Louise O'Reilly (Dublin Fingal, Sinn Fein)
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2. To ask the Minister for Health the stretch income targets that have been set for each hospital group for 2017; the stretch income targets for each hospital in 2016; the total stretch income targets for 2016 and 2017; the direction that has been given to hospital groups in respect of the generation of private income; the consultation his Department and the HSE have had with each of the hospital groups in relation to the sustainability of the stretch income targets; and if he will make a statement on the matter. [38243/16]

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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My question refers to the "stretch income targets", not a term I like but one that the Minister and the Department have perhaps chosen. The people in charge of the hospital groups described them as unrealistic in their submission to the Oireachtas Joint Committee on Health. I am interested in knowing where they came from, who directs them, how they are decided and what happens in the event that they are not met.

Simon Harris (Wicklow, Fine Gael)
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Hospitals collect income from a number of sources, including charges for public and private patients as provided for in legislation. They also collect income in respect of facilities such as rental of shops, cark park charges and other sources.

Setting targets for income collection is a normal part of effective financial planning and management for any organisation. While rates for statutory charges are specified in legislation, there is in practice variation in performance among hospitals in the billing and collecting of charges and in raising other income. This has been commented on by the Comptroller and Auditor General in his Report on the Accounts of the Public Services in 2008, 2009, 2012 and 2014, where the scope for improved billing and collection was highlighted.

In practice, much of the income from private patient charges is recouped directly from private health insurers. In 2014, under the Health (Amendment) Act 2013, the scope of private charges was expanded to include all private patients accommodated in public hospitals and not just those in private or semi-private beds as previously. This was in line with long standing Government policy to reduce the subsidy to private practice in public hospitals, something the Deputy would probably support. The Health Insurance Authority has identified that payment by private health insurers to public hospitals increased by €144 million between 2014-2015 and 2015-2016.

In 2016 hospitals were set income targets of €50 million or 5% over the normal year on year growth associated with increased activity. This recognised the scope for improved performance, particularly in respect of collection. The level set for each hospital group was: RCSI, €5.8 million; Dublin midlands, €7 million; Ireland east €7.9 million; south-south-west, €9.3 million; Saolta, €9.7 million; University of Limerick, €8.5 million; and the children's hospital group, €1.8 million.

Targets for 2017 are under consideration in the context of the approval of the national service plan and subsequent agreement of the operational plans for hospitals. The Department and the HSE engage in consultation with regard to the setting of the national budget for each service area as part of the Estimates process. The setting of budgets for individual hospitals and the hospital groups is completed within the HSE as part of a consultation process between the national directorate and the hospital group chief executive officers, CEOs, and formalised in operational plans for each group.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I am interested specifically in what happens when these targets are not met. When I asked the CEOs of the hospitals, their answer was that they were crossing their fingers in hopes that would not happen. In the event that it does happen, what direction has the Minister given the CEOs on where they should start to cut? Their word, not mine, was “unrealistic” to describe the stretch income targets. These are not just the income targets that have been set, but additional targets. When they have to cut, what direction is the Minister giving them on what is to be cut? At the committee meeting, Liam Woods of the HSE said the cuts would not be in clinical areas. They are already instructed to make all the cuts they can in non-clinical areas. Where is the axe going to fall? What direction has the Department given them on where the cuts are to happen?

Simon Harris (Wicklow, Fine Gael)
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It is interesting to talk about cuts when the HSE and the health service has received the largest ever health budget in the history of any budget in this House. It is simply not the case that we are cutting services. We are, however, expecting the hospitals to do a better job of collecting the income that this House legislated for them to collect. These are the views of the Comptroller and Auditor General in four reports in recent years. His office has acknowledged that there is scope to do more. The HSE sets the target for what it expects each hospital group and each individual hospital to collect in income. I have outlined the various different ways a hospital can do that through maintenance charges, long stay charges, car parking, retail, inpatient prescription charge income, canteen receipts and restaurants. These are the targets the HSE works out with the hospital group CEOs which should be met. This year, there was a target of €50 million and €44 million has been met. This shortfall was addressed in the context of the additional €0.5 billion I received for the health service.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Is the Minister saying that if these targets are not met, his Department will come in and meet the shortfall? I do not think he is. That is not realistic and I do not think the hospitals believe it is realistic. I specifically asked the Minister where the cuts will be made because when the unrealistic targets - to use the term these people used - are not met, as they very well might not be, for example, if too few people buy a cup of tea in the canteen, how will the services survive? Is it simply a case of saying it is fine and giving them money when they do not meet the targets or will there be a penalty? If there is a penalty, how will that manifest itself in the event that they simply cannot reach the targets that they, not I, described as unrealistic?

Simon Harris (Wicklow, Fine Gael)
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I am not a believer in a financial penalty for a hospital because while it sounds like one is acting like a tough guy, it ends up being a circular flow of money. I am not suggesting the Deputy is saying that, but that is my view. We have allocated additional funding to the health service. The HSE will make sure to put that additional funding to use for patients and improved services. It will take into consideration in that context what targets to set hospitals based on canteens, restaurants, shops and car parks. I am not willing, pardon the pun, to give a hospital pass to managers who cannot hit targets when the constitutional office of the Comptroller and Auditor General has said our hospitals must do better in terms of collecting the income that people in these Houses voted to empower them to collect. We should not be letting people off the hook. These are the targets and people should be trying to meet them. We have additional funding which is now being put to use in the service plan which has been submitted to the Department and which I expect to publish within the next two and a half weeks.

John Lahart (Dublin South West, Fianna Fail)
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The next question is in the name of Deputy Murphy O’Mahony. She is unavoidably absent this afternoon but the Ceann Comhairle is satisfied that Deputy Kelleher can put the question in her stead.