COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 28 Apr 2005

Special Report No. 7 of the Comptroller and Auditor General: Health Sector Audits.

Mr. M. Scanlan (Secretary General, Department of Health and Children) and Mr. K. Kelly(Chief Executive, Health Service Executive) called and examined.

Chairman

There is no relevant correspondence on the matter. Witnesses should be aware that they do not enjoy absolute privilege before the committee. The attention of members and witnesses is drawn to the fact that from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These rights include the right to give evidence, produce or send documents to the committee, appear before the committee in person or through a representative, make a written and oral submission, request the committee to direct the attendance of witnesses and the production of documents and to cross-examine witnesses. These rights may be exercised for the most part only with the consent of the committee. Persons being invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of these rights and provided with a transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions of Standing Order 156 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I welcome Mr. Michael Scanlan, Secretary General of the Department of Health and Children, and congratulate him on his new appointment. I ask him to introduce his officials.

Mr. Michael Scanlan

I am joined by Mr. Dermot Smyth, assistant secretary in charge of the finance unit, Ms Fiona Prendergast who works with Mr. Smyth, and Mr. Tony Morris who also works in the finance unit.

Chairman

Will Mr. Kevin Kelly, chief executive of the Health Service Executive, introduce his officials?

Mr. Kevin Kelly

I am joined by Mr. Diarmuid Collins, financial director, and Mr. John Magner, acting director of human resources.

Chairman

Will the representative of the Department of Finance introduce himself?

Mr. Joe Mooney

I am from the public expenditure division which deals with the health group of Votes.

Chairman

Mr. Purcell, Comptroller and Auditor General, will introduce special report No. 7 on health sector audits. Although the report addresses six separate issues, I ask Mr. Purcell to introduce them together because members may wish to address questions across the range of issues.

Mr. John Purcell

Under governing legislation I may prepare a special report on general matters arising from my audits. I have used this discretionary power in the past and, having completed my audits of the health boards and agencies for 2002, I decided it would be appropriate to go down this road again, bearing in mind a number accountability issues which had come to light during the course of our work. The report comprises seven chapters which, at the suggestion of the Chairman, I will briefly discuss trying to touch on the important matters as I see them.

I included chapter 1 to give some context to the report by outlining the way expenditure in the health sector has increased and to give some idea of where the money has gone. Not surprisingly, pay and pay related expenditure account for the bulk of the increase, reflecting general and special pay rises together with an expansion in the numbers employed. Apart from advances in service developments and greater expenditure on clinical supplies, the rising cost of the general medical services scheme through the years is a major contributory factor in increased expenditure.

Chapter 2 draws attention to the control exercised over the enhanced capital programme provided for the health sector in the national development plan. Some €2.5 billion in funding at 1999 prices was earmarked for the programme over the timeframe for the plan from 2000 to 2006. The kernel of the audit issue was that the health boards interpreted the Department's allocation of indicative funding for projects as sufficient approval to proceed. It was not until late 2001 that the Department realised what was going on and when the dust had settled it determined that approximately €115 million had been expended without its authorisation, both on unapproved projects and additional commitments on approved projects arising mainly from scope and design changes. The Department later retrospectively gave its approval to €93 million of the expenditure. Although the Department is adamant that its instructions were clear at all times, the health boards, by their words and actions, obviously took a different view. Revised arrangements have since been introduced in this sector.

Chapter 3 sets out details about how patients' private property is administered and accounted for by the various health boards. It follows on from earlier reports of mine which pinpointed shortcomings in this area and led to the establishment of a working group to review the management of money and personal possessions held on behalf of patients. The vast bulk of money held in private property accounts belongs to long-stay patients in hospitals and nursing homes. The amount involved, calculated on the basis of the latest figures available at the time of the report, was about €17.5 million. The working group made a number of recommendations, some of which have not been implemented for pragmatic reasons, generally on the grounds that current arrangements are regarded as operating satisfactorily.

Chapter 4 picks up on an issue which had concerned me over the years, namely, the effectiveness of the control exercised over staffing numbers in the health sector. The Department devolved responsibility for employment control to the health boards and agencies in 2001 but the arrangement was not a success and lasted only until the end of 2002, when the Government decided to cap the numbers employed in the public sector as a whole and a centralised system was re-introduced. Traditionally, the Department's ability to effectively monitor numbers employed has been hampered by the lack of information systems to support the requisite level of control. This deficiency is being addressed by the implementation of a costly information technology system aimed at eventually covering most, if not all, of the health sector.

Chapter 5 points to the need to clarify the position in regard to charging for public outpatient services provided to private patients of consultants. The position in Beaumont Hospital is outlined to illustrate the point.

Chapter 6 sets out the governance difficulties associated with not having boards in place in four health agencies which were subject to my audit. Apart from the Tallaght Hospital board, which had the responsibility of overseeing development at the hospital and should have been wound up by now, satisfactory remedial action has been taken.

Chapter 7 raises issues about how the area boards of the Eastern Regional Health Authority and North Western Health Board went about procuring new headquarters. The committee has already dealt with the North Western Health Board which was the subject of a separate report. Two main issues arise with regard to the area boards. First, capital expenditure was incurred on new headquarters without having a permanent source of funding in place. Second, a failure to properly plan accommodation requirements in Bray led to a €3.4 million fit-out of a building which was only partly used for four years before being vacated.

I have provided a quick summary of the material contained in the report. While the report is essentially a retrospective exercise, I hope it helps to highlight the key areas of difficulty associated with financial control in the health service. These will have to be addressed regardless of who is running the show. I have in mind, in particular, the rising pay bill, control over capital expenditure, the absolute necessity for effective information systems and the need for higher standards of governance.

Chairman

With regard to chapter 4, almost 100,000 people now work in the health service. Mr. Purcell stated a costly IT system is being introduced to track and monitor who does what and where and how many people are working in different sections of the service. Until now, the Department of Health did not appear to know the position and there was a mismatch between the numbers the health boards believed were employed and the Department believed were employed. It has been suggested that the IT system is not progressing very well. Does Mr. Purcell have any additional information?

Mr. Purcell

I would like to hold my fire on that issue. We are undertaking an examination of the so-called PPARS system because a large amount of resources have been invested in it. In the report the then accounting officer referred to a cost of €130 million and further estimated costs of €100 million. The system has been rolled out in certain areas and I understand it is proposed to implement it in the broader health sector. I hope to return to the committee before the end of the year with a separate value for money report on the system.

Chairman

Does Mr. Kelly have any information in this regard?

Mr. Kelly

I will ask Mr. Magner to comment in a moment. We are currently carrying out a detailed review of the money spent to date and likely to be spent in the future as well as the benefits estimated to be realised. I cannot say any more except that we are looking at it very seriously to assess further expenditure. We want to be convinced the benefits will be realised.

Mr. John Magner

It is rolled out currently to agencies that cover 35,000 staff in the sector and our plan is to role it out to the agencies covering 68,000 staff before the end of the year. All of the former health boards will be covered by then. We plan to roll it out to the rest of the sector and the Dublin academic teaching hospitals next year.

Chairman

Is it working well for the 35,000?

Mr. Magner

In terms of payroll, organisation management, time returns and calculations of overtime, it is meeting the objectives. Significant benefits can be realised from this type of investment and part of our focus since January has been to work with the team to ensure we secure the benefits for line managers from the roll out of the system.

Chairman

When is Mr. Purcell expected to have completed the value for money report?

Mr. Purcell

I could come back to the committee with that information.

Deputy Dennehy

When the Comptroller and Auditor General reported in 2001, his analysis showed there were 3,800 staff in excess of the approved numbers.

Chairman

I have not asked the Secretary General to make his opening statement yet.

Deputy Dennehy

The report was circulated, I did not know if it was being taken.

Chairman

We will give him the opportunity to speak before he answers questions.

