kingdom. We also need to address the population of patients in our acute hospital system. A survey done on bed utilisation showed that approximately 12% of patients were in hospital for IV therapy, which in many other countries is delivered in patients' homes or community based centres.

Additional funding of €8.1 billion has been allocated to public health since 2002. To put this figure in context, it is twice the level of expenditure on health in 1996-97. Of this increased expenditure, 36% has been expended on pay, 14% on drugs and 29% or almost €3 billion on new service developments in the areas of older people, services for people with disabilities, the acute hospital sector, cancer control, screening and so forth.

The sustainability of our public finances is a challenge for all of us, not least the Government. Countries and health ministries around the world face the same challenge. We estimate, at this point, that the financial challenge facing the Health Service Executive for the remainder of this year amounts to €480 million. I reiterate the point I made before Deputy Reilly entered the Chamber that the position may change when fiscal measures are introduced in the House in three weeks. In that case, I will revert to the House or a committee thereof to address the new position.

The €480 million figure includes an estimated €100 million shortfall in receipts from the health levy. The substantial shortfall in January eased somewhat in February and will, we estimate, amount to €100 million over the year. We also estimate a shortfall of between €57 million and €60 million in long-stay repayments. This figure arises primarily from the success of some appeals. The HSE's contingency figure may not be sufficient to meet requirements. The estimated shortfall in the allocation for medical cards is approximately €170 million.

The remainder of the €480 million figure is made up of an additional €30 million for the consultants' contract which arose because more people signed up for the contract than we anticipated when the allocation was made to the HSE. The cost of the Hickey judgment, under which retrospective payments must be made, is estimated at €35 million. The failure to implement the judgment this year will give rise to costs of perhaps €50 million. Under the emergency provisions introduced by the Minister for Finance, I commenced consultation with the Irish Pharmacy Union and other professional organisations in health care, including the Irish Medical Organisation, on fees and the need to ensure the distribution margin is substantially reduced. I anticipate that this consultation will be completed by 3 April. At that point, it will be a matter of making a determination which is in line with the outcome of the High Court proceedings. If that occurs, we expect to achieve savings in this area for 2009.

The €480 million shortfall at this point presents a major challenge for the HSE. I have asked the board of the HSE, which meets on Thursday, not to reduce levels of services to patients if this can be avoided before the Government makes its determination on expenditure and fiscal matters in the next three weeks. As the Taoiseach stated, the Cabinet will tomorrow morning decide on the date on which the budget will be introduced in the House. The question is whether it will be introduced on 2 April or the following week. Once this has been done, we will be clearer on the financial implications for the health service in 2009.

Many people would argue that as more people become unemployed, pressure increases on demand led schemes, particularly medical cards. There will be a shortfall in the levy, for example, moneys from which are allocated to appropriation-in-aid to the Health Service Executive. Unlike the social welfare system, where additional money is provided when unemployment increases, as is appropriate, other State services do not receive additional resources to address increased demand that had not been anticipated when services were being planned for at the end of the previous year.

To be fair to the HSE, last year it achieved value for money savings of approximately €280 million. At this time last year, it was predicted that the HSE would exceed its budget. I compliment the Accounting Officer, management team, board and staff of the executive on operating within their budget, challenging as that was. Not only must it operate within the allocated budget for 2009, it must meet the unexpected new issues which arise as a result of the economic pressures confronting the country.

There has been speculation in the public domain about the new consultant contract. I will address this issue briefly bearing in mind that I will also take questions later. The new consultant contract was welcomed by all sides in the House when it was successfully negotiated after a prolonged and protracted period of negotiations lasting more than four years, which included the term of office of some of my predecessors. It is not a pay increase for consultants but a new way of working. It is fundamental to the recruitment of new consultants that they are recruited on the basis of a contract that meets the needs of the public health care system rather than one that was negotiated in the early 1980s, when relatively few people in this country had private health insurance, and did not meet the needs of the public health service.

The essential elements of the new contract are that each consultant will work as part of a team with a clinical director. It will be the responsibility of that clinical director to make sure the team provides cover for the acute hospital at appropriate times. A longer working day and working week are envisaged for consultants and there will be structured cover over the weekends. In addition, there is one-for-all access to diagnostics, which is significant. We all know of many cases in which access to diagnostics was a factor, not least that of the late Susie Long, who was told when she sought a colonoscopy in a public hospital that if she had private health insurance she could have one within a week or ten days but as she did not she must join a queue. That is not acceptable in our public health system and, under the new consultant contract, this system will come to an end. These are fundamental changes to the way in which consultants work.

Consultants must also subject themselves to clinical audits, not just of outcomes but also of performance. The HSE has recently done some interesting work on key performance indicators. I mentioned in the House the work done in the area of neurology services, which showed a major discrepancy between the number of new patients seen by neurologists in different parts of the country and in different hospitals. The power of performance indicators, auditing and data in changing performance and delivering better outcomes for patients cannot be underestimated.

Under the budget, as I mentioned, 93% of the allocation for health in 2009 will go to the HSE. That represents a quarter of all the money we will spend running the country in 2009. As I mentioned earlier, if we accept, as the governor of the Central Bank said today, that the economy will contract by 6%, an increase of 3% or 4% for the HSE represents an actual increase of 9% or 10%. If we add to that the amount of public money spent on health — 78% of spending on health in Ireland comes from the public purse and 22% from private sources — we can see that spending on health represents about 13.5% of our national income, which is by any standards a major investment in our health services.

Among the areas in which the HSE must see change in order to deliver patient care in a way that does not adversely affect patients is that of work practices. Between allowances and overtime alone we spend more than €1 billion. The HSE is currently in discussions with non-consultant hospital doctors, in particular, but also with other staff. There is a high dependence on agency nurses and a very high dependence on allowances. We all accept that the health system does not operate on a nine-to-five basis, and people must be remunerated for the anti-social hours they work. Notwithstanding that, the pay pressures are immense, and unless we can achieve greater flexibility for the major increase in pay we have had each year for the past number of years, the health service will not be able to provide the services we all expect, whether in the community or in the acute hospital system.

I am happy to engage in this debate in the House, although I accept that it is premature given that there is to be a budget in three weeks' time. In the context of that budget, nothing is off the table. I am not ruling anything in or out. We are in a new financial situation, and we must all play our parts in making sure we address the major deficiencies in the public finances in a way that has minimum impact on those at the very bottom in our society, particularly in terms of the provision of public health services to our population.

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