John Brassil (Kerry, Fianna Fail)
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I very much welcome the opportunity to raise this matter as a Topical Issue because in March this year I tabled a parliamentary question due to my concern about a potential shortfall of €5.6 million in the budget of University Hospital Kerry. In the reply I received to my parliamentary question there was an explanation of the previous model of rolled-over funding and I was informed that there has been a switch to activity-based funding. Concerns had been expressed about that. There was a key line in the response, which I will outline to the Minister of State. I was told that, in summary, the projected spend for 2017 exceeded the allocated budget by approximately €5.6 million. The reason for the variance relates largely to unexpected costs associated with agency locum consultants and non-consultant hospital doctors, additional nursing posts, and the need for additional health care assistants, all of which are necessary to provide a safe clinical service. The reply went on to say that to identify a saving of €5.6 million, the hospital needs to look at the service and identify post and non-pay items that can be removed from the projected spend. It was stated that would clearly have a significant effect on service delivery and potentially could give rise to significant clinical risk. It is extremely concerning when the HSE replies to a parliamentary question and itself flags a potential significant clinical risk to the operation of a hospital.

We know the issues hospitals such as University Hospital Kerry face in regard to recruitment. When one has an over-reliance on agency staff, in particular agency consultant staff, agency non-consultant hospital doctors and agency nurses, sometimes costing in excess of five times what it would cost for staff under a standard recruitment process, the hospital in question will run into difficulties. At the end of 2017, will we ask University Hospital Kerry to cut back on elective surgeries, equipment such as surgical devices or drug costs? Those areas of expenditure are all critical factors in the successful running of the hospital. Until we address recruitment we will struggle to a significant extent with the funding of hospital services.

On foot of the work being done by a committee of which I am a member, the Committee on the Future of Healthcare, I hope the recruitment of all staff in future will be done on a hospital group basis. We might then be able to make inroads into the staffing issue. At the moment we are asking hospitals to meet their budgets. Their only recourse to proper staffing levels is through agencies, and then we beat them up for not meeting their targets. We are putting rural and peripheral hospitals such as University Hospital Kerry in an impossible position. When I get a reply to a parliamentary question which tells me there is a significant potential clinical risk facing us towards the end of this year, it gives rise to concern. We need to provide the necessary funding until such a time as the recruitment deficit that exists is made up and allows the hospital to function properly.

Finian McGrath (Dublin Bay North, Independent)
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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.

John Brassil (Kerry, Fianna Fail)
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I thank the Minister of State for his reply. Having done a very quick tot in my head, if the hospital was provided with €2.5 million and €881,000, that comes to approximately €3.3 million. In the reply I received to the parliamentary question I asked in March, the sum of €5.6 million was identified as a deficit. That still leaves a shortfall of €2.3 million. One part of the HSE has given me one figure and the Minister of State has given me a different figure.

From speaking to people involved in the hospital locally I know the real issue is that there is a significant shortfall and it has to be met. I have no issues with activity-based funding, better efficiencies and all that goes with that, but there is a transition period, this is the first year of the new system and the hospital in Kerry needs the shortfall to be made up in order that there is not a significant clinical risk, as was pointed out in the reply I received to my parliamentary question.

I hope there is not a significant clinical risk, but if one is dealing with a shortfall of €2.3 million, I do not see any other outcome.

I wish to apprise the Minister of the gravity of the situation. Both the hospital manager and assistant hospital manager in Kerry were operating in temporary positions for the last number of years. Both of them were doing an exceptionally good job in the circumstances. In March this year both those jobs were advertised as full-time permanent contracts, yet neither the acting manager nor the acting deputy manager saw fit to apply for them. They basically felt that given the circumstances and restraints, they would not be in a position to do the job properly. That, therefore, is the challenge facing us when two extremely efficient and capable people will not apply for permanent jobs when they become available. That challenge will continue until such time as we address staffing issues in all our hospitals.

There is a historic issue from the moratorium that was in place whereby voluntary hospitals continued to recruit because they were directed to do so by their boards of management. Public hospitals obeyed the moratorium, however. Now there is a huge imbalance which we will have to address. We have to get staffing up to a level that allows the hospital to function and does not cripple it with agency costs which result in budget overruns. In this case it is €2.3 million above what is allowed for.

Finian McGrath (Dublin Bay North, Independent)
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I accept many of the arguments that Deputy Brassil has put forward. For example, he spoke about unexpected costs and agency staff issues. I have noted this in my own portfolio covering disabilities. If one does not have stable services, it costs more to bring in agency staff, so we must address that particular issue.

We also have to address the issue of recruiting administrative and medical staff, including nurses. There are difficulties in getting such staff. I agree with the Deputy that we have to clarify the figures involved. I will bring those concerns back to the Minister, Deputy Harris, and the HSE because we must have answers.

I am glad, however, that the Deputy accepts the model of activity-based funding is a new one. It ensures a fair system of resource allocation, drives efficiency and increases transparency. At the same time, if there are any funding or staffing issues during the transition period, we have to address them. We all want to reform the health services, but above all, we want to ensure patients are safe in hospital.