Mr. Scanlan

As the committee has acknowledged, I am new to the health brief and I am looking forward to the challenges ahead. We are entering a new phase of health service delivery which provides many opportunities for improvement in the system. The Irish health service has developed significantly over the years and it is important to emphasise that the purpose of these reforms is to enable further development and better services for patients. All change poses a challenge but the scale of the change we are facing in the health services is huge. The establishment of the HSE is a significant milestone in the development of the health services. The restructuring will enable the health service to develop so it can provide more effectively and efficiently for the needs of patients in the context of a unitary national delivery system.

The report under discussion today examines a range of issues across the health sector, including out-turns in terms of costs and outputs, unauthorised capital expenditure, patient private property, employment control, billing, governance and property management. A detailed response to the report was submitted by the then Secretary General of the Department and the report reflects those comments.

In the report, the Comptroller and Auditor General identifies some areas where the detailed operation of the system differed across health board regions. The single management and delivery structure that we are putting in place with the Health Service Executive offers a real opportunity to implement best practice across the State. We can look at differing practices that existed in the health boards and if one health board had a better way of doing something, the establishment of the HSE allows us to spread that across the country.

The Prospectus report on the audit of structures in the health system commented on the then system as being highly fragmented, thereby creating uncertainty among patients as to who was responsible for delivering the service. A unitary national system, as provided for by the Health Service Executive, will enable such anomalies to be addressed and allow national standards to be observed.

The report also highlights areas where appropriate governance structures were not adhered to. A strong governance framework must be a fundamental element of an efficient and effective health service. Work has already started on the development of a framework in both the Department and the HSE that will be appropriate for the health service and the new structures being put in place.

An information gap lies at the heart of many of the issues that have been addressed in the report. The Comptroller and Auditor General referred to that, particularly in terms of employment levels. The disparate nature of the health service, coupled with the disparate information systems in operation, contributed to a lack of clarity, with different methodologies in use across the system. Significant investment is now under way which will address those anomalies and the aim is to provide both the HSE and the Department with the information we require in a timely and efficient manner.

I share the sentiment of the Comptroller and Auditor General when he said that this is an exercise in looking back but I see it also as signposting what we must address as we move forward with the HSE in the new national system. We are in a time of significant change in the management and delivery of the health services. I am confident that working together, the Department and the Health Service Executive will meet these challenges and secure improvement in the health services.

Chairman

May we publish that statement?

Mr. Scanlan

Yes.

Chairman

Mr. Kelly will now make an opening statement.

Mr. Kelly

I agree with everything the Secretary General has said. We welcome the report because, even though it deals with 2003, it is relevant as we move forward. We are now the largest employer in the State and we must have the highest standards of control and corporate governance. We look forward to working with the Comptroller and Auditor General to ensure that happens. Already our audit committee had an informal meeting with the Comptroller and Auditor General and we will take this report seriously. Many of the issues arose as a result of past fragmentation and we now have an opportunity with a national system to deal with these issues in a much more practical and effective way. That is a high priority for us.

Deputy Dennehy

I welcome Mr. Scanlan. He has taken on a tough job and we wish him well and hope he will spend the money available to him wisely.

The out-turns and output are linked to controlling employee numbers. In 2001 we found there was 3,800 more staff than had been approved. The Comptroller and Auditor General went back in 2004 and we were notified of the farcical situation that the Department was still waiting for more accurate data on staff numbers. It was totally chaotic at that point in personnel.

Mr. Scanlan

In 2004.

Deputy Dennehy

We reported on it in 2001 and pointed out that there were 3,800 extra employees but it was still not possible to count them in 2004.

Mr. Scanlan

I accept the audit findings that there were problems and that controls over staff levels and monitoring systems have been ineffective. We have had problems getting accurate information but there have been improvements. The old system relied on an annual census and it used to take at least six months after that census to get figures. There is now a quarterly census system in place that was operated by the Department last year and now, in a transition phase, is managed by the HSE. It is done on a quarterly basis and the information comes in within ten weeks of the end of the quarter.

On the question of whether the current system is perfect or even close to it, it is not for a variety of reasons. Some are related to information systems, others are due to fragmentation and differences in definitions and methodologies. We do not have a system in place that gives us a sound picture of employment levels in the health system.

Deputy Dennehy

When issues are raised by the Comptroller and Auditor General, the committee regularly hears the answer that it was due to new systems. This is an expensive system, costing approximately €231 million. Will it count accurately? I was given a figure of 97,000 people working in the health services. However, neither contract nor agency staff were included in the employment ceiling limit. Why? Does this not lead to the temptation to go to agencies to employ temporary staff to get around it rather than taking on permanent and countable staff? Is there a policy decision not to count agency people?

Mr. Scanlan

In my view there is. It is my understanding that agency staff and contract staff are not included in the numbers. The policy being implemented is about numbers employed. There is an issue of overall expenditure management of the allocations made to the then health boards and now the HSE. It must manage within those expenditure allocations, of which a large chunk is pay-related. That is why managing pay and numbers is so important. However, it has to be managed in the allocation. In fairness this has been achieved in recent years.

There is a numbers policy, excluding agency and contract staff. The Deputy makes his point well on this. The health services have also made this point to us. A numbers accrued policy can give rise to issues where arguably one does not get best value for money, depending on how it is implemented. The Brennan report acknowledged this. It suggested there might be a better way of managing pay costs in the health system and to include items such as agency and contract staff. It also looked across the board at issues such as overtime working and hours at which people worked. I am interested in examining these areas and some work has already been done on it. Before one can move on this issue, a much better foundation in information on the basic question of how many people are employed in the health services is needed. The Deputy is correct that it does not include agency staff. It raises issues at the least about the interaction between expenditure control and numbers control.

Deputy Dennehy

In this period, 31,024 extra staff were taken on. Will Mr. Scanlan provide a broad breakdown on these numbers? I am concerned about how many frontline staff were employed as opposed to how many management types. There have been suggestions that this figure mainly comprised managers and so on.

Mr. Scanlan

I am not sure if I have the actual breakdown of these figures with me.

Chairman

Paragraph 1.3 contains some breakdowns.

Deputy Dennehy

I have a figure but I want it to be confirmed. My figures show 75% frontline staff, such as nurses, health and social professional professionals, dental and patient care professionals, are employed in dealing with clients, 23,238 in total. Is that an accurate figure?

Mr. Scanlan

I am taking it that the Deputy has used paragraph 1.3 and worked out the difference. I would have to do the sums myself. The Deputy's concern is the figures for frontline staff as against management staff.

Deputy Dennehy

Yes.

Mr. Scanlan

I have a concern about this matter. The Brennan commission stated that nine out of every ten staff employed were engaged in frontline delivery. Nurses and medics are frontline staff. However, a valid case can be made for those classified as management-administrative staff who actually release frontline delivery staff. The classic example is secretaries to consultants. One does not want consultants spending their time typing letters when they should be dealing with patients. It can be difficult to examine management and administration as a block. Not all of these workers are back-of-office staff. Having said this, we are trying to focus in increasing the numbers in frontline delivery as we develop further services. If we are staying with the numbers policy, we must cut back on non-frontline staff. The groups that can be increased, and those that cannot, have to be identified.

Deputy Dennehy

Will Mr. Scanlan send the committee an up-to-date note on this rather than the 2001 figures?

I recall the Southern Health Board had concerns about patients' private property accounts. A working group was set up in 1997 to examine the issue. There were various arguments as to how it should be funded. The group recommended the interest on patients' property should be used to administer that fund. A substantial amount was involved because between 1999 to 2001, the administration charge came to €1.7 million and interest received was €2.5 million. Was this recommendation implemented? If so, did that group have legal advice when it made the recommendation? Again, Mr. Scanlan may have to come back to us on this question.

Mr. Scanlan

It is not a question of coming back. That is more a matter for Mr.Kevin Kelly because it was a health board group rather than a departmental one.

Mr. Kelly

We have numbers for last year if it will be of help.

Deputy Dennehy

No, it relates to the decision made. It is a public argument. Thousands of accounts must be administered. Are the patients concerned charged? It was a recommendation made then that rather than taking the money out of the account, the interest accrued on it would be used. That is a substantial amount. Was the recommendation implemented? If so, was legal advice taken on the issue?

