Finian McGrath (Dublin Bay North, Independent) | Oireachtas source

I thank Deputy John Brassil for raising this very important and serious matter and giving me the opportunity to inform the House on it. I also convey to him the apologies of the Minister for Health, Deputy Simon Harris, who is away on Government business at the moment.

An activity-based funding, ABF, system is being introduced in public acute hospitals on a phased basis. That represents a fundamental change in how health care is funded in Ireland. Implementation of the funding model involves moving away from inefficient block grant budgets to a new system where hospitals are paid for the actual level of activity undertaken, subject to budgetary limits. As such, there will be a shift from funding facilities and settings to funding episodes of care instead. Other key benefits from the introduction of ABF include increased fairness in resource allocation, improved efficiency and increased transparency.

January 2016 represented a major milestone in the implementation process because the ABF system was introduced for inpatient and day case activity in the 38 largest public hospitals. The ABF activity targets were initially identified at the hospital level and then combined to form overall hospital group activity targets.

Transition payments have also been calculated at the hospital level before being aggregated at group level. Transition adjustments are payments made to hospitals which are operating above the national average price to avoid financial instability. The level to which hospitals are operating above the national average price is calculated as part of an annual benchmarking process. For 2017, hospitals have been allocated 90% of the value of that calculation with the remaining 10% being provided to hospital groups. The hospital groups were provided with the overall targets and allocations and were then given the opportunity to adjust individual hospital activity targets and associated funding levels as well as the level of transition payments to apply to their member hospitals as long as they remained within the overall group allocations, with oversight for such changes from the acute hospitals division in the HSE.

With regard to University Hospital Kerry and the suggestion that the hospital has a €5.6 million shortfall due to the ABF process, the HSE has informed the Department of Health that the hospital was in fact allocated an additional €881,000 this year under ABF. It was also allocated an additional €2.5 million in structural payments to cover agency costs. Any budgetary shortfall therefore is not related to the ABF system and will have to be addressed by the hospital and the hospital group. University Hospital Kerry is part of the South/South West hospital group. The group has advised the Department that it will continue to work closely with University Hospital Kerry to support it in managing the budget situation. It has also advised the Department that while there are risks identified on the hospital's risk register, the group has confirmed that all risks are being mitigated to ensure the delivery of safe patient care.

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