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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 25 Jan 2007

Chapter14.3 — Extra Remuneration.

Mr. M. Scanlan (Secretary General, Department of Health and Children) and Professor B. Drumm (Chief Executive Officer, Health Service Executive) called and examined.

Witnesses should be aware that they do not enjoy absolute privilege. Their attention and that of members is drawn to the fact that, as and 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; the right to produce and send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written or oral submission; the right to request the committee to direct the attendance of witnesses and the production of documents; and the right to cross-examine witnesses. For the most part, these rights may be exercised only with the consent of the committee. Persons invited before the committee are made aware of these rights and any person identified in the course of proceedings who is not present may have to be made aware of them 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 by name or in such a way as to make him or her identifiable. They are also reminded of the provisions of Standing Order 156 that the committee shall 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 policy or policies.

Will Mr. Scanlan, Professor Drumm and Mr. Mooney please introduce their officials?

Mr. Michael Scanlan

I am accompanied by Mr. Paul Barron, assistant secretary; Mr. Dermot Magan and Mr. Colm Kennan, principal officers in the Department.

Professor Brendan Drumm

I am accompanied by Mr. Pat Healy, assistant national director, PCCC, for the southern area; Mr. John O'Brien, director of the National Hospitals Office; and Mr. Liam Woods, HSE director of finance.

Mr. Joe Mooney

I am principal officer in the sectoral policy division of the Department of Finance and accompanied by Mr. Dave Ring, principal officer.

I call Mr. Purcell to introduce Votes 39 and 40.

Paragraphs 13.1 and 14.1 to 14.3, inclusive, of the report of the Comptroller and Auditor General read as follows:

13.1 The Post-Mortem Inquiry

Background to the Inquiry

In 1999 parents of children who had died at Our Lady's Hospital for Sick Children, Crumlin began to query the hospital's practice in the area of removal and retention of organs. By late March 2000, approximately 1,700 enquiries had been received from parents by the major hospitals. Concerns were expressed that the removal and retention of organs was not covered by informed consent. A particular concern related to the extraction of pituitary glands from deceased children. Our Lady's Hospital for Sick Children, Crumlin, confirmed that correspondence on its files indicated that its laboratory had participated in extracting pituitary glands from deceased children which were then supplied to a pharmaceutical company to manufacture a human growth hormone for the treatment of children.

In December 1999, parents of children whose organs had been retained by Our Lady's Hospital and by Cork University Hospital formed a support group called Parents for Justice (PFJ).

In April 2000 the Government decided to establish a non-statutory inquiry which would review post-mortem policy, practice and procedure in the State since 1970 particularly relating to organ removal, retention and disposal by reference to prevailing standards both within the State and in other jurisdictions. An inquiry was established with the intention that work would be completed in two phases

The first phase of the Inquiry would culminate in a report which was to be available within six months.

On receipt of this report, the Minister for Health and Children (the Minister) would table a motion that the second phase of the Inquiry would be undertaken by the Oireachtas Joint Committee on Health and Children. The Committee has powers to discover documents and compel witnesses under the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997.

A chairman was appointed by the Minister on 11 April 2000 subject to approval of the terms and conditions of employment by the Minister for Finance.

The Form of the Inquiry

Detailed discussions took place with PFJ and its legal advisors in a bid to agree an appropriate format for the inquiry. PFJ lobbied for the establishment of a statutory inquiry with full powers of compellability, privileges and immunities of witnesses. However, the Minister favoured a non-statutory format for the following reasons

The needs and concerns of PFJ could be met by this route

It could be speedily established

It could be flexible in its approach and less rigid in its implementation

It would be relatively informal and less adversarial

It would not be as debilitating on the provision of vital hospital services

It could deal with these painful issues over a shorter period of time.

Additionally, the Minister expressed concerns that many parents might not be open to the prospect of going before an open and public tribunal to talk about the traumatic event of the loss of a child. While some parents would want to participate in such a forum there might be many others who might not wish to do so. At that stage, PFJ went along with this proposal on the basis that the Minister gave a written commitment that there would be a second phase – the Oireachtas Joint Committee on Health and Children which would constitute the statutory phase. The Committee could decide whether to conduct hearings in relation to the report and, if it considered it appropriate to do so, to avail of powers to call witnesses as appropriate. Ultimately, however, it was not possible to conduct the second phase through an Oireachtas committee in the manner originally envisaged.

Objectives of the Inquiry

Although pressure groups, such as PFJ, lobbied to make the Inquiry as extensive as possible the Government proposed to confine the remit of the Inquiry in order to ensure timely completion. At the time the Government decided to establish the Inquiry in April 2000 its objectives were set out as follows

To independently establish the full facts in regard to past practice relating to post-mortem examinations and to address the issues (removal, retention, disposal, storage and consent) raised by parents and by the PFJ group.

To restore full public confidence in hospitals and in the necessity for post-mortem examinations including organ and tissue retention for such purposes as further diagnosis, teaching and research.

To provide public assurance that any previous practice which might be judged unacceptable will not recur. An inquiry would provide for publicly acceptable protocols to apply to all hospitals where post-mortem examinations are carried out.

To establish the full facts relating to some hospitals' confirmed participation in the extraction of pituitary glands from deceased children and the supply of these glands to a pharmaceutical company to produce a growth hormone for the treatment of children.

Inquiry Resources and Timing

In a letter to the Minister in February 2001 the chairman set out the terms under which the Inquiry team and the chairman were embarking on the Inquiry. The chairman indicated that

She no longer thought it possible to complete the task within the six months originally agreed and asserted that it would take far longer because the Inquiry had become much more extensive, complex, and comprehensive than originally envisaged.

She required the services of at least one Senior Counsel on a full time basis rather than on an ad hoc basis alone.

She and two members of the legal team would be operating with flexibility. This would allow them to attend to legal work other than that of the Inquiry which she felt was necessary, in order to maintain connection with the Law Library and with their respective practices.

She wished to be able to review these terms every six months.

Terms of Reference

The Terms of Reference were set out in a Public Notice issued on 23 March 2001 by the chairman together with her Interpretation of the Terms of Reference. The published Terms of Reference are set out in Figure 6.

Figure 6 Terms of Reference of the Inquiry

To review all post-mortem examination policy, practice and procedure in the State since 1970, and in particular as it relates to organ removal, retention, storage and disposal by reference to prevailing standards both in and outside of the State. To examine the application of these policies, practices and procedures in hospitals, generally and in particular their application in the 11 named hospitals.

The Inquiry will address the hospitals' policies, practices and procedures in this area of organ removal, retention, storage and disposal, the necessity for such practices and the manner in which they were carried out. The Inquiry will take account of best practice regarding post-mortem examinations in and outside of the State together with the reasonable expectations of parents of deceased children and next of kin in such circumstances. In particular, the Inquiry will:

Examine the hospitals' policies and practices relating to obtaining consent from parents and next of kin for post-mortem examinations, organ removal, retention, storage and disposal.

Examine the hospitals' procedures and practices relating to retained organs, including the reasons for such retention, the hospitals' management of such retention and storage of organs (including record keeping) and of any other arrangements relating to such organs and the practices adopted for ultimately dealing with retained organs including any arrangements with pharmaceutical companies in relation to those retained organs.

Review the nature and appropriateness of the hospitals' overall response to parents of children and next of kin of persons on whom a post-mortem examination was performed.

Examine any specific cases in any hospital as it deems appropriate in relation to post-mortem examinations and post-mortem examination related matters.

However, it will be at the discretion of the Inquiry to examine any other relevant matters which arise in the course of the Inquiry in relation to post-mortem examination policy, practice and procedure in the State since 1970.

The inquiry will make its final report, including its findings, to the Minister for Health and Children within six months unless otherwise determined by the Minister. It will make recommendations to the Minister on foot of its findings.

The report will include confirmation that the Inquiry received all the information and co-operation from health agencies, persons employed therein and any other persons, which it considered necessary to form its opinions and to arrive at its conclusions. In the event of deficiencies arising in these areas, which the Inquiry considers materially limits the scope of its investigations the report will identify same.

The chairman's Interpretation of the Terms of Reference stated that she considered that the work of the Inquiry would extend to all post-mortem examinations wherever carried out. This set the scope of the Inquiry which would extend to an examination of the specifics of individual post-mortem examinations. The scope in the Interpretation also extended to all hospitals within the State in which post-mortem examinations were carried out and/or hospitals which requested, directed or authorised post-mortem examinations to be carried out at another location. The Interpretation stated that the Minister for Health and Children had determined that the time limit of six months for the final report no longer applied and that the inquiry would report to him within a period of 18 months unless otherwise determined by him. On 22 October 2002 the Minister, in Dáil Éireann, expressed some reservations about the scope of the terms of reference. He noted that to move to a statutory phase at that stage would not be achieved within the existing terms of reference, as these were too wide. He also noted that the problem which had by then arisen with the timeframe was related to the terms of reference.

Provisions in Regard to Procedures

By reason of the fact that the Inquiry was established on a non-statutory basis it had no powers of compellability, either in relation to the production of documents or information, or in respect of the attendance of witnesses before it. Consequently, it depended upon the voluntary co-operation of the many potential participants in its work. For this reason it was deemed necessary to obtain a consensus between all potential participants as to the procedures to be adopted. To this end a document entitled ‘Memorandum on Procedures' was drawn up, in consultation with relevant parties, and issued on 3 August 2002 to all participants for signature and return. The memorandum outlined how the Inquiry proposed to conduct its work. Specifically it set out three stages to be completed.

The first stage involved conducting research as well as obtaining information from all relevant individuals. This included taking submissions both oral and written, obtaining a sample of post-mortem examination records and records of consent.