Mr. Kelly

We have information on the numbers for last year which we can send to the committee. We are examining closely the question of agency staff as it is an uneconomic way of using resources and we do not think we are getting value for money.

Chairman

Perhaps Mr. Kelly might give us that information if he has it.

Mr. Magner

From 2003 to 2004, we employed an additional 2,200 staff in the health sector. Of those, 389 were in the administrative group, which can itself be broken down, with almost two thirds engaged in direct patient services, supporting consultants, on wards, in laboratories and so on, and one third employed in direct administration services. In 2003, we engaged an additional 390 administrative staff, 250 of whom were in direct patient services, and 140 in core administrative services.

Chairman

What is the HSE's current sanctioned establishment?

Mr. Magner

For administrative staff.

Chairman

No, for all staff.

Mr. Magner

Our current establishment is 97,255. That is our approved employment ceiling.

Chairman

Does the HSE currently employ more?

Mr. Magner

Our report at the end of 2004 showed us 1,400 staff above the approved ceiling.

Chairman

Therefore, the HSE must get down to that. Is it the policy to get down to the sanctioned establishment?

Mr. Magner

As soon as we had been established, we entered discussions with the Department of Health and Children. As referred to in the Comptroller and Auditor General's report, there were several legacy issues arising from the health boards regarding the original determination of the ceiling, since, when it was set in 2002, it did not take account of vacancies that we had in the system or posts that had been approved but not filled because of recruitment lags. It did not take account of replacement rates, an issue that we now face in the context of service delivery. We are therefore in discussions with the Department of Health regarding the verification of a revised ceiling. We are seeking that revision to take account of those factors. Following the December outturn, we have commenced an audit of the variance between the approved ceiling and the census outturn for 2004, and we hope to have preliminary figures on that audit in the next few weeks and then to enter into detailed discussions with the Department.

Chairman

The HSE does not have a figure for the total number that it employs, including agency and contract staff.

Mr. Magner

Agency staff, contract staff and overtime are not included in the census.

Chairman

Yes, but I presume that the HSE knows how many it employs.

Mr. Magner

Some 98,761 were in the census.

Chairman

In addition, how many agency and contract staff were there?

Mr. Magner

From a nursing perspective, I would estimate that we are using the equivalent of perhaps 500 agency staff each year.

Deputy Dennehy

I have two questions on No. 2, the unauthorised capital expenditure programme. It has close links with No. 7, which is headed "Property management control". The North Western Health Board headquarters at Manorhamilton was built without formal sanction. In evidence before this committee, Mr. Harvey, the CEO, said that there had been an understanding that it had approval and sanction. Under No. 2, dealing with unauthorised capital expenditure, we see that an audit of all the health boards showed a total capital deficit of €115 million in 2002. That figure did not include offices, office accommodation or commitments to such facilities.

The reasons given by the seven or eight CEOs at the time seemed similar to those of Mr. Harvey. They said that they understood that they had sanction. Part of the understanding arose from the fact that, between March and April 2001, the Department held 13 meetings with them regarding the national development plan. In July 2001, the Department said that it would visit all the boards to validate their projects. It appears that, after visiting just one board, that approach was abandoned. The boards have given evidence that they understood that they had the go-ahead to spend €2.4 billion over the relevant period. Importantly, they said that they had received a letter stating that, if they did not spend the indicative funding, it would be allocated to high-spending health boards.

I have two questions on that, the first being in regard to the validation that the Department told the health boards it would carry out — I believe that it was in March. Did the Department have the expertise — or does it have it now — to carry out such a validation of so many contracts or projects? Second, why was there such confusion, and how could it happen that all eight CEOs got it so wrong? They head organisations employing in most cases 12,000 or 14,000 people. How could they all have got so confused? There was a series of meetings outlining developments at that time. However, it appeared that they were given a false message, and I would like to hear the HSE's views on that.

We are recommending to groups such as the NRA that they employ expertise where necessary. I wonder about the commitment made to carry out the validation. The Department gave that up after one visit to one board. Would the HSE have the expertise to do it now?

Mr. Scanlan

With the Chairman's permission, I may ask a colleague to talk about that in a little more detail, but the short answer to the question of whether we have the expertise in the Department is that we do. We have a hospital building unit, and I understand that the former health boards relied to a great extent on the expertise in the Department, and part of the discussions going on between us and the HSE is to transfer that to the operational arm.

As for the question of why so many health boards say that there was confusion, one or two points have to be made, both in fairness to the boards and to record the Department's view. There was absolutely nothing wrong with the individual projects about which we are talking. They are what I believe the former Secretary General described as "approvable projects". They are real and add to the asset base that allows services to be delivered.

The second thing that I acknowledge, which applies not just to the health service but across the entire public service, is that when the national development plan was published, there was a push on to ensure that people would be able to spend the money now allocated and in particular draw down the necessary funding from Brussels. Part of what was behind the NDP was encouraging people to start planning and get ready to spend the money.

On the other hand, the NDP was always an investment plan with indicative funding levels separate from the actual decisions on funding, which, at that stage, were made annually for capital projects as part of the Estimates process. It would have been entirely separate from the existing approval system that had operated very well right up to then. The Department has no explanation for the apparent confusion. I am not sure that the figures across the health system show that such confusion existed in equal measure across the health boards. When I studied the Comptroller and Auditor General's report and looked at the figures on page 17, it seemed to me that there had been differences in practices across the health boards.

In summary, the Department feels quite strongly that, while recognising that there were pressures on the health system, that expectations had been raised, and that there was a need to plan capital spending multi-annually, there had been no change whatsoever in the capital approval process and no change in the expenditure allocation process. We could not accept that the Department failed to clarify that matter.

I am sure the committee has heard from other sectors that there are major problems involved in managing capital on an annual basis. The NDP went some way towards resolving that in that it was multi-annual indicative. We are now working on a multi-annual capital investment framework which is a stage beyond that again, where allocations are approved by Government, published each year in the budget, with provisions to pre-commit money. Up to 85% of this year's allocation may be pre-committed for next year, so it is possible to now get involved with certainty in planning and actual commitments. That was the problem. In order for health boards to be able to spend the money over this period certain things had to be done, planning etc. That was the pressure on them from the one side while on the other they were dealing with an annual expenditure allocation system.

Deputy Dennehy

Since that time a consultant has been put in place to monitor these projects and to consult with the boards. Perhaps Mr. Kelly can tell us whether that person or company is still in place and are they monitoring and reporting back to whatever is left of the boards, say, the technical staff.

Mr. Kelly

I cannot answer that specifically, but I can say what we are doing now. All the expertise within the various health boards is being put together. Also, that particular department is being transferred into the HSE over the next few months. To answer the Deputy's earlier question, I believe there is the expertise within the health service. The fact that it may now be done on a national basis, with clear policies, means that fragmentation will end. We will have proper capital planning and these issues, I hope, will not arise again.

Deputy Dennehy

Are we monitoring the national development plan on an ongoing basis as an overall picture within the context of health care? Is there still a consultant on board as in the past?

Mr. Kelly

Not that I am aware

Mr. Diarmuid Collins

Perhaps I should outline the process for capital expenditure going forward, for HSE. Chapters 2 and 7 in many ways reflected the disparate nature of the structure in the past, with multiple boards. As the Comptroller and Auditor General's report points out there was some confusion over whether the funding was indicative and whether resources of that nature would result in actual cash to fund projects. That gave rise to the confusion and some of the unapproved expenditure that arose, as set out in chapter 2. The HSE has its own Vote, so as regards indicative funding it has clarity up-front in terms of the actual cash available in any one year. The capital investment framework, which is a five year plan, sets out the level of real cash available for the HSE over the life of the plan. It means the HSE can plan with some certainty around the funding that is available. The process for getting approval has also changed. The board has adopted and approved the projects to be funded from the capital budget for 2005, this year. They will ultimately be approved by the Tánaiste and Minister for Health and Children and the Department of Finance. Those projects will be linked to a specific cash amount.

