James Reilly (Dublin North, Fine Gael)

According to the latest available information, the HSE managed to achieve financial break-even within its overall Vote last year. While it was assisted in this regard by the Supplementary Estimate of €148 million, it is important to acknowledge that €58 million of this was attributable to a shortfall in the funding provided to the HSE earlier in 2011 for the pay savings arising from the voluntary exit schemes which ran up to the end of 2010 and departmental savings on its Vote of approximately €40 million which reduced the net impact on the Exchequer.

It was recently stated in the headlines of a newspaper that the Department of Health had handed back €40 million which it had not spent. This is a technical issue. The Department of Health cannot hand over the €40 million to the HSE. It must hand that money back to the Exchequer which in turn allocates it to the HSE in a Supplementary Estimate. That is the way it works. Given the scale of the HSE Vote and difficulties that any health service faces in managing within budget, this has to be seen as a very satisfactory outcome.

Given the €750 million saved last year and the year before that and the requirement to save €750 million this year, real innovation will be required to maintain the service. We now are at a point at which we depend on real innovation to maintain the service. However, such innovation and the new clinical leadership behind it are coming to the fore. That said, I am aware the acute hospitals are entering 2012 with an underlying deficit based on their rate of spending in the latter part of last year. This clearly will add to the difficulties facing hospitals this year in managing within reduced budgets and staffing levels. The HSE estimates at this stage that the overall underlying deficit for acute hospitals is in the region of €160 million, but this is subject to revision in the light of detailed end of year figures. This is an average figure and the challenge facing individual hospitals varies. I am advised that some hospitals achieved a break-even position or are carrying forward relatively small underlying deficits, whereas others have substantial deficits. A number of hospitals are facing particularly difficult challenges in this regard and therefore must focus on maximising cost reductions, income collection and effective clinical changes.

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