The second stage aimed to consider all the evidence and identify matters which might be in dispute.

In the third stage it was planned to resolve these disputed matters of fact.

The Memorandum guaranteed the constitutional right to fair procedures to all those affected by its work. Moreover, the Inquiry stated that it would inform all affected persons of proposed criticisms contained in its report and would afford them a right of reply.

It is unclear how many hospitals agreed to be bound by these procedures but by 2 October 2002 only 62 of the 201 hospitals identified in the report had signed the Memorandum. Furthermore, only 65 of 402 parents and next of kin who had made written submissions to the Inquiry had signed as at that date. However, having regard to the level of co-operation obtained to that date the chairman did not regard the failure of participants to sign the memorandum as impeding the ability of the Inquiry to continue its work. A number of participants who had not signed the Memorandum provided full cooperation to the Inquiry.

Conduct of the Inquiry

The first phase of the Inquiry began on 5 March 2001. No provisions had been put in place for interim reporting as the report was expected to be delivered by September 2002. However, in August 2002 the chairman informed the Minister that the Inquiry was a long way from reaching the stage at which a report would be available having regard to the extensive scope of the terms of reference and the nature of the Inquiry. The Minister requested a progress report from the chairman. In response, the chairman submitted a Progress Report on 2 October 2002 which outlined the work already completed by the Inquiry team and set out the work that had yet to be completed. The Report also noted the response rate obtained from hospitals, individual parents and next of kin, and other relevant parties. However, the chairman was unable to give an estimate of the timescale required for the completion of the work of the Inquiry and the making of its report.

In October 2002 the PFJ expressed their dissatisfaction with the process in a meeting with the Minister and decided to withdraw. At the time, there were also concerns about the implications of the Abbeylara judgment. The Minister assured the PFJ, following legal advice, that the Abbeylara judgment should not affect phase one and that it could continue. In respect of phase two, his advice was that much would depend on the content of the report that would be presented to the Oireachtas Committee. Upon their withdrawal from participation in the Inquiry the PFJ also withdrew any submissions made to it by their members. The Chairman informed the Minister, in November 2002, that she had sufficient involvement of parents and the Inquiry was continuing with its work.

In December 2002, the chairman indicated to the Minister that an interim report on paediatric hospitals would be provided by December 2003 which would be followed by reports on maternity hospitals and on general hospitals. Subsequently, in October 2003, the chairman, in a further progress report, informed the Minister that she would not be in a position to provide the interim report on paediatric hospitals by the end of the year.

During a review of all ongoing Tribunals and Inquiries the Attorney General wrote to the chairman on 16 July 2004 requesting an estimated date of completion. The chairman's response to this request did not give a definite timeframe for completion. Subsequently, it was agreed by Government on 1 September 2004 that the chairman should be requested to furnish the Minister with a final report not later than 31 March 2005 and that the Inquiry should then cease.

Output of Phase One of the Inquiry

On 31 March 2005, 54 bankers boxes of material were furnished to the Department of Health and Children. This material comprised a report running to 3,500 pages accompanied by 51 boxes of appendices including submissions from parents, next of kin, hospitals, health boards and professional bodies. The report dealt with the three Dublin paediatric hospitals and did not report on the other 198 hospitals identified in the progress report. However, evidence collected on these other hospitals was contained in the appendices. It was acknowledged in the report that it was not complete due to time constraints.

Counsel from the Attorney General's Office were retained to read and analyse the report at a total cost of €21,800. Arising out of this review certain legal issues were identified. In a letter written to the Tánaiste and Minister for Health and Children in April 2005 the Attorney General stated that the report could not be published for legal reasons due to issues relating to natural justice.

Cost of Phase One

At the outset the costs had been estimated to be of the order of €1.9m. However, by 31 March 2005 when the report was submitted the total cost of the Inquiry had risen to over €13m. Table 44 outlines the costs of the Inquiry.

Table 44 Costs incurred by Inquiry

Cost Category

€m

Office Fit out costs

1.19

Rent of Premises

1.10

Legal costs (Inquiry Team)

7.70

Administrative Costs

3.80

Total

13.79

A total of €7.7m was incurred on legal costs. These fees were incurred as set out in Table 45.

Table 45 Legal Costs

Recipients

Number

Cost €m

Chairman

1

2.5

Full-time Barristers

2

3.1

Part-time Barristers

3

1.1

Solicitor

1

1.0

Total

7

7.7

UK Inquiries

No inquiries of this scale have previously been undertaken on organ retention issues in Ireland or the UK. The two inquiries which were undertaken in the UK dealt with single hospitals and are therefore not directly comparable in terms of timescale and cost.

An inquiry into the management of the care of children receiving complex surgical services at the Bristol Royal Infirmary was established in June 1998 and disclosed that following post-mortem examinations, the organs of children who had died were removed and retained by the hospital. The Inquiry was conducted by a Chairman who was a Professor of Health Law, Ethics and Policy, and assisted by a Professor of Medicine, a Director of Nursing, and a Director of a Centre for Family Law. An interim report of the Inquiry investigating the removal and retention of organs was published in May 2000.

An inquiry into Alder Hey Children's Hospital in Liverpool, which was established in December 1999, found that the organs of a large number of children were retained without the consent of parents or next of kin. The Alder Hey Inquiry was conducted by a Chairman who was a Queen's Counsel, and assisted by a Consultant Paediatric Pathologist, and a Chief Officer of a Community Health Council. This Inquiry extended only to one hospital and reported in nine months.

In contrast to the UK inquiries, the Irish Inquiry relied heavily on legal expertise. Two full-time barristers, three part-time barristers and a solicitor made up the bulk of the Inquiry's resources. No other area of expertise was represented on the team. However, the advice of several experts was sought throughout the life of the Inquiry. The advice of a statistician was sought but does not appear to have been used.

Appointment of Legal Expert to prepare Report

In May 2005, following the advice of the Attorney General, the Government approved the appointment of a legal expert to prepare a report on key issues relating to post-mortem practice and procedures by 21 December 2005. The final report was completed and presented to the Minister by the reporting deadline and at the total cost of €436,000.

The specific terms of reference for this work were

To inquire into policies and practices relating to the removal, retention and disposal of organs from children who had undergone post-mortem examination in the State since 1970.

To inquire into allegations that pituitary glands were removed from children undergoing post-mortem examination for sale to pharmaceutical companies within and outside the State.

To examine professional practice in relation to the information given to children's parents in respect of the removal, retention and disposal of tissue and organs and the appropriateness of practices of obtaining consent.

To review the manner in which hospitals responded to concerns raised by bereaved families relating to post-mortem practices carried out on children.

To make recommendations for any legislative and/or policy change as deemed appropriate in relation to post-mortems on children.

For the purpose of her report ‘child' or ‘children' refers to those born alive and less than twelve years of age at the date of death.

In conducting this work, the objective pursued by the expert was to make findings on facts about post-mortem procedure in the hospital system. The expert's report found that post-mortem examinations were carried out in Ireland according to best professional and international standards and that no intentional disrespect was shown to the child's body. In relation to the extraction of pituitary glands the expert concluded that there was no known commercial motive on the part of any hospital or its staff. The root causes of the controversy had been a lack of communication with parents as to why organs were retained, the difference in perspective as to their symbolic significance and the legislative vacuum on the role of consent in post-mortem examinations. The report recommended the enactment of clear and unambiguous legislation to ensure that such practices cannot happen again.

Audit Concerns

For the year ending 2005, expenditure on tribunals and inquiries under the aegis of the Department of Health and Children (Subhead E) amounted to approximately €44.4m. Some €1m of this charge related to Post-Mortem Inquiries bringing the total legal and administrative costs of the Post-Mortem Inquiries to €12m. These costs do not include office fit out costs and rental costs which are charged to other subheads of the vote or the costs incurred by hospitals and health boards (now the HSE) in responding to the inquiry.

It is recognised that there is a delicate balance to be achieved when inquiries are undertaken. On one hand, the facts must be established through an objective and independent process while, on the other, there needs to be a cost effective inquiry which gathers sufficient relevant and reliable evidence to enable the State to address the issues and concerns which arise. This would suggest the importance, at the outset, of focusing attention on certain key features of inquiries

agreeing the general scope of the Inquiry and specific, focused and unambiguous terms of reference

establishing a methodology based on achieving cost effective evidence-gathering focused on defined Inquiry issues

providing for review milestones and reporting deadlines.

Queries to the Department

Arising out of these concerns I asked the Accounting Officer what steps were taken at the outset of the Inquiry and during its course by the Department to reduce the exposure of the State to cost escalation and to ensure timely reporting. I also enquired as to what lessons have been learned in regard to the conduct of this Inquiry in the areas of scope setting, methodology and the establishment of review milestones and reporting deadlines, and the extent to which such lessons have been or are capable of being applied to other Inquiries. I also asked the Accounting Officer for his best estimate of the costs incurred by the Health Service Executive (formerly the Health Boards) and of hospitals in connection with the Inquiry.

Accounting Officer’s Response

With regard to the role of the Department in reducing the risk to the State of cost escalation and ensuring timely reporting the Accounting Officer informed me that it is necessary to address this question in the context of the position that obtained in 1999/2000 when issues in relation to post mortem practice and organ retention came to public attention. This was a highly emotional issue for parents and the motives of the hospitals and clinicians involved were being questioned, particularly in relation to the extraction of pituitary glands. There were demands that where appropriate those involved be "named and shamed" and many believed that the Department itself was at least partially culpable for what had occurred.