Internally, within the HSE, we will be able to monitor progress and cash spend drawn down against individual projects. The difficulties in the past in having an indicative level of funding over time perhaps did not result in real cash being available. These gave rise to some of the unapprovals, and are now gone, following the change in the method the health boards were being funded to the revised pattern of funding for the HSE.

Deputy Dennehy

I have no other questions, but I have a comment for Mr. Collins as regards several references to mistakes by the CEO and his team, who got things wrong. These were very experienced people, comparable to company executives, in charge of a staff of up to 14,000. I find it incredible that they could all get it wrong and the Department got it right. I am suggesting that there is much ambivalence about the letters that were sent out. This should be accepted, rather than an assertion to the effect that "they all got it wrong and we were right". When the army is out of step, it is time to look at individuals.

The communications system will be better in the future. The HSE is spending a large amount of our money and I hope it gets it right.

Mr. Kelly

In terms of the Chairman's question about the patient property accounts, Mr. Collins can answer that if he wishes.

Chairman

All right, we will deal with that.

Mr. Collins

The working group recommended that we should work to an interest based approach. Of the ten boards at the time, eight have moved to that approach. Two continue to charge the administration fee. Since the start of the HSE in 2005 we have been seeking to get definitive and final legal advice on what the exact approach should be. We were hoping to put a common initiative in place across all of the former health board areas as regards the management of patient private property funds.

On the other points raised in that chapter we are also in discussion with the NTMA and the central treasury on how the funds may be jointly invested. In the past each of the former boards would have dealt with this autonomously, as regards investing the money. We are seeking to get a better return by joint investment of the funds.

Three boards have installed a common information system and we will see how that turns out for 2005. This will have to be rolled out across the entire HSE to give us a more accurate and consolidated method of managing information. In the past boards had done this using a combination of manual records and more sophisticated systems. We have taken on board the relevant recommendations. Our objective is to ensure we all have one common approach to how the interest or administration charge is managed for the future.

Deputy Dennehy

Since the chairman took office he has often commented on the need for clarifying and dealing with issues. This is a further manifestation of reluctance or inability to deal with problems. In 1999 an expert group met to deal with this issue, which is relatively small in one sense, but nonetheless of some importance for individuals. Five or six years later the HSE is looking for final legal advice.

We witnessed the same as regards medical card payments to members of the IMO and a whole series of other items. Nobody seemed to be in a position to say, in effect, "Let us get this correct, finally, and put it to bed." I hope the new single grouping will get its act together in this regard. Again, I do not want to blame the individuals involved, except to say the department was in place since 1999 and this was an issue to be dealt with. Deputy McGuinness has raised this countless times with various Secretaries General as regards what was happening and what they were doing. I reported back from the Southern Health Board on what we had done under my chairmanship, some time back. There was much ambivalence as regards how the situation was handled. We are dealing with customers' money, small though it may be, but it means a good deal to them.I am somewhat disappointed that the HSE is now looking for legal advice on this issue.

Chairman

Just to finalise this point, before I go to Deputy Deasy, is this not becoming an increasing issue as it interrelates with the nursing homes saga? The property we are talking about is patients' jewellery, cash and pension books. If pensions are not being retained and if persons are getting rebates as a result of the deductions made in the saga with which we are all familiar, has the quantum of patient property not increased dramatically in recent months, or is it about to increase?

Mr. Collins

It has increased. Since the HSE began to make ex gratia payments, the amount has increased. It has increased by about €15 million since January this year.

Chairman

That is right.

Mr. Collins

It is an issue, which is why the HSE wants to ensure what it is doing is consistent. It is not as straightforward, perhaps, as a bailor-bailee relationship, which implies that the duty of care is not so onerous and that under that arrangement our obligation extends to the principal only. For patients in our care with diminished capacity, however, who are unable to say how the fund or cash should be managed on their behalf, it is a trustee relationship.

There could be circumstances where people in long-stay care are initially in a bailor-bailee relationship. When they come under the health board's care they are fully in control of their faculties and in that instance a bailor-bailee arrangement is put in place. Over time, were they to become senile or whatever in our care, the relationship changes by default to trust or trustee as they no longer have the capacity to manage themselves. We want to get final clarity on that for once and for all before we decide which approach to take. This influences whether we retain the interest or whether we have the administration charge. There is an urgency here as the fund has risen since January 2005.

Chairman

There is a disturbing echo here. The previous Minister for Health and Children made a distinction between legal advice and legal opinion recently. There is legal opinion available from different health boards. One set of opinions is that it is a bailor relationship. The other set of opinions is that it is a trustee relationship. One group of health boards acted as if it was bailor and the other group acted as if it was trustees. That conflict has not yet been decided. While the issue remains the same, the value of patient property, which the HSE is now holding, has increased dramatically. As the rebates come back, it continues to increase. The historic figures given here no longer reflect the magnitude of the issue. There was much grief caused because the advice of the Attorney General was not sought on the nursing home issue at a particular time. We therefore stress the urgency of the HSE sorting this out. Is this completely out of the hands of the Department? Will the HSE get the advice of the Attorney General separately?

Mr. Collins

It is separate to the Department. Irrespective of whether it is bailor or bailee, or trust or trustee, the issue surrounding the capital fund is protected. The issue is whether the interest is added. We know that the capital fund will go up, but regardless of the final opinion, that will not be reduced.

Chairman

We must presume that the health boards that got bailor advice retained eminent counsel and that the health boards that got trustee advice also retained eminent counsel. The HSE is again going to eminent counsel to get further advice. It seems to me that it should be positioned by getting advice from the Office of the Attorney General. Once that advice is sought, the executive will at least have his imprimatur on any subsequent court challenge taken by a patient. There is an echo of what happened in the past and I strongly advise Mr. Collins to follow that route.

Mr. Kelly

Point taken.

Deputy Deasy

I want to concentrate on health outputs from hospital services. The report by the Comptroller and Auditor General states that new and expanded services have been brought on stream in certain areas. I want to deal specifically with cancer and neurology services. My constituency has been badly neglected in both of these areas. I want to ask questions about Department policy on transportation costs, chemotherapy wards, public and private facilities and whether the Department will pay for the radiotherapy treatment for public patients in a private facility that will be ready in September.

The Government has broken its own guidelines for the safe provision of chemotherapy by failing to provide dedicated cancer wards in hospitals. The Department's own guidelines state that cancer chemotherapy should be administered in designated in-patient or day care out-patient facilities which are properly staffed and equipped for the purpose. Neither Waterford Regional Hospital or Cork University Hospital has a dedicated in-patient cancer ward. Plans by Waterford Regional Hospital for a 31 bed chemotherapy ward were submitted 18 months ago. What has the Department done about that submission?

Mr. Scanlan

I do not have facts and figures with me about services in particular geographical areas. Chapter 1 of the report provides a context on the way the expenditure in the health service had increased and what we had secured in return at a broad national level.

Deputy Deasy

Notwithstanding what Mr. Scanlan just said, there is a litany of neglect regarding cancer services in three or four areas. Regardless of the €726 million that was spent since the cancer strategy began in 1997, it is failing people. As the chemotherapy issue is probably the responsibility of the HSE, I would like Mr. Kelly to respond to that.

Mr. Kelly

We have submitted our capital spending plan for this year to the Tánaiste. I cannot comment on it any further until she gets back to us.

Mr. Scanlan

I can get the Deputy a note on specifics. I am sorry if he expected that I would have them today. In 1996, the cancer strategy had an overall goal to achieve a 15% decrease in mortality in a ten year period from 1994. It met that goal three years ahead of its target. It is my personal view that when one is trying to measure value for money in the health service, it is a matter of re-measuring inputs. Part of the problem with the health service is that we do not know enough about what we are actually getting. This is one output that we do know as it was evaluated and delivered.

The Deputy raised the issue of radiotherapy services. We have the Hollywood report on this. The issue of how best to provide radiotherapy services is currently under consideration in the Department. The HSE has submitted its capital plan to the Tánaiste, as Mr. Kelly pointed out. That is currently with the Department. The standard practice is that we need to secure approval from the Department of Finance for that.

Deputy Deasy

What is Mr. Scanlan's personal view of public patients being funded by the State to receive care in private facilities? This is a key policy issue. There are two planning applications in for a private facility that would provide radiotherapy in the south east. It is not the optimum situation, but we have to ask the question. Will the Department provide funding for public patients in a private facility, one of which will be ready in September? While Mr. Scanlan is only in the job for the last three weeks, what is his personal view on that?

Mr. Scanlan

There are two issues here. Let us take the issue of where a particular service might be delivered. The Hollywood report expressed a view regarding the national structure for radiotherapy services, and it must be considered. Regarding acute hospitals, I see no difficulty in the private sector having a role as a provider, and this is already reflected in our health system. However, there is a need to look at how these services will be strategically located and delivered, whether they are provided by the public or private sector, and how they will be integrated in some way.

Deputy Deasy

A number of oncologists, including Dr. Ian Fraser in St. Luke's, have made repeated attempts to get people to realise that patients often die when they leave the south east and make the journey to Dublin. The journey is killing them but they must travel for radiotherapy services. I understand that Mr. Scanlan has only been in the job a short time, but it is important for him to appreciate the depth of feeling in the south east with regard to the issue. I am referring to patients and families and also the health professionals dealing with the issue.

We recently discovered that there is no dedicated transport system in the south east. It has been described as ad hoc. It has also been claimed that the transport costs involved over a ten year period could be as high as €36 million. Would it not make sense, when dealing with that kind of funding, for a long-term investment to be made in a radiotherapy centre in the south east?

Perhaps Mr. Kelly will respond to my third point. The former south eastern health board was involved in issuing the report.

Mr. Kelly

The Health Service Executive is only up and running three or four months. We are examining a range of areas but funds are limited and demands are enormous. Large inequities exist which are not acceptable. We are trying to work our way through it but it will take some time. I would sympathise with many of the Deputy's points, but it will take time to deal with the issues and we need funds to do so. The only money available to us this year is to maintain the existing level of service plus the special development funds which the Tánaiste has negotiated with the Government.

Mr. Scanlan

The Deputy's point regarding the strength of feeling and views as well as the reality on the ground is well made. I know very little and yet enough about the area to be careful not to get into specifics at this time. I understand his point regarding costs and, without getting into specifics, it is valid to look beyond the immediate costs. If one looks at the total cost one might find a different way of providing services. On the basis of my very limited understanding of the area, there are issues other than costs such as differing views on how best patient care is delivered and structured. I am not saying that I understand or agree with one or other of the arguments.

Deputy Deasy

Caredoc was launched two weeks ago in Waterford. I was heavily involved in lobbying the Department and former south eastern health board to get this on-stream. I tabled some 20 parliamentary questions on the matter over the past few years, it was ping-ponged between the Department and the health board and everybody blamed each other. We eventually got the funding but were the last county to do so. All 57 GPs in Waterford signed up and most of them were at the launch. However, there was a palpable sense of neglect in that room and a feeling that Waterford was the poor man of the country in terms of health infrastructure and facilities. This is the feeling of health professionals working in the area. I must convey this as strongly as possible. One after another, the speakers on the night said that Waterford could not come last again with regard to the next project. I understand what Mr. Kelly and Mr. Scanlan are saying about a national picture and best practice. However the Department should understand the depth of feeling involved.

With regard to neurological services, some 55,000 people are suffering the effects of strokes and various related ailments. Treatment often involves four hour trips and greatly adds to the trauma of sufferers. Statistically, it is far more difficult to secure a visit to a consultant when one is from the south east as opposed to other regions. In some cases, people must wait six months to see a specialist.

I have not been very germane with regard to reports in terms of the health audit. I came here with a purpose which was to convey how the people I represent are affected. If they are demanding I do so. I realise that Mr. Scanlan is new to the job and I take this opportunity to convey my message. I congratulate him on his new post. God help him. I wish him the very best in this hefty task.

Chairman

Deputy Deasy asked for specific information which Mr. Kelly and Mr. Scanlan understandably do not have to hand. Could they send it to us in writing?

Deputy McGuinness

I wish Mr. Scanlan well in his position. He has been there only three weeks. I also wish the Health Service Executive well in its job.

Three weeks in a job, however, is not an excuse. Mr. Scanlan has plenty of people around him from the Department and health boards with enough knowledge and experience of specific issues to enable him to come before this committee and give a fairly comprehensive response to most questions. That is how I view the team before us today. They have an amount of experience on which to draw and information can be given in a forthright manner.

Like many public representatives, I sit in the Chamber and bite my tongue with regard to developments in the Health Service Executive in the hope that everything will begin to draw together in a way that does not happen in the context of reports in the media and experiences that we have in our own constituencies.

Regarding the report before us today and the general workings of the Department and the Health Service Executive, I thought that after examining the health boards with due diligence the Department and the Executive would know the exact number of staff employed and their location. I thought there might be an explanation as to why, in spite of what we are being told, health services are top heavy in terms of administration and carry huge related costs. In view of the back-up and administration, customers want to know why telephone calls are not returned from consultants' offices and hospitals with regard to obtaining an appointment. A woman told me she has been waiting on the post-mortem results of her young son since January. Not a single telephone call is returned.

I am trying to explain to Mr. Scanlan where the anger and frustration comes from. His Department can carry the cost of answering parliamentary questions. This is a value for money notion that we must consider. I put down a massive number of parliamentary questions pertaining to the Department of Health and Children, have done so since I was elected and make no apologies for it. This is because the Department's customers cannot get the relevant information from the local health board or hospital or service they are trying to access. I do not mean the service itself, but simply information about it. I find that appalling. The situation has deteriorated, in terms of communications and information, since the Health Service Executive was established. Mr. Scanlan must correct this if he wishes to avoid a negative perception of him as he starts out in this business. The sooner he does so, the sooner he will start to reduce his Department's cost base in terms of the expenses in manpower it takes to address those questions.

The other area I thought Mr. Scanlan would have examined was his Department's exposure to cost, possibly from old court cases that linger or perhaps from settlements reached by the former South Eastern Health Board that the Health Service Executive refuse to honour. I ask him to examine that area. The Health Service Executive stubbornly refuses to honour them, to the extent that it is now seeking further legal opinion, as is the client, even though a case has been settled. I thought Mr. Scanlan would have examined that issue which has been going on since the late 1990s.

Before I move on to cost exposures, perhaps we should return to the questions I have raised since 1997 regarding patients' accounts. I have gone through the report quickly and the former health boards do not have a uniform approach to this issue. The Health Service Executive is totally exposed and the legal opinion is already there. The Chairman is correct in that it sounds similar to last week's proceedings of the Oireachtas Joint Committee on Health and Children with the former Minister of Health and Children, his officials and Ministers of State.

The Health Service Executive is not short of legal opinions and knows this. It knows the position better than I do. It knows the legal opinion and knows that what it is doing is wrong. I do not see how any legal opinion can tell the executive that it can deduct funds willy-nilly from patients' accounts. Despite the report by the Comptroller and Auditor General, the Health Service Executive's management of those accounts is unsatisfactory to say the least. The Health Service Executive has a duty of care to the State to bring about an end to this legal limbo and tell the committee what is the definitive legal position. It should then implement a proper management system for those accounts throughout the country. From where does the executive get its legal basis for taking money from a patient's account to furnish a room that has already been furnished by the State? It does not have one. What gives the executive the legal right to take money from a patient's account, without signed documents, to improve a patient's lot, and furnish a room? It does not have that legal right. This is how the old health boards managed the accounts.

On foot of its legal advice, will the Health Service Executive consider repaying that money to the patients and implementing immediately a management system that will deal with the matter properly and entirely? This should be extended beyond the health boards. Currently, there are organisations funded by the health boards which care for people who are sometimes capable of making decisions for themselves and sometimes are not. These organisations care for people who are not always incapable of making decisions for themselves.

I have never got a proper answer about how those funds are managed. Like the payment for the care of the elderly and what is going on at present, I am told that some patients have been refunded money, as the Chairman noted. Up to two weeks ago, a sum of €19 million of taxpayers' money has been refunded. This has found its way into some of these accounts that we are now discussing, the patients' property accounts. How often do those patients, or family representatives of those patients actually get a statement of account? Who knows how much the patients have in the accounts or what type of accounts they are? How are such deposit or current accounts accessed by general staff and what proper management procedures is the Health Service Executive going to put in place?