The Government Decision in April 2000 was that a non-statutory inquiry should be conducted by a senior counsel, who would act independently of the Department. The terms and conditions of the Inquiry chairman were approved following consultations with the Attorney General and the Department of Finance in accordance with the arrangements that applied generally to Inquiries at that time. The Government also approved the terms of reference of the Inquiry subject to any modifications which the Minister considered necessary following consultation with key parties. In February 2001 at a meeting with the chairman the Minister confirmed that the interpretation of the terms of reference was strictly a matter for the chairman. At that stage it was agreed to extend the timeframe for her work from six months to 18 months i.e. until September 2002.

At a meeting with PFJ shortly after the Government decision to establish the Inquiry, the Minister assured the group that the workings of the Inquiry were independent of him and of the Department, and that there was no question of dictating to the chairman what she should or should not do. In this context it was essential that the Inquiry was completely independent in carrying out its investigation, particularly as the Department itself was under investigation.

At the outset of the Inquiry, the Department had no reason to believe that the task could not be completed within the six-month time-scale that was originally envisaged. For example, the then most recent Tribunal of Inquiry into the Blood Transfusion Service Board which the Department had dealt with and which was equally emotionally-charged had been completed within 5 months. In the light of this, the six month time-scale seemed reasonable.

Considerable delays were experienced in obtaining suitable accommodation for the Inquiry, which ultimately did not become available until January 2001 despite the best efforts of the Department and the OPW. In addition, there were difficulties in sourcing clerical and administrative staff to assist the Inquiry. The combination of these factors meant that the Inquiry only became operational in March 2001.

The first formal indication that the Inquiry was running behind schedule was in August 2002 when the chairman advised the Minister that the Inquiry was a long way from reaching a stage at which a report would be available and she sought an extension of the time-scale for the Inquiry. At the request of the Minister the chairman submitted a Progress Report in October 2002 which indicated that the chairman was not in a position to estimate the timescale for completion of the work of the Inquiry and that she considered that it would be some considerable time before the report could be completed. The Minister and the Department were concerned at the absence of a definitive time scale. Considerable thought was given to possible options to expedite the Inquiry, including the possibility of effecting changes in the terms of reference. Having taken advice, the Minister came to the conclusion that it would not be practicable, at that stage, to revise the terms of reference or to replace the Inquiry with some new structure. One of the primary concerns was that any such change could invalidate the work done to date such as interviews with witnesses and could mean having to start the investigation afresh. A further concern was that any move to alter the terms of reference might fuel demands from PFJ for a statutory Tribunal of Inquiry.

Having decided against a change in the terms of reference, the Minister, at a meeting with the chairman and her legal team in December 2002, stressed the need to expedite the investigation. It was agreed that a report on paediatric hospitals would be provided by the end of 2003, to be followed by reports on maternity hospitals and general hospitals at six month intervals. The chairman indicated that her legal team would need to be augmented in order to achieve these revised deadlines. The Department sought sanction from the Department of Finance for an increase in the legal staffing but this was not forthcoming. In the light of this, the chairman advised the Minister in June 2003 that the deadline of end 2003 for the completion of the report on paediatric hospitals might not be achievable. However, she undertook to keep the matter under review with a view to making a more definitive statement within the following two months or so. In the event, on 16 October 2003 the chairman wrote to inform the Minister that she would be unable to furnish the report by the end of that year. Her letter, which was accompanied by a 12 page progress report, did not specify when it was anticipated that the report would become available. The Minister met with the chairman and her legal team on 17 November 2003 and expressed his concern that the deadline for the paediatric hospital report would not be met.

In April 2004 the Inquiry advised that, with some exceptions, it was at the end of the second stage of its work in relation to the paediatric hospitals i.e. the information gathering was complete and the issue of analysing the information and establishing which matters remained in dispute had been concluded. The Inquiry was next to consider the third and final stage of its work, which was the resolution of matters in dispute and the conclusion of the Report. The Inquiry added that it was keeping in mind the need to be in a position to commence the work in relation to the maternity hospitals as soon as the paediatric report was completed. In July 2004, the Attorney General, on behalf of the Government, conducted a review of all Tribunals and Inquiries then in being to establish their likely completion dates. On 1 September 2004 the Government decided, inter alia, that the chairman should be informed that the Inquiry should furnish to the Minister for Health and Children not later than 31 March, 2005 a Final Report based on all information and evidence obtained by and available to the Inquiry at that time and that the Inquiry would then cease to exist.

With regard to the lessons learnt the Accounting Officer stated that, although the terms of reference were approved by the Government, it would have been preferable if the capacity to interpret these, and to provide input to the methodology to be employed, had been reserved. However, for the reasons set out above, this was not possible in this instance.

It would have been preferable if the contractual arrangements with the chairman and her legal team had been so structured as to provide certainty for early completion of the work. However, the terms and conditions were set in accordance with the arrangements that applied generally to Inquiries at that time and it is not clear that it would have been possible to secure the services of the relevant people on any other basis.

It would have been preferable if provision had been made for interim progress reports. Had this been the case, the Department would have been alerted at an earlier stage that there were problems with the timeframe for the Inquiry. However, when it became evident in October 2002 that it would be some considerable time before the report would be presented, the Minister decided that it would not be practicable, at that stage, to revise the terms of reference or to replace the Inquiry with some new structure. Accordingly, regular interim reports would not necessarily have changed the outcome. With regard to the costs incurred by the HSE (formerly the Health Boards) the Accounting Officer informed me that the Department provided specific funding for Inquiry-related expenditure to the Eastern Regional Health Authority (and subsequently the Health Service Executive), which, for the period 2000-2005, amounted to €6,350,000. The Department does not have information in relation to expenditure incurred by health boards/ hospitals outside the former ERHA region.

14.1 Discretionary Medical Cards

Introduction

Section 45 of the Health Act 1970 (the Act) provides that adults and their dependants have full eligibility for health services if they are "unable without undue hardship to arrange general practitioner, medical and surgical services for themselves and their dependants". The Act gives the Minister for Health and Children the power to make regulations specifying a class or classes of people who may be deemed to meet this criterion. No such regulations have been made.

There are a number of groups who are entitled to full eligibility for health services regardless of means. These include people over the age of 70, certain EU migrant workers, persons affected by the drug thalidomide and persons with retention entitlement under government schemes designed to encourage people into employment. Apart from these groups, medical cards are issued by the Health Service Executive (formerly by the health boards) to persons who, in the opinion of the HSE are unable to provide general practitioner medical and surgical services for themselves and their dependants without undue hardship. In practice, cards are issued largely on the basis of an assessment of the applicant's income. Income guidelines for the award of medical cards are drawn up each year by the HSE. People whose income is below the guideline figure for their circumstances get a medical card. In general, those whose income is above the guideline figure do not qualify unless they have particularly high medical expenses or there is other evidence of hardship. The term " discretionary medical card" has come to be applied to cards awarded to persons whose income exceeds the guideline figure.

Payments to Doctors for Discretionary Medical Cards

In 2001 the Department of Health and Children agreed with the Irish Medical Organisation (IMO) that, pending an examination of the discretionary medical card area, a sum of €2.54m would be paid to doctors under the General Medical Services Scheme (GMS) in respect of services to certain discretionary medical card holders. The figure of €2.54m was arrived at in the light of the Department's understanding that there were about 20,000 discretionary medical cards in issue. The money was allocated to individual doctors in proportion to GMS patient panel size as at 1 January 2001. The payment was in addition to the normal capitation payment made to doctors for their GMS patients.

In informing the health boards of the agreement with the IMO, the Department indicated that the examination of the discretionary medical card area would commence in 2001 and would seek to determine the nature and extent of discretionary cards in the GMS scheme. In the event of the examination not being completed by the year-end, with appropriate agreed alternative arrangements put in place, the sum of €2.54m adjusted for national pay increases would also be paid in 2002 on the same basis.

In April 2002, the Department wrote to the Chief Officer in the General Medical Services (Payments) Board, now the Primary Care Reimbursement Service (PCRS) and part of the HSE, stating that the payments for 2001 should be increased from €2.54m to €9.52m. This was on the basis that the Department now believed that the estimated number of discretionary medical cards was 75,000 and not 20,000 as previously thought. The arrears for 2001 were to be paid in 2002 and the payment for 2002 was to be made on a monthly basis in proportion to the size of each doctor's GMS patient panel. A second letter in April 2002 from the Department to the health boards and the GMS clarified that the additional payment to doctors in respect of discretionary cards was not intended to remunerate them in respect of all discretionary card holders. The Department indicated that, in this context "discretionary medical cards are understood to refer to those given to persons who, although significantly above the income guidelines for medical card eligibility, would by virtue of a condition or illness, necessitate a GP visitation rate significantly above the norm, thereby incurring increased costs." This was a significant narrowing of the definition of a discretionary medical card for the purpose of paying the extra amount to GPs.

The Department also indicated that when the actual numbers covered by discretionary medical cards became known an adjustment to the aggregate amount for each year, e.g. the €9.52m for 2001, would be made. The Department also asked for details of required changes to the systems in the GMS and at health board level in order that these more narrowly defined discretionary cards could be identified and payments could be made on foot of actual numbers. In a letter to the health boards, the Department stated "health boards should take the necessary steps to ensure that it is possible in future to associate discretionary medical cards with individual doctors for payment purposes."

€10.046m was paid in 2005 in respect of 75,000 cards. Each year since it issued the original instruction, the Department has confirmed in writing that payments should continue under the arrangements. A total of €50.7m has been paid out to GPs under these arrangements up to 31 December 2005.