I want to support the points made by Deputy Deasy. If he feels that the delivery of services in Waterford is neglected, I can say that in Kilkenny, we feel the same and there is probably a similar story in every other county. I cannot understand why, where the Health Service Executive has a model of best practice such as, for example, accident and emergency services in Kilkenny, as stated by the consultants involved and supported by the community, it does not just take the model it already has and try to implement it elsewhere with the co-operation of others. Why does it not look at hospitals like that?

For example, Deputy Deasy mentioned dialysis and cancer care. The Health Service Executive pays for patients' taxis, ambulance services and transport to and from Waterford, Dublin and wherever else. Surely it should examine that cost? It is a cost that must be factored into the delivery of any new service. Can a cost be eliminated? Are other alternatives more cost-efficient? Why, when a community buys a CT scanner for the Health Service Executive and puts it in place, can it not be operated on a 24 hour, seven days a week basis? Replies I have received to parliamentary questions tell me that the Health Service Executive is in negotiations regarding staffing arrangements for the scanner while patients who are quite ill are transported to the various hospitals in Dublin. This has gone on for two years. The health boards and now the Health Service Executive tell me that they are in negotiations. Try telling that to a patient who must travel.

The Health Service Executive has only been established for three months, but these are areas I thought it would have sought to immediately address. Actions taken on such issues would have had tangible and positive effects on the public and would have gained the executive some kind of credibility.

Chairman

I appreciate the interesting points Deputy McGuinness has made, but I want to get answers. The Deputy has suggested that the flow of communications and information is worse now than it was under the old health board system. Perhaps Mr. Kelly will pick up on that issue. The second issue concerns patients' accounts. Mr. Collins has already given significant information to the committee, but perhaps he can particularly focus on whether statements are given to patients or relatives of patients and what the flow of information is in this regard. Can he specifically deal with the issue of whether, as the Deputy suggests, projects such as the refurbishment or furnishing of a room in the patient's interest were paid for by deductions from one or more patient accounts? If this is the practice, it sounds peculiar, no matter what legal opinion one might be working from.

There is also the set of issues concerning cancer treatment in the south east and the purchase of the scanner and the question of to what degree progress can be made there. Perhaps Mr. Scanlan can begin, followed by Mr. Kelly. They should pick from that menu and provide the committee with specific information.

Mr. Scanlan

Many of the issues raised are operational. Mr. Kelly is probably happy enough to deal with them. In terms of the issues relating to patient accounts, I did not respond earlier because I did not want to step into somebody else's area. I agree with Mr. Kelly that in light of all that has gone on, not simply in terms of the amount of money that is involved but in bringing certainty to the issue, we must get advice from the Attorney General on this issue.

I am aware of the frustration with the health service. The easy answer would be to tell people to forget all of the problems facing the health service and look forward but this is not the answer. All I can say is that the very reason the Department of Health and Children supported the reform programme we are discussing was because it believed, and I believe, that it can address people's frustrations with the health service. The scale of the reform programme, which I only touched on at the outset, is such that it cannot be accomplished overnight. I fully accept that this is scant comfort to individuals on the ground but it is the reality that we must face.

Mr. Kelly will speak about communications. I agree that we need to get them right. The number of parliamentary questions I see across the Department and the number which I think cannot be answered because they relate to operational issues must be a source of frustration. We spoke yesterday about trying to get to grips with that and inform Members of the Oireachtas that if they want information from the Department to which they are entitled, possibly the better way to obtain it is to take this route.

Regarding the accident and emergency situation in Kilkenny, even in a short time and before I arrived at this committee, Kilkenny was complimented on the way it had "solved" the crisis in its accident and emergency department. However, I am not sure that because a measure works in Kilkenny, it will work somewhere else. The other thing I understood from the situation in Kilkenny, which could be transferred elsewhere, is the way people worked together. The delivery of health services does not always come down to money. There is the question of how the money is used, which is behind much of this report. It is about how we use the money co-operatively. Again, it is easy to say this but I believe, based on what I have heard about the case in Kilkenny, that the right people — GPs, consultants and hospital management — all worked together to use available resources. We need others to engage and I think Mr. Kelly would agree with me.

I do not know about the CT scanner mentioned. I think the Deputy was referring to every county, which goes back to what I said about a general frustration with the health services. I repeat that a considerable amount of money has been invested. Chapter 1 of the report began to ask the questions regarding what has been achieved by that investment. I came to the Department of Health and Children from the Department of Finance so I do not want to say that money does not make a difference because it does. Money is required for the health service and I would have said that while I was in the Department of Finance. However, it is important to spend money wisely.

Mr. Kelly

I understand much of the frustration expressed by members of the committee. This reform programme is the biggest change programme in the history of the State. A considerable amount of work has been taking place in the background for the last 18 months. Gradually, members of the committee will see the results of the programme.

On the question of communications, there is a gap at present. As the committee is aware, it is intended to set up four regional fora. We have appointed four people who will head the fora and the Tanáiste intends to bring forward legislation to deal with this in the near future.

A considerable amount of work has been going on for the last year on the issue of patient complaints and we are very close to launching a sophisticated process to give patients access in a way that has never happened before. In terms of savings, I believe that over time, particularly because 11 health boards are being merged into a national system, there is potential for significant savings. This will take time because the State has given an undertaking that there will be no involuntary redundancies.

For this year alone, I have appointed someone in charge to deliver savings of €200 million because we are short of €200 million in terms of the Estimates we have been given. We must find those savings by the end of 2005. I have made a commitment that the savings will be delivered but they will not be delivered by affecting existing levels of service. The savings must be made by attrition and other means. I can give the committee a small example. Due to the fact that the Health Service Executive is a national agency and the largest company in the country, it now has buying power with regard to relations with suppliers. We are already using that buying power to negotiate better value for money.

Chairman

Could Mr. Collins say a few words about patient accounts?

Mr. Collins

The way in which funds are managed on behalf of patients is set out in at the beginning of that section. On admission, a list of the patient's property is drawn up. If it is individual property such as jewellery, it is put into safekeeping for him or her. If it is cash, it is lodged to his or her unique patient private property account. If the patient receives regular pension payments, they are lodged to that account. Those accounts are balanced and reconciled. Some boards operate a controlled account system to reconcile individual accounts to the overall accounts. All boards have the patient private property accounts separately audited every year by independent auditors.

As part of the audit of the former health boards' main accounts ordered by the Comptroller and Auditor General, the audit report and the audit of the patient private property accounts is forwarded to the Comptroller and Auditor General every year to ensure that the accounts are properly managed. Controls, management and reconciliation regarding the accounts are carried out. Regarding the discrepancy between how we treated this matter, it is important to remember that while the boards were involved in similar services around the country, they were unique statutory agencies. While it was recommended that all boards use the same system, two boards retained their own administrative systems. We have the opportunity to move towards one system to ensure that practice is defined and carried out consistently throughout the sector. Up to January 2005, the Health Service Executive did not have that opportunity to ensure this with the result that if a board decided to manage it in its own way, it was allowed to do so. We are now ensuring that once we finalise the approach, it will be consistent across the country for all former boards and new HSE areas.

Mr. Kelly

I reassure Deputy McGuinness that from the outset, we set down three tenets that underpin the reform process. Reform must improve patient-client journeys over time, improve the environment for staff, free up staff for more frontline services and deliver value for money for the State. If reform is just about reorganisation, it will fail and lead to greater cynicism. From what I have seen, we have traced a number of patient journeys over the last nine months and have found them to be very fragmented. In addition, we have found that the experience of these patients' families is also very fragmented. Leaving aside investing money, simply changing the way we do things will bring about an improvement but it will take time.

I cannot give a specific answer about the CT scanner but I will come back to the Deputy with a specific answer. I have come across instances where people have very generously contributed to the capital cost of buying equipment. The problem then is to find the revenue for the staff to use the equipment. However, very often the money is not available at a particular point in time.

Deputy Boyle

I would to ask a question of both Mr. Scanlan and Mr. Kelly. Having heard an earlier response for Deputy Deasy, it concerned me when Mr. Scanlan said he had access to national statistics that were cause for feeling better about the delivery of particular health outputs. I got breast cancer statistics from the National Cancer Registry recently. These are several years old as they took some time to compile but the period in question spanned seven years and concluded in 2001. The statistics show that, for the nation as a whole, the health output was 13 per 100,000 fewer people dying from this particular condition. However, there were significant variations in the regional statistics. While the number was reduced by 13 nationally, it increased by 18 persons per 100,000 in the Cork region. This indicates problems with accessing services and the early identification and treatment of conditions. Many people fear the rationalisation of the health service will turn it into an amorphous mass wherein the aspect of acting on local intelligence will be lost. I want a reassurance about how the new structures will deal with the regional imbalances Deputy Deasy spoke about.

Mr. Kelly can answer my second series of questions about his immediate concern on the €200 million cut this year and the need to stay within the staff cap by 1,400 positions. Most of the problems in the health service resulted from the false economies achieved by cuts in the early 1980s. We have the same number of beds we had in the 1980s for a population that has increased in size. I want reassurances that, in the attempt to achieve the 1,400 staffing and €200 million expenditure cuts aimed at living within the balance the Department has been given for this year, these types of false economies will be avoided. Can Mr. Scanlan assure me that no front line staff involved in direct care services will be affected by the cuts?

I wish to address Mr. Scanlan's comments on the unapproved expenditure. We have received similar responses previously about how these were almost justified retrospectively as approvable projects. However, we are speaking about expenditure of approximately €100 million when these projects are added together, money that could be used in direct provision of other health care services. Is Mr. Scanlan confident that the circumstances that brought about the creation of these unapproved projects have been addressed and will not happen again? Are there statistics available to the Department of Health and Children or the Health Service Executive about the extent of unused capital within the health service? We have all heard stories about beds being in place but going unused and units that have been built but are inoperative.

Mr. Scanlan

The Deputy's first question or search for a reassurance is entirely valid. When I said I would not have been familiar with particular regions, I did not expect today to deal with service pressures in specific locations. I agree with the Deputy's point about examining not just the national level but regional disparities. In terms of rolling out the national service plan with the HSE, we all accept that we must improve the service planning and performance reporting arrangements, as it should address more than just regional disparities. However, some issues of health inequalities have nothing to do with geography but are connected to other matters.

Deputy Boyle asked Mr. Kelly about the staffing and expenditure cuts. On the capital issue, I maintain what I said at the outset that the Department is not and was not happy with what happened. Now that it has happened I am not in the business of having a spat about it. I understand that the projects were approvable and if they had gone through the process, they were likely to have been built and funded regardless, although I am not certain about this. This was my point. I may be wrong but there is a clear risk that this would knock a potential project from a list somewhere. This the real issue. I do not wish to be pejorative but if a project is unapproved and gets to a point of effectively having no option other than to be funded, I am concerned that another project that would otherwise have gone ahead would go unfunded.

Will this ever happen again? The Department changed its process for funding to prevent the way in which the unapproved projects were funded initially through the cash system. The establishment of a separate Vote for the HSE and the executive's similar system to ours should prevent such an occurrence in the future. Technology is not the answer to all our problems and has its own costs. We are about to go live on a new ICT system in terms of managing the capital programme later this year, which should be of help.

Deputy Boyle

Is Mr. Scanlan in a position to answer my last question about the extent of unused capital within the health service?

Mr. Scanlan

Mr. Kelly may have information on this. The Deputy is using the term "capital" as an asset, for example beds and so on, but I have not seen anything at the level he is speaking about.

Mr. Kelly

I toured the country in 2004 and saw a number of brand new facilities sitting idle because revenue and staff resources were unavailable to open them, which is what Deputy Boyle is speaking about. More and more facilities are being opened, for example the recent extension of the James Connolly accident and emergency unit in University College Hospital Cork. We are carrying out an inventory of all capital resources within the HSE and will assess the results. If I had spoken with the Deputy after what I saw nine months ago, I would have been depressed. However, what has been achieved since then has been a significant improvement through opening new facilities that were lying idle.

In terms of local involvement, our focus will be on local health offices on the primary community side, which is even more important than the acute side in the long term. We are appointing 32 local health offices based on counties and with several in Dublin. This will be done by the end of May and will hopefully create a situation in which the whole system will become more patient-centred. We will build the system around the patients' journeys, starting with the patients and their families and achieving a locally-driven change. This is at the heart of the change.

As with all Departments, we have been asked to reduce the staff numbers by 600 specifically this year. I have given a strict instruction that this will not affect front line services. We will achieve this by national attrition and other means but I can give the Deputy the assurance he is seeking that existing delivery services will not be affected.

Deputy Boyle

Will the €200 million fall inside the same category?

Mr. Kelly

The rules will be exactly the same regarding the €200 million. We are having tough discussions on how much each former health board is to contribute to the figure. We are making progress and I am optimistic, even though we only have nine months in which to achieve it.

Deputy Boyle

I have one further question on the table at the head of the report. There seems to be a huge discrepancy between administration staffing levels and direct delivery. The most glaring statistic is that nursing staffing levels show the lowest percentage increase over the time period the audit was done. As interim chief executive officer can Mr. Kelly indicate to what extent that is being tackled? How can this sector be protected and augmented during ongoing staffing adjustments?

Mr. Kelly

I can respond in two ways. With the change in the education system I worry that there will be a shortage of nurses at the end of this year. The HSE has a team examining this matter. We plan to recruit a number of extra nurses this year.

Mr. Magner

We recognise this year will be difficult for nursing staff. The old diploma programme is changing to a degree programme. There is a gap in the sector in terms of student qualifications. We have a project to recruit and retain nurses from Ireland and abroad. Since 1998 we have increased the number of training places from 968 to 1,640. We have increased the number of student nurses in training by more than 70%. That is a continuing investment. This year we will be spending over €85 million on undergraduate nursing training. We are looking at measures to recruit staff for the current year.

Deputy Boyle

There is a suspicion that we are now bringing nursing expertise UK instead of from the Philippines because of difficulties with the Department of Enterprise, Trade and Employment in providing work permits for other family members. Is this being measured and what impact is it having?

Mr. Magner

It is something we are examining with other Departments. We have enjoyed a significant number of nurses from abroad coming to work here. Their contribution to the service has been significant. Any obstacles that might hinder recruitment of significant numbers of nurses are being pursued with the Department of Health and Children and other Departments.

Mr. Kelly

We have set up a special group and allocated €2 million to solve this problem.

Mr. Scanlan

We need to know who we are employing and how many we are employing. Nursing is the visible frontline delivery service. There are moves to change the jobs different groups in the health service do. We have seen this abroad, where nurses start to undertake traditional medical duties and healthcare assistants start to undertake what were traditionally nursing duties. Healthcare assistants may be in the general support staff. The right people doing the right jobs leads to a better situation for everyone. The increase in general support staff is not necessarily a bad thing.

It is important to plan one's capital programme early and that everyone co-operates on staffing levels. We must continue to review staffing levels. It is a valid question for the taxpayer to ask about staffing levels and how they compare in other parts of the country or with other countries and is there a better way to utilise more of our asset base.

Mr. Magner

As well as looking at individual contributions of professions we must also consider training additional support staff for the professional staff, such as nursing, paramedical and medical staff. With the support of the Department of Finance a skills programme is underway. This will train healthcare assistant staff to undertake duties currently undertaken by nurses and will release nurses to provide direct care to patients in the system.

I wish to clarify a point on the cost of agencies and the number of equivalents. I indicated a figure of 500 but this excludes nursing. In addition, there was a figure of 1,000 equivalents for nursing.

Chairman

Is the figure approximately 98,000?

Mr. Magner

Yes, and approximately 1,500 on an agency basis.