Audit Objectives

The audit objectives were

To determine if the discretionary medical card scheme operated in a uniform way across the health service

To review what progress had been made in moving towards paying doctors for the actual numbers of discretionary card holders on their panels, as originally envisaged by the Department in 2001.

As part of the audit, the HSE regions were asked to provide details of all current GMS Medical Cards on their systems as at 31 December 2005 and the numbers which had been awarded on a discretionary basis. The PCRS provided details of the number of GMS medical cards on its system.

Audit Findings

Operation of Scheme

Table 46 shows the total number of discretionary medical cards issued by region, discretionary cards as a percentage of eligible individuals and discretionary cards as a percentage of eligible family units.

Table 46– Discretionary Medical Cards by HSE Region

Region

Number of Discretionary Medical Cards Issued

Discretionary cards as % of eligible individuals

Discretionary cards as % of eligible family units

Eastern

7,418

2.17

3.19

Midland

4,885

6.98

10.33

Mid Western

4,950

4.94

7.18

North Eastern

1,428

1.43

2.17

North Western

2,915

2.95

4.76

South Eastern

8,415

6.06

9.09

Southern

11,878

6.85

9.64

Western

3,794

2.84

4.17

Total

45,683

3.95%

5.84%

As the results shown in Table 46 seem to suggest that the scheme is not administered across the country in a uniform way, I asked the Accounting Officer the basis on which discretionary medical cards are awarded and for an explanation for the significant variations in the percentage of discretionary cards to eligible persons between the different HSE regions.

The Accounting Officer informed me that in the first instance every application for a medical card is assessed based on the national income guidelines. In cases where applicants are deemed to be in excess of the guidelines the HSE can take account of extenuating medical and or social circumstances of applicants. Medical circumstances might relate to a person or indeed family unit who, despite being in excess of the income guidelines, require frequent visits to their GP and outlay on drugs or medicines due to family member(s) having an established medical condition, such that the costs of meeting their medical needs outweighs the assessed income excess. An example of a social circumstance could be a family unit where, despite being assessed as being in excess of the means guidelines, the HSE becomes aware that the bread winner has an addiction problem and is not adequately supporting the spouse and children. To alleviate the ensuing hardship, the HSE can exercise its discretion and grant a medical card to the spouse and children in such circumstances.

The Accounting Officer stated that geographical variations in the percentage of discretionary medical cards as a proportion of all cards is an issue that warrants further examination and this will be conducted as part of a process currently under way to validate the total number of discretionary medical cards. It should be noted however, that the HSE has issued standardised national guidelines in the last year which deal with, among other things, the exercise of discretion in the issue of medical cards.

Establishing the Number of Discretionary Cards

The remuneration of doctors for medical cards assumes the existence of 75,000 discretionary cards. The figures provided by the HSE regions suggest the real figure may be far lower, perhaps as low as 45,600. The figure recorded on the PCRS database is lower still at 36,000. The Accounting Officer has indicated that the ongoing validation exercise in all HSE regions is likely to reveal that the figure is between 65,000 and 68,000.

These figures refer to all discretionary cards regardless of the circumstances that gave rise to their issue. On the other hand, it is clear from the Department's correspondence to the health boards in 2002 that the intention was to pay additional remuneration to doctors only in respect of cards issued to persons whose income was "significantly" above the income guidelines and who by virtue of a condition or illness required a rate of GP visit "significantly" above the norm.

The HSE's national guidelines on medical card entitlement lists the following matters as factors to be taken into account in considering whether undue hardship arises in any case:

llness or medical circumstances

The cost of providing general medical and surgical services

The cost associated with the provision of medical, nursing and dental treatment

The cost of physiotherapy and speech and language therapy

Transport cost to hospitals and clinics

Addictions such as drink, drugs and gambling

Poor money management

Social deprivation – including poor home management

The cost of medical aids and appliances.

It is clear from this list that there is a range of circumstances in which discretionary medical cards might be issued that might not involve a rate of GP visit in excess of the norm. It follows that the discretionary cards that give rise to the extra payment to doctors is likely to be less than the total number of discretionary cards recorded on the HSE systems.

I was concerned that payments continued to be made on the basis of the 75,000 estimate, which now appears to be too high, and that the payments continue to be made to doctors in proportion to patient panel size instead of on the basis of the actual number of their patients holding discretionary medical cards.

In response to my enquiries, the Accounting Officer informed me that at the time of the agreement with the IMO the former health boards were not routinely collecting details such as frequency of GP visits by individual patients or details of patients' income levels. The best available figure was the estimated number of all cards where the applicant's income was above the guidelines. He considered this to be a critical point because the number involved i.e. 75,000 was not and could not be sufficiently refined to reflect only those whose incomes were considerably above the guidelines and who require frequent visits to their GP.

The Department, as the brokers of this agreement, had been requested on a number of occasions to give a working definition of the discretionary cards that were intended to be comprehended by this agreement (i.e. what is the threshold for "significantly above the guidelines" etc.). As part of the Schemes' Modernisation Programme, the HSE has even gone as far as suggesting a definition to the Department, but a determination on this is still awaited. In anticipation of a clear definition against which an actual assessment of discretionary cards can be based, the HSE has introduced a coding system in which discretionary cards are categorised according to income excess bands. This enhancement will make it easier to calculate the exact number of such cards going forward. On renewal of each discretionary medical card, HSE areas are collecting data which enables coding of the card into one of four income bands above the qualifying income thresholds. All new discretionary medical cards are subject to this coding system also. The income coding bands are up to 25%, 25%-50%, 51%-85% and in excess of 85% above the qualifying income threshold for a medical card. The coding exercise was rolled out nationally in mid-2005. Given that the average period of issue for medical cards is 2 years, the majority of cards will be re-issued and appropriately coded within a 2 year timeframe. A definition from the Department is still a necessity however.

The Accounting Officer said that in his opinion payments can be made in respect of actual numbers of discretionary medical cards, subject to clarifications of definitions by the Department and application of those definitions to each individual record thereafter. There would, however, be a considerable workload in doing this first time off, but, once done, it would then become a data management issue. The recalculation of amounts paid to date would have to be considered with the Department following the validation exercise and clarification of definitions.

Views of the Department of Health and Children

In light of the comments of the Accounting Officer, I asked the Department of Health and Children for its observations on the matter.

The Department's Accounting Officer informed me that the arrangement regarding medical cards agreed with the IMO arose in the context of difficult industrial relations negotiations aimed at giving effect to the Government's decision to extend eligibility for a medical card to all persons aged 70 or over. During those negotiations, the IMO tabled a wide range of issues which they sought to have resolved before their members would agree to provide a service to all over 70s, free of charge to the patient. In particular, the IMO sought extra payment in respect of discretionary medical cards on the basis that these were cards awarded to a significant number of persons not by reference to their means but because of a requirement to visit a GP frequently. The IMO argued that these patients represented a predictable high workload and that, instead of having a balance of low and high workload patients, GPs' patient panels were becoming increasingly skewed towards high demand clients. Payments were made on a notional figure of 20,000 discretionary medical cards, subject to review.

In 2001 and 2002, the Department made a considerable effort to obtain information from the health boards in relation to the number of discretionary cards. In several cases, the health boards were unable to provide the information and it became clear that the interpretation of the term "discretionary medical card" varied considerably between health boards.

A further difficult industrial relations situation developed in March 2002 and there was a threatened withdrawal by GPs from the GMS scheme. The issue of discretionary cards was again raised by the IMO who contended there were an estimated 75,000 persons covered by discretionary cards. The information the Department had by then obtained from the health boards supported this figure and it was decided payment would be made on the same basis as previously in respect of 75,000 discretionary cards.

The Department continued to request the health boards to put systems in place to identify the actual number of discretionary cards so they could be associated with individual GPs' panels. The Department's standard definition of "discretionary medical card" which it issued in April 2002 was meant to enable the health boards adopt a common approach. The definition was intended to differentiate between persons awarded a card based on means, even if they were marginally above the income assessment threshold, and those where the impact of a medical condition was the main determining factor. It was anticipated that when the health boards had established accurately the number of discretionary medical cards, it would provide a basis to re-engage with the IMO on the matter.

The Accounting Officer also stated that the whole issue of discretionary medical cards will now have to be addressed in the context of a major review of all aspects of the GMS contract which has been underway since late 2005 under the auspices of the Labour Relations Commission (LRC). He said it would be inappropriate at this stage to deal with the matter outside of the LRC process and that there were a number of other issues that would need to be taken into account in addressing the matter —

The significant adjustments made to the system and guidelines for assessment of applicants for a medical card in 2005

The introduction of the new GP visit card

A current review of eligibility legislation

The draft national partnership agreement "Towards 2016" which provides for a review of the eligibility criteria for the assessment of medical cards.

14.2 Nursing Home Subventions

The Health (Nursing Homes) Act 1990 (the Act) provided for the introduction of the Nursing Home Subvention Scheme by health boards. The purpose of the scheme is to provide financial support for eligible persons who avail of private nursing home care. Eligibility is determined by reference to two criteria

The degree of dependency of the person

The person's means and circumstances.

The way in which these two criteria should be assessed is set out in detail in regulations introduced in 1993 and amended on a number of occasions up to 2005. Application for subvention can be made either by the person concerned or someone acting on his or her behalf. The HSE became responsible for administering the scheme in 2005, following the dissolution of the health boards.

Assessment of Dependency

Dependency is determined by means of a clinical assessment. The assessment involves an evaluation of the ability of the person, in respect of whom a subvention has been sought, to carry out the tasks of daily living, the level of social support available to the person and the medical condition of the person. Assessment is based on of degree of mobility, ability to dress unaided, ability to feed unaided, ability to communicate, extent of orientation, level of co-operation, ability to bathe unaided, quality of memory and degree of continence. There are three levels of dependency: Medium Dependency – the person requires nursing home care because the appropriate support and nursing care required by the person cannot be provided in the community.