Chairman

The total figure is approximately 100,000. How are CEOs and senior staff integrated to the new system? Are they automatically becoming regional chief executives?

Mr. Kelly

No, there are 11 CEOs, two of whom are on the national directorate. Mr. Pat McLoughlin runs the hospitals office and Mr. Aidan Browne runs community services. Some former CEOs are about to retire, or have retired. Mr. Pat Harvey retired a week ago. Some others are interested in remaining in the service. I am in discussion with each individually about the role they might play. Every role is open to fair competition. All of them had the opportunity to apply for jobs and some were successful.

Chairman

The Tánaiste indicated recently that the private sector would have a greater role in the delivery of services. Will that be a decision for the private sector or will the HSE have an input in directing the private sector to where it could best meet service needs? Have public private partnerships been considered?

Mr. Kelly

A policy paper has been commissioned by the Tánaiste. I gather it is in her possession. I have not seen it yet. She wants to have a debate with the HSE.

Mr. Scanlan

A paper has been commissioned by the Tánaiste and is currently in the Department of Health and Children. I had a discussion about it recently. I must put proposals to the Tánaiste in light of that. It goes beyond what we understand as public private partnerships. There could be private sector investment in particular areas. The Tánaiste will have to make an important decision on whether the HSE can direct the private sector. It is an obvious policy issue. Should we allow services to appear around the country without regard for a national view of the best way to deliver services? It is an ongoing policy question.

Chairman

I wish to comment on another issue. Mr. Scanlan would probably not have as clear a perception as we do of how the health services traditionally related to Members of the Oireachtas. While it was not a rule, practice and precedent meant that where Oireachtas Members were also members of local authorities, they usually ended up on the health board, while other councillors went on other committees. One had the opportunity of attending a health board meeting to raise an issue discovered while doing normal constituency business and if one did not get a satisfactory answer, one could raise the issue in the Houses of the Oireachtas.

Despite the flaws of the old health boards there was quick and open accountability and transparency, which is now gone. The executive's managers, despite their excellent qualities, are not giving the same flow of information to Oireachtas Members as used to be available. An issue could be brought to the attention of the people who could do something about it very quickly but that is no longer happening. That will create much frustration for the public as well as Oireachtas Members, as public representatives often act as lightning conductors and are the first flashpoint for a local concern.

Legislation introduced to abolish the dual mandate means that Oireachtas Members are no longer members of local authorities, but the wiser management of local authorities invites in all Oireachtas Members and fully briefs them during informal, private and helpful meetings on a quarterly basis. I suggest that until the fora are put in place Mr. Scanlan should do something like that.

Mr. Scanlan also mentioned another frustrating issue, which is that it is no longer possible to get information by parliamentary question on matters deemed to be operational rather than policy. Before Mr. Michael Buckley went to the Department of Social and Family Affairs it had been in a frightful mess and one could not get any information from it. A unit was set up specifically to deal with queries from Members of the Oireachtas. From a public representative's point of view, the manner in which that Department now conducts its business is the exemplar for the public service. If Mr. Scanlan could do something similar and dedicate and equip a small unit from the 100,000 strong workforce to deal specifically with queries from elected members, it would stave off the frustration I expect will occur in the process of moving the system from a local to a national one.

When is Professor Drummond coming on board?

Mr. Kelly

It has not been finally agreed yet. I hope it will be agreed in the near future.

Chairman

Is Mr. Kelly staying on as chairman?

Mr. Kelly

I am not and I have indicated that to the Tánaiste and Minister for Health and Children, Deputy Harney.

Chairman

We thank Mr. Kelly for taking on this task at reasonably short notice. It was a major achievement to get the executive up and running as smoothly as he did. To paraphrase what another famous politician said on one occasion, "You did the State some service.".

Mr. Kelly

I thank the Chairman.

Chairman

Are there any other questions?

Deputy McGuinness

I agree with the Chairman's comments on the flow of information to public representatives, but as this issue will continue after the fora are put in place the dedicated unit must be continued on a permanent basis and the sooner it is done, the better. The Department of Social and Family Affairs found that when it implemented that new system, it saved itself a huge amount of money. I never saw sense in each health board having a parliamentary question section that took up a huge amount of time, but I agree with what the Chairman stated, and differ only in that it must be a permanent arrangement. That would also help to deal with the public's frustration. In line with that, when these management systems are being implemented, I ask that the advice of the Minister for Environment, Heritage and Local Government, Deputy Roche is taken. An automatic telephone answering system should not be used, as this service can be manned in a cost-efficient manner.

I understand that Mr. Kelly will return to the committee with information on the legal advice on the purchase of furniture, the specific court case I mentioned and the issue of the CT scanner. I might have misunderstood the matter on St. Luke's, as despite it being held up to us as an example it still requires a huge amount of investment.

Mr. Scanlan

Point taken.

Deputy McGuinness

What is the cost of employing agency nurses as distinct from conventional employment of nurses? A significant amount of property throughout the country was in the ownership of the health boards, including houses and land not in use, and land attached to hospitals that will not be needed, even taking into consideration developments over the next 20 years. Is the Department or the HSE currently examining the value and potential use of that land bank or the possibility of its sale?

Mr. Kelly

The HSE is currently doing a complete inventory and we will then examine the results of that.

Chairman

The Department will appear before the committee on 26 May to discuss the Vote and the relevant chapter in the Comptroller and Auditor General's report. If we miss an issue today we will pick it up then.

Deputy McGuinness

That is fine. Can we get a cost for agency nurses?

Mr. Collins

The cost of an agency nurse is typically 1.8 to 1.9 times that of a staff nurse. This is because the hourly rate may be greater, there is an agency fee, and we must also pay VAT which we do not pay on staff salaries.

Deputy McGuinness

It is 1.9 times the cost of a staff nurse.

Mr. Collins

Yes.

Deputy McGuinness

Mr. Magner stated that the number of training places are now far greater than they were. Has the length of time for qualification increased? Is that an issue?

Mr. Magner

The length of time has increased from three to four years. That will be an issue in the current year, but from next year we will have a continuous flow of the increased number of trainees coming into the system.

Deputy McGuinness

Are those places taken up?

Mr. Magner

Last year, over 80% of the number of number of students that qualified in nursing were offered and took up employment in the sector. That is on par with numbers taking up employment immediately after qualification from most other degree courses. Quite a number continued to study postgraduate courses, some took up employment outside of nursing and some went abroad to travel and gain experience.

Deputy McGuinness

A certain number of places are offered. Are people coming forward to——

Mr. Magner

We do not know the particular demand for applications for nurse training places at present.

Mr. Kelly

The one year gap is an issue in the education system.

Chairman

Before I ask Mr. Purcell to speak, are there further questions, comments or after-thoughts?

Mr. Purcell

I have a few after-thoughts. The findings of the report are generally accepted, as is the need to take on board the lessons of those findings. It was an effort to bring all of these issues between one set of covers and have them addressed. My main priority in the short term is to have the legacy accounts of the health boards and health agencies for 2004 done as quickly as possible. It is always difficult to get full co-operation when an organisation is in transition mode.

Clearly, those involved are looking forward to the exciting challenge — to put it mildly — facing the Health Service Executive. We have been liaising closely with the executive and, as Mr. Kelly stated earlier, I have had a long meeting with the audit committee. Permanent liaison arrangements are in place to ensure that we can clear the 2004 accounts for all the health boards and health agencies and also deal with the challenge of carrying out the audit of the HSE by the end of April next year. That demands co-operation. I am glad to say that the required co-operation has been forthcoming and if that situation continues there is no reason why we cannot deliver within the agreed timetable.

Chairman

I thank Mr. Purcell for appearing before the committee. Is it agreed that special report No. 7, health sector audits, may be disposed of? Agreed.

The witnesses withdrew.

Chairman

The agenda for the meeting on Thursday, 5 May 2005 is as follows: 2003 Annual Report of the Comptroller and Auditor General and Appropriation Accounts: Vote 38 — Department of Foreign Affairs and Vote 39 — International Co-operation.

The committee adjourned at 2.35 p.m. until 11 a.m. on Thursday, 5 May 2005.