High Dependency – the person's independence is impaired to the extent that s/he needs nursing home care but is not bed bound.

Maximum Dependency – the person's independence is impaired to the extent that s/he requires constant nursing care.

The level of dependency assessed under the scheme determines the maximum weekly rates of subvention. The current rates are

Medium Dependency€114.30 per week

High Dependency€152.40 per week

Maximum Dependency€190.50 per week.

Assessment of Means and Circumstances

The regulations provide that in assessing the means of a person the HSE must take all sources of income into account, including wages, salary, pensions, allowances, payments for part time and seasonal work, income from rentals, investments and savings and all contributions from whomsoever arising. The HSE is permitted (but not obliged) to consider any assets of the person in assessing the means.

While the HSE has discretion as to whether or not to take assets into account in assessing means, there are specific rules set out in the regulations in relation to how assets are to be taken into account should it choose to do so. In particular, the HSE may refuse to pay any subvention if either of the following apply: · the claimant's principal residence is valued at €500,000 (for properties in the Dublin area) and €300,000 (for the rest of the country) and the claimant's income is greater than €9,000 per annum or · the value of the claimant's assets (excluding principal residence) is greater than €36,000.

There are two significant exceptions to these rules

the first €11,000 of any assets must be disregarded

a claimant's principal private residence is not taken into account if it is occupied immediately before the application and continues to be occupied by the claimant's spouse, a child aged under 21 or in full-time education or a relative in receipt of disability allowance, blind person's pension, disability benefit, invalidity pension or Old Age Non Contributory Pension.

Enhanced Subvention Payment

Articles 22.3 and 22.4 of the Nursing Home (Subvention) Regulations make provision for the payment of enhanced subvention. Effectively, this means that the HSE may make an enhanced payment in addition to the maximum weekly rate. The sum of these amounts, when taken in conjunction with the individual's available income can in some cases meet the full cost of the bed in the private nursing home. Enhanced payments arise in situations where, even with the maximum subvention, the family or individual cannot afford to meet the shortfall in costs of nursing home care and there are long waiting lists for public beds. The amount of each enhancement will differ, as the amount granted is based on the person's income, their level of dependency, the nursing home fees and on budgetary constraints.

There are no clear rules in the regulations about who is entitled to get enhanced payments. In practice, the making of enhanced payments is a matter for each HSE Area and each case is assessed individually. There is no maximum amount for enhanced subvention in the regulations and it is a discretionary matter for the relevant Local Health Office (LHO) areas.

Legal Cases

A number of High Court challenges (104 at July 2006) are being taken to test the constitutionality of the Health (Nursing Homes) Act 1990 and the related regulations. The legal cases relate to entitlement and eligibility, with the claimants arguing that they had to use private nursing homes, as there were no public beds available.

Expenditure — 2005

The total amount paid out under the scheme in 2005 was €109.8m of which €49.2m was in respect of enhanced subvention.

Audit Findings

In the course of the audit, the 19 LHOs responsible for administering the scheme were surveyed to establish the extent of the different approaches to the treatment of principal residence in assessing means and the payment of enhanced subvention. The survey did not seek to establish whether the means testing of income was carried out in a consistent way.

Assessment of Principal Residence

The survey revealed that there were some inconsistencies in how a principal residence is treated in assessing means. Specifically, 7 LHOs indicated that they do not take a principal residence into account if the house is occupied by a relative. This is not in line with the regulations which provide that the principal residence should only be disregarded if it is occupied by a spouse, a child aged under 21 or in full-time education or a relative in receipt of certain Social Welfare benefits. While the other 12 LHOs took the principal residence into account for means purposes in accordance with the rules, two areas indicated that they had not done so until December 2005. The main reason advanced for this approach was that property prices in these areas were low.

Payment of Enhanced Subvention

The survey also indicated widely different practices in calculating the amount of the enhanced subvention. In summary

10 LHOs pay a maximum payment between €360 and €680 — less assessable income

3 LHOs pay up to the cost of the bed less assessable income

5 LHOs pay between €38 and €250 — plus the standard subvention

1 LHO pays an agreed amount.

Applying the different practices to a typical case showed that an individual or supporting family members could end up paying varying amounts to meet the cost of private nursing home fees depending on the area in which they were located. For example, in the Southern, North East and three Dublin/East HSE areas no contribution would be required, whereas in the South East, Mid-West and Western areas a substantial contribution could be required. Moreover, in some counties in the Midland and North West areas a substantial contribution could be required, while in other counties in the same areas no contribution would arise.

The results of the survey reflect the approach taken by LHOs in the generality of cases. However, in cases of hardship LHOs may exercise discretion to increase the amount of enhanced subvention to cover the balance of the cost of a nursing home bed not met by the individual. The LHO will often seek to negotiate an agreed charge with the nursing home or to fix the charge for a period of around 12 months. The instructions used by LHOs do not give any guidance on how such discretion ought to be exercised, and it is not possible to say whether discretion is exercised in a reasonably consistent basis across LHOs.

Audit Concern

In light of the apparent inconsistencies in approach, both to assessment of means and to the payment of enhanced subvention in the HSE regions, I sought the views of the Accounting Officer.

Accounting Officer’s Response

The Accounting Officer informed me that the discretionary nature of the enhanced subvention, as it operated in the old Health Board system, is fundamental to the inconsistencies which now exist and which are being addressed by the HSE in the context of a unified delivery system. In the old Health Board system, each Health Board established criteria for a methodology of payment of basic and enhanced subvention arrangements which generally would have been reported formally to the Health Boards' members in the context of the monthly Board meetings, etc. However, the overall extent of discretionary support would be influenced by budgetary constraints and the amount of funding provided by the Department of Health and Children.

In the old system each individual Health Board was a legal entity in its own right and was entitled to provide for such arrangements as part of the annual service plans agreed with the Department.

The Accounting Officer detailed the underlying issues giving rise to the inconsistencies in the operation of the Nursing Home Subvention Scheme nationally

The 1993 Subvention Regulations were open in a number of sections to varying interpretations

The guidelines which accompanied the regulations were not detailed and comprehensive

Lack of communication between Health Boards led to inconsistencies in interpretation of the legislation and guidelines

There was a significant degree of variation between Health Boards in resources available to services for the elderly e.g. long stay beds, etc.

There were varying per capita budgets allocated to Health Boards for the subvention scheme

Differing demographic and geographical profiles between Health Boards resulted in differing emphases within Health Boards.

The demand for enhanced subvention in any area tended to be influenced by a number of factors

The percentage of the population over 65 in need of continuing care

Total number of continuing care beds available, both public and private, to meet that need

Number of public beds available.

The ratio of public beds to the number of people over the age of 65 varied significantly between Health Boards. Where there were a large number of public beds available in local Health Board long stay hospitals, the demand for subvention within that area was reduced. Likewise, if a Health Board had few public beds available, proportionate to the local need, the pressure for support from the subvention scheme tended to be greater. In practice, this may have led to a more comprehensive enhanced subvention scheme in such Boards.

The cost of private nursing home care also varied widely between Health Boards. Currently, fees charged by private nursing homes can range from €550 per week to €1,100 per week depending on location. The main factors that determine these costs include local supply and demand for places and local costs such as building and staffing. The variation in private care costs is reflected in the value of enhanced payments.

As part of the transition of the Health Board system to the HSE, a comprehensive risk assessment was undertaken by the outgoing CEOs of the Health Boards at the time and this was provided by way of a report to the then CEO of the HSE. This document identified the risks associated with the merging of 11 Health Board structures to a unified system with the inconsistencies of interpretation of various services including the Nursing Home Subvention Scheme.

In the context of the varying degrees to which these inconsistencies existed in the old system, the Accounting Officer stated that there are arrangements which existed in the Health Boards, and continue to exist in the HSE, to deal with individual cases which arise where anomalies are highlighted arising from inconsistency in interpretation or application of the scheme. These cases are generally dealt with by the Appeals Officers and are also dealt with by Local Health Managers and Assistant National Directors as appropriate.

The HSE recognises that the move towards a unified system with a standardised interpretation and application of the legislation and regulations can only be implemented on a phased basis. This is because of the resource issues involved and the necessity for arrangements to underpin the legislative and regulatory amendments through the Department.

Since the establishment of the HSE, arrangements are now being put in place to address the inconsistencies. In relation to Services for Older People, a National Steering Group has been established and through this process arrangements are being made to progress this agenda on a systematic basis. Within this national framework, a Working Group has been established and one element of its work relates to the development of a standardised approach towards the implementation of the Nursing Home Subvention Scheme across the health service. The Working Group's terms of reference include the effectiveness of current legislation in terms of

The legislation's implications regarding equity of access

Clarification of the HSE's legal obligations

Identification of gaps and risks and the highlighting of their implications (financial and other) to the HSE.

The approach being taken by the HSE is to standardise the arrangements within the existing legislative and regulatory framework, while at the same time working with the Department to ensure a more appropriate and equitable legislative framework for the future. The underlying issues related to eligibility and entitlement and funding arrangements in relation to the provision of Long Stay Care for Older People, both public and private, have been the subject of ongoing consultation with the Department in the old Health Board system and also since the establishment of the HSE. The Department, in the Health Strategy and more recently following a Supreme Court decision on Long Stay charges, has confirmed that it is at an advanced stage in developing a comprehensive legislative and regulatory framework which will address the overall eligibility and entitlement for these services including the Long Stay Care for Older People.

The Accounting Officer concluded by stating that significant work had been undertaken over the past couple of years in this area and the Government established a high-level Departmental group chaired by the Department of An Taoiseach to address Long Stay Care for Older People, which will also address equitable arrangements for the funding of Long Stay Care for Older People going forward. This work is grounded in the Mercer and O'Shea Reports, and the HSE understanding is that recommendations will be going to Government shortly on the matter. The HSE is working closely with the Department in relation to these issues.

14.3 Extra Remuneration

Public financial procedures prescribed by the Department of Finance require that each Appropriation Account shows the total amount charged to the Account in respect of overtime and extra attendance, the number who were paid overtime and the highest individual overtime payment in the year. Because of the nature of the health service, the HSE Appropriation Account also includes details of extra remuneration in respect of allowances, night duty, weekend pay, on-call and other payments. Total expenditure on extra remuneration in 2005 was €585,651,417 as shown in Table 47.

Table 47

Allowances

92,528,783

Overtime

187,148,078

Night Duty

64,451,495

Weekends

166,379,057

On-Call

49,019,852

Other

26,124,152

Total

585,651,417

It should be noted that certain individuals receive extra remuneration in more than one category.

Total payroll costs for the HSE for 2005 (per the Income and Expenditure Account) was €4,029,586,638 of which extra remuneration represented 14.5%.

The results of an audit analysis of the 30 highest recipients of extra remuneration in the different categories in each of the 10 former health board areas are shown in Table 48.

Table 48 – Analysis of high earners

Overtime

Weekends

Allowances

Night Duty

On-call

Other

Total

125,000 — 150,000

7

0

0

0

0

0

7

100,000 — 125,000

15

0

4

0

0

1

20

75,000 — 100,000

66

0

4

0

3

2

75

50,000 — 75,000

161

0

9

0

17

5

192

25,000 — 50,000

51

2

73

0

254

35

415

0 — 25,000

0

298

210

300

26

167

1,001

Total

300

300

300

300

300

210

1,710

A further analysis showed that the 22 largest overtime payments (i.e. all those greater than €100,000) were to Non-Consultant Hospital Doctors (NCHDs). The 3 highest earners worked for 3,530; 3,193 and 2,419 hours in 2005 on top of their normal working week of 39 hours. This involved average overtime hours of 75; 68 and 51 hours per week respectively, for 47 working weeks.

It should be noted that 28 of the 300 highest overtime earners were also in the top 30 recipients of payments from the other extra remuneration categories in their areas and received amounts ranging from €6,311 to €61,226 in this respect. Other high overtime earners may have been in receipt of payments in the other extra remuneration categories but were not in the top 30 recipients for their area.

While accepting that a level of extra remuneration payments will always be necessary and desirable because of the nature of HSE operations, I asked the Accounting Officer

what measures the HSE has in place to ensure that resources expended on extra remuneration payments are used economically and efficiently

what day-to-day management, budget control and monitoring procedures are in place in the HSE in relation to extra remuneration

whether the HSE is satisfied that its attendance and rostering systems and controls are adequate to manage such significant additional payroll expenditure.

The Accounting Officer said he was acutely conscious of the need to ensure optimum use of resources, while minimising cost exposure or reliance on additional allowance / overtime etc, and always maintaining the levels of coverage for the provision of care. The HSE's Medical Manpower Managers continuously examine NCHD rosters in the interests of safe service provision, training and value for money, with a particular focus on reducing hours in the context of the European Working Time Directive (EWTD).

Day-to-day management and control of NCHD overtime relies on a requirement that all NCHD hours, including overtime, must be signed off by the supervising consultant. These hours, as recommended for payment by the consultant, are then matched against agreed service rosters for each grade and specialty. Claims for payment are checked against rosters and on-call rotas by payroll or medical administration staff under the supervision of a Medical Manpower Manager or Hospital Manager.

The nature of acute health service provision is such that emergency situations or delays at scheduled theatre or clinic sessions will arise intermittently, with a consultant requiring additional unrostered NCHD cover. Prior to 2006, monitoring and control of the cost of unrostered cover was effected by obtaining details of unrostered hours and routinely auditing and verifying them against hospital activity before payment for this additional unscheduled work. Where patterns of unrostered hours were developing, these were addressed with individual NCHDs and their supervising consultants as necessary.

The Accounting Officer informed me that the HSE is aware that NCHDs are working increasingly beyond their rostered hours, resulting in unsustainable overtime costs. In May 2006, the National Hospitals Office issued directions to all Hospital Managers in relation to unrostered NCHD overtime. The directions require that all NCHDs work in line with their rostered hours. Hospital Managers were instructed to approach individual consultants and inform them that the current budget cannot support unrostered NCHD overtime.

The new directions require Hospital Managers tof

confirm the roster for each individual specialty on the basis of service needf

remind all NCHDs directly of their individual unit roster andf

advise NCHDs that they will be paid for their rostered hours only and must finish duty at their rostered time.

A new control was introduced to the effect that any requirement for NCHD to work beyond his/her rostered hours must now have the prior approval of the Hospital Manager. This arrangement took immediate effect. It is supported by a policy of monitoring all overtime sheets to verify that the hours claimed have been approved by each Hospital Manager. Overtime claims which do not have the required approval will not be paid and will be returned to the individual NCHD for correction.

The Accounting Officer added that that the use of sophisticated rostering IT solutions may present local management with potential advantages in managing attendance levels and rostering arrangements. He indicated that the integrated HR information and payroll system (PPARS), which had been planned by the former health boards had been intended to address, inter alia, some concerns in this area. However, the HSE had suspended any further roll-out of this project until it is satisfied as to the value proposition involved.

Consequences for Service Delivery

I also asked the Accounting Officer whether the recruitment of additional staff would increase the quality and quantity of service provided and reduce costs.

The Accounting Officer informed me that in certain cases the availability of additional resources would assist the situation and would have possibilities in terms of reducing reliance on overtime arrangements. There are, however, many factors which would be part of this equation including availability of skill mix etc. He assured me that the quality of service is never compromised. He also made the point that, at present, the HSE does not enjoy full flexibility to recruit additional staff, regardless of whether or not this would result in a reduction in extra remuneration levels or reliance on agency staff. There is an employment ceiling allocated to each element of the service and additional staff may not be recruited in excess of this ceiling. Dialogue is on-going with the relevant Government Departments on an overall adjustment to the HSE employment ceiling.

Implication of the European Working Time Directive (EWTD)

The provisions of the EWTD, as they apply to NCHDs, were introduced into law in Ireland in 2004. As a result, the working hours of such doctors have been limited by law to a maximum average of 58 hours per week since August 2004. The 58 hour maximum is to be reduced to 48 hours on a phased basis over the period to August 2009. The Directive, and case law that emerged in recent years in relation to it, imposes other significant constraints on doctors' working hours. Doctors must not work more than 13 hours in each 24 hour period, and are entitled to 35 consecutive hours rest in every 7 day period, or 59 hours rest in every 14 day period. In addition, where the daily 13 hour limit is exceeded, then the doctor concerned will be obliged to take sufficient rest to meet the terms of the Directive and this will have implications for starting times on the following day. In the light of the levels of overtime noted in the course of the audit, I was concerned that the HSE was not complying with the terms of the Directive.

The Accounting Officer informed me that the terms of the EWTD are being adhered to in full in respect of 30% of NCHDs. In relation to the remaining 70% of NCHDs, discussions are continuing with the Irish Medical Organisation, under the auspices of the Labour Relations Commission, to agree arrangements which will effect a reduction in the hours of NCHDs to comply with the working hours and rest provisions of the EWTD.

An industrial relations process is in place which will oversee a number of pilot attendance arrangements for NCHDs in nine locations and which will be EWTD compliant. The pilots will last for 4 to 6 months during which they will be evaluated. In addition, it is envisaged that discussions on a revised contract for NCHDs will take place concurrently. The successful pilots should then be mainstreamed and a revised contract for NCHDs agreed.

Mr. John Purcell

There is much to get through. The Vote for the Department of Health and Children used to be one of the biggest in monetary terms but it had a modest net outturn of €167 million in the year, given that most of the Exchequer funding for health was channelled through the Vote for the HSE. That represented an underspend of €66 million, mainly due to timing factors associated with expected commitments under subheads F1 and J not materialising during the year and the demand-led nature of expenditure under the hepatitis C and HIV compensation scheme. On the other hand, the Vote for the HSE accounts for €11.5 billion gross expenditure and €9.5 billion in net terms. The format of the Appropriation Account is unusual because the presentation of the figures relies on the structure of the accounting systems inherited by the HSE from the older health boards. In practice, the account is derived from an accruals-based income and expenditure account and balance sheet which I audit under the governing legislation. I certified the account last May and it was presented to the Houses of the Oireachtas. It is more informative than the Appropriation Account. The sum of €11.5 billion includes not only the cost of the HSE's services but also the amounts transferred to voluntary hospitals and agencies —€1.78 billion under subhead B9.

I refer to chapter 13.1 which draws attention to the long timeframe for completing the inquiry into the removal and retention of children's organs at post mortems and the consequent escalation in the cost. In April 2000 the Government decided to establish a non-statutory inquiry into the State's post mortem policy, practice and procedure in the previous 30 years. A chairman was appointed in the same month. It was initially expected that the report of the inquiry would be available within six months, but things moved slowly. Suitable accommodation for the inquiry did not become available until January 2001 and the inquiry became operational in March of that year — almost one year after the inquiry had been announced and established. When the chairman, around the same time, set out the terms under which she and the inquiry team were embarking on their work, she indicated that it would not be possible for them to complete that work within six months. As a result, the Minister determined that the inquiry team should report to him within 18 months, unless he decided otherwise. Alarm bells were ringing by October 2002 because no end was in sight. When the chairman produced the inquiry's progress report, she was unable to estimate the timescale required for the completion of the work. In December 2002 she indicated that an interim report on paediatric hospitals would be provided within one year, but she subsequently informed the Minister — in October 2003 — that she would not be in a position to do so. The Attorney General wrote to her in July 2004 — during the review of all ongoing tribunals and inquiries — to request an estimated date of completion, but no such date was provided.

The Government decided in September 2004 that a final report should be furnished not later than 31 March 2005 and that the inquiry should then cease. A report and extensive backing material were submitted on that date. While the report dealt only with the three Dublin paediatric hospitals, the appendices contained evidence and submissions which had been collected on other hospitals. The Attorney General advised that the report could not be published for legal reasons, including issues relating to natural justice. Shortly afterwards the Government approved the appointment of a legal expert to prepare a report on the key issues arising from the earlier inquiry. That report was completed and presented to the Minister on 21 December 2005, within the stipulated timeframe, and later published. The cost of that report was €436,000. The final cost of the earlier inquiry was €13.8 million, of which the legal costs of the inquiry team amounted to €7.7 million. An additional €6.35 million was provided for the HSE's predecessors in the eastern region in connection with the inquiry. The Department does not have information on related expenditure incurred by hospitals and former health boards in other regions. If one examines the available figures, it is clear that the total expenditure incurred as a result of the inquiry was in excess of €20 million.

Given that the inquiry was expected to be wrapped up within six months, at an estimated cost of €1.9 million, I was concerned that the manner in which the Department organised the inquiry did little to minimise the risk of cost and time over-runs. In particular, unambiguous terms of reference should have been established, a methodology based on achieving cost-effective gathering of evidence should have been specified and review milestones should have been put in place at the earliest possible stage. The Accounting Officer states in his response on page 146 of my report that he agrees in principle with these three points. However, he argues that the circumstances surrounding the establishment of the inquiry worked against the adoption of such an approach. He can elaborate on these circumstances later in the meeting.

I will move on to the chapters on the HSE. Chapter 14.1 relates to discretionary medical cards, that is medical cards issued to persons who do not qualify under normal income rules, or otherwise by right. In 2001 the Department of Health and Children agreed with the Irish Medical Organisation that a sum of €2.54 million would be paid to doctors under the general medical services scheme to cover services provided for some categories of discretionary card holders. In its negotiations with the Department, the Irish Medical Organisation made the reasonable point that those who received such cards by virtue of a condition or illness would be more likely to present to their general practitioners more frequently than normal. The organisation argued that such circumstances justified a payment in addition to the normal capitation rate. It was estimated that approximately 20,000 people had discretionary cards. The extra payment —€127 per person — was allocated to doctors in proportion to their general medical services panel size.

An examination of the nature and extent of discretionary medical cards was supposed to commence in 2001 in order that the additional payments to general practitioners would be based on actual figures. However, the systems in place in the health boards were not capable of providing the required information. In 2002 the Department estimated that the number of discretionary medical cards was 75,000, rather than 20,000, and directed that additional payments should be made on that basis, with arrears being paid for 2001. This revised estimate has formed the basis for the additional payments since, which average approximately €10 million per annum. A firm figure on which to base the payments has yet to be determined.

I continue to be concerned that the estimate of 75,000 discretionary medical cards on which the additional payments are based is far too high. The returns from the various HSE areas can be used to calculate that approximately 64,000 people are covered by discretionary medical cards which have been granted on grounds of financial and medical hardship. If we were to take out the cases of financial hardship — those who do not require above average numbers of visits to their general practitioner — and the dependants of persons who have been given medical cards on the grounds of medical hardship, it is likely that the figure attracting the extra payment would be substantially reduced. There is no way of knowing that for sure, however, because the records are not kept in a form that would facilitate the production of such information.

The other main point made in chapter 14.1 is that the discretionary medical card scheme was not being operated in a uniform way across the health service. Table 46 in that chapter suggests there is a wide variation between regions, even when demographic factors are taken into account. A person is three times more likely to be granted a discretionary card in some regions than in others. This inconsistency, primarily a legacy from the old health board system, has no place in the delivery of a national health service that should treat all citizens equally.

In chapter 14.2 I draw attention to inconsistencies in the way principal residences were assessed for the purposes of calculating nursing home subventions. I also point to some widely differing practices in calculating the amount of enhanced subvention payable. In the case of principal residences, some HSE areas did not strictly comply with the rules regarding the occupation of a beneficiary's house by a relative. In the case of enhanced subventions, there were no clear rules about the level of payment. The amount deemed to be payable depended to a significant extent on the area in which the person was living. Some variation would be expected as a reflection of the different conditions in the various HSE areas such as the availability of continuing care beds and the level of nursing home fees in each area. Regardless of factors such as those I have mentioned, however, there are signs that some people fared better than others because of the manner in which discretion was exercised. The committee will note that the Accounting Officer has informed me that the discretionary nature of the enhanced subvention, as it operated in the former health board system, was fundamental to the inconsistencies which he has said are being addressed by the HSE in the context of a unified delivery system. The committee will be aware of recent initiatives in this regard.

Chapter 14.3 relates to extra remuneration. The total payroll cost of the HSE in 2005, including superannuation, was just over €4 billion, of which €585 million represented extra remuneration in the form of overtime, allowances, payment for night duty and weekend work and on-call payment, as well as some other miscellaneous payments. It is clear that a level of extra remuneration will always be a feature of the system because of the nature of hospital activities. Equally, it is important that such payments be kept at the minimum level consistent with the delivery of quality health services. I was particularly concerned about the level of overtime, amounting to €187 million in 2005, especially in light of the number who had received what I would regard as excessive overtime. For example, 22 non-consultant hospital doctors each received over €100,000 in overtime payments in 2005. A further 66 staff received between €75,000 and €100,000 in the year. As these levels of overtime would not appear to be sustainable and might impact on the effective and economic delivery of services, I asked what was being done about them. The Accounting Officer informed me that the authorisation of overtime for non-consultant hospital doctors was tightened up during 2006 to ensure non-rostered hours could not be paid for without prior approval of the hospital manager. He agreed that the current position on excessive working hours was unsustainable in that 70% of non-consultant hospital doctors were working in excess of the limits laid down in the European working time directive.

Arrangements to address the issues involved were the subject of lengthy negotiations with the IMO but in the meantime a number of pilot schemes had been implemented to test possible solutions. More generally, there may also be potential for better management of attendance levels and rostering arrangements through the use of IT solutions locally, although these are dependent on the further development of HR information systems.

Will Mr. Scanlan make his opening statement?

Mr. Scanlan

The year under examination, 2005, was a watershed in the development of our health and personal social services with the establishment of the HSE on 1 January of that year. The health reform programme represents an enormous undertaking. It involves one quarter of all Government expenditure, over 100,000 staff and the delivery of a huge range of services for very large numbers from one end of the country to the other. It must be rolled out while simultaneously maintaining and developing services. As is the case worldwide, we must deal with increasing demands on health and personal social services, advances in medicine and technology, and demographic and societal changes. However, the potential benefits are equally enormous in terms of being able to provide, on a consistent basis, high quality, cost-effective and accessible services for patients and health gains.

It was to be expected that the reform programme would throw up considerable challenges. Clearly, there are many legacy issues to be addressed such as the lack of uniformity in approach to service provision in different parts of the country. The fact is that under the former structure of independent health boards, tasks were done differently from one region to another, as different choices were made about priorities in resource allocation and service development. Certain regional inconsistencies have been evident for some time such as differences in nursing home subvention payments and disability support services. However, there are other less obvious inconsistencies that also need to be addressed such as differences in admission rates and the length of hospital stay.

The former health board structure developed over many decades and it will take several years to forge the former fragmented structure into an effective unitary structure. Since the passing of the Health Act 2004 and the establishment of the HSE in January 2005 significant progress has been made to align legislative, policy, strategic and operational capabilities with the development of a modern unitary health system. I list the following as examples.

There have been demonstrable improvements in accident and emergency services and we have seen consistent improvements in the numbers waiting for admission and the time spent waiting. There have been measurable increases in the services provided for older people to allow them to remain at home and the Government has recently approved a new policy for residential long-term care which will ensure equity between those in public and private nursing homes. A new mental health policy, A Vision for Change, has been launched and extra funding is being provided to underpin its implementation. The Disability Act 2005 has been passed; a disability plan for the health sector has been published and funding has been provided to increase the services available to people with disabilities. The roll-out of 100 primary care teams in development is under way and a further 100 are to be put in place this year and in each of the next three years. A joint HSE-Department team has negotiated a new agreement with pharmaceutical manufacturers that will deliver substantial savings in drug costs, while still ensuring the pharmaceutical industry can continue to invest in research and the development of new products. The format and content of the HSE service plan has been improved to outline more clearly what services are being provided in return for the considerable investment by taxpayers. A new employment management framework has been agreed with the Department of Finance which will, among other things, establish clearer links between service developments, funding and employment. The Health and Social Care Professionals Act 2005 has been passed, while the Health Bill 2006 and the new Medical Practitioners Bill have been published. Work is proceeding on new pharmacy and nursing Bills.

A lot more remains to be done. In the case of the Department, we need to provide modern legislative and regulatory frameworks for the health service. We need to enhance our capacity to provide policy advice for Ministers on a wide range of immediate, medium and long-term issues based on best practice and international experience. We need to work more closely with our colleagues in other Departments to identify situations where non-health service policies would have a significant impact on health outcomes and work with the Departments concerned to progress these policies. We need to continue to work with the HSE to improve the overall governance, transparency and accountability of the system.

Greater transparency is essential if we are to achieve the types of health services to which we aspire. We must measure what services are being delivered for the resources being provided and focus on ways of delivering more services within these resources, while meeting the highest standards of quality and safety. It is important, however, to acknowledge the very considerable services being provided. For example: there were over 1 million inpatient and day-case discharges from acute public hospitals in 2005; 1.2 million were treated in accident and emergency units; almost 2.5 million attended outpatient clinics in 2005; over 2.5 million are eligible for services under the medical card and drug payment schemes; while over 1.2 million are in receipt of medical cards or GP visit cards and on average visit their general practitioner about six times per year.

Perhaps the biggest challenge of all is to harness the skills, experience and commitment of all the staff working in the health service, be they in the Department, the HSE or the many other organisations operating as part of the health system. We must negotiate new contracts for consultants, pharmacists and general practitioners. We must develop new ways of working and new skill mixes across the entire workforce. Change is never easy and I realise the reform programme has its critics. However, I believe those working in the health service want to be part of a high performing organisation. They want to take pride in their work and the reform programme offers a unique opportunity to harness that goodwill.

Constant criticism of the health service can affect staff morale and, ultimately, impact on the quality of patient care provided. It is necessary and appropriate that we in the Department question and challenge the HSE on an ongoing basis, in addition to improving our own performance. However, it is also essential that we recognise the progress being made and encourage moves to achieve further progress. We will continue to work with the HSE to develop accessible, sustainable and high quality services that respond to the needs of the public.

I wish to turn to chapter 13.1 of the Comptroller and Auditor General's report relating to the post mortem inquiry. As the circumstances and my comments thereon are well covered in the report, I will keep my comments brief. The report of the inquiry into post mortem practice and organ retention chaired by Ms Anne Dunne, SC, was presented to the Minister in March 2005. The advice of the Attorney General was that it could not be published for legal reasons. Dr. Deirdre Madden, an expert on medical law, was appointed by the Government in May 2005 to provide a report on key issues in paediatric post mortem practice and procedures. She had access to all of the documentation assembled by the previous inquiry. Her report, containing 50 recommendations, was published on 18 January 2006. The HSE is implementing the recommendations of the report in hospitals across the country. The Department will continue to liaise with it to monitor progress in that regard.

Dr. Madden's report was followed on 6 November 2006 by a working group report on other areas of post mortem practice and procedures. Both reports stressed the need for legislation to be introduced to ensure no post mortem examination would be carried out and no tissue or organ retained from a post mortem examination for any purpose without appropriate authorisation. Now that the recommendations are complete in respect of all age cohorts, the Department is preparing proposals for consideration by the Government in regard to the legislation required to give legal effect to these recommendations.

I thank Mr. Scanlan. May we publish his statement?

Mr. Scanlan

Yes.

Professor Drumm

I thank the Comptroller and Auditor General for the presentation of the report on the Health Service Executive for 2005 and the Chairman and the committee for this opportunity to address it.

This is the HSE's first Appropriation Account. The organisation is in the unique position of being required to produce two sets of accounts, an Appropriation Account and an income and expenditure account. It is widely acknowledged that dual reporting is a complex task for any organisation but it is worth recognising this. I give thanks for the diligent efforts of the HSE staff who have successfully produced both the Appropriation Account and the income and expenditure account for 2005 on time, despite the significant challenge involved in amalgamating the separate financial control systems used by the 17 former health agencies. Both accounts have been subject to audit by the Comptroller and Auditor General. The Appropriation Account for 2005 shows gross Voted expenditure of €11.486 billion, or 99.5% of the gross Estimate, by the HSE. A total of €10.972 billion went on services, almost 100% of the Estimate, while €513 million went on capital services.

In May 2006 we published our first annual report which included the HSE's audited income and expenditure account for 2005, together with a statement of board members' responsibilities and a statement on internal financial control. It also contained a comprehensive review of progress made in 2005.

I would now like to address chapter 14.1 of the Comptroller and Auditor General's report dealing with discretionary medical cards. There are three main categories entitled to a medical card: applicants and their dependants whose assessable income comes within the relevant financial guidelines; applicants whose assessable income is in excess of the financial guidelines but where the Health Service Executive grants a card in order that undue hardship does not arise from the financial burden of medical or social circumstances; and applicants who do not require to be means-tested such as those over 70 years of age.

The term "discretionary medical cards" refers to medical cards issued to persons who fall into the second category, where a medical card may be issued to an applicant where the income guidelines are exceeded and there is the possibility that an applicant may endure undue hardship if refused a medical card. The legal basis is section 45 of the 1970 Health Act, as amended. In evaluating and deciding cases of undue hardship or undue burden the HSE is obliged to use discretion and must act in a reasonable and legal fashion and take into account only bona fide and relevant considerations. A decision is only taken after a sufficient and reasoned assessment of all the circumstances of an individual case, taking account of the nature and extent of personal, medical or social circumstances of the applicant and-or family. If the medical costs arising are confined to an individual or individuals within a family, a medical card may be issued for the family member or members affected. If, in the assessment, it is obvious that the predominant factor giving rise to undue hardship or burden is the costs associated with GP visits, a GP visit card may be granted. In making a decision the HSE can seek advice from the patient's doctor, the Health Service Executive's medical officers, the public health nurse, the community welfare officer, social worker, the therapy services and the Money Advice and Budgeting Service.

In the Comptroller and Auditor General's report he highlighted the absence of a standardised approach to the issuing of discretionary medical cards. I would like to provide some background information on this point. Before 2005, when the HSE was established, the health boards used different approaches to the implementation of schemes which had a discretionary element, such as the issue of discretionary medical cards. The particular approach employed by each of the individual health boards depended upon local demographics, the priorities of the board, the historic funding base in the board for the particular service and other local factors.

Shortly after its establishment in 2005 the HSE's main focus was on ensuring quality service provision was maintained. Later in 2005 programmes were introduced aimed at setting common standards across the HSE and addressing many of the approaches used by the former health boards. One of the key programmes initiated in 2005 and relevant to our discussion today is the schemes modernisation programme which includes the modernisation of the general medical service scheme. As the programme progresses, it will greatly improve the processes governing how medical and GP visit cards are issued. To date, the HSE has issued new guidelines to staff regarding decision-making for all medical cards and GP visit cards, while a national training programme is being rolled out.

The second issue highlighted by the Comptroller and Auditor General's report on the issues of discretionary medical cards concerns the figure used to determine remuneration for general practitioners for discretionary medical cards. In 2002, following negotiations with the Irish Medical Organisation, the Department of Health and Children agreed an arrangement for a payment to general practitioners in respect of discretionary medical cards. According to the agreement, GPs received an enhanced capitation payment in respect of patients who met two criteria: their incomes were considerably above the medical card guidelines; and they required frequent visits to their GPs. There were, however, two outstanding issues. There was an absence of a clear definition of what "considerably" above the medical card guidelines meant, while at the time of the agreement the former health boards were not routinely collecting details regarding discretionary medical cards. Pending clarity on these issues, the agreement was based on a notional figure of 75,000 discretionary medical cards. To ensure a standardised and consistent approach, we clearly need a working definition of the discretionary medical cards that the agreement between the Department of Health and Children and the IMO was meant to cover and clarity on how to calculate the financial threshold applicable to the term "considerably" above the medical card guidelines to ensure consistency and fairness.

As part of the schemes modernisation programme, the HSE is working closely with the Department of Health and Children to clarify issues associated with discretionary medical cards. Pending these clarifications, against which an actuarial assessment of discretionary medical cards can be based, the HSE has introduced a coding system in which discretionary medical cards are categorised according to income excess bands. This enhancement will make it easier to calculate the exact number of such medical cards in the future.

In chapter 14.2 of his annual report the Comptroller and Auditor General discusses nursing home subventions. His principal concerns related to inconsistencies, first, in assessing applications for subvention, in particular the assessment of the value of the principal residence, and, second, the levels of enhanced subvention paid.

The nursing home subvention scheme was introduced by the Health Act 1990 and operated by the health boards in accordance with regulations introduced in 1993 and amended a number of times up to 2005. The inconsistencies in the operation of the scheme were related to the following: the fact that the 1993 subvention regulations were open in a number of sections to varying interpretations; the guidelines which accompanied the regulations were not detailed and comprehensive; a lack of communication between health boards led to inconsistencies in interpretation of the legislation and guidelines; there was a significant degree of variation between health boards in resources available to services for the elderly such as long-stay beds, etc.; there were varying per capita budgets allocated to health boards for the subvention scheme; and differing demographic and geographical profiles between health boards resulted in differing emphasis within health boards.

The HSE took over administration of the scheme in 2005 and commenced work to put in place arrangements to address the inconsistencies in the application of the scheme within the funding available. In 2006 a national working group was established by the HSE to examine best practice and draft national guidelines for the assessment of applications for nursing home subvention incorporating a procedures manual for staff. The group completed this work in December 2006. The completion of its report coincided with the Government's decision to introduce a new nursing home care support scheme, A Fair Deal, from 1 January 2008. The new scheme will replace the current system of charges for public beds and the private nursing home subvention scheme. It will ensure the same level of support for public and private nursing home residents.

Legislation is being prepared for consideration by the Oireachtas early this year and implementation in 2008. As a transition to the 2008 scheme, the Minister for Health and Children also announced specific arrangements to be put in place this year. The amendments which are effective from 1 January and are reflected in the guidelines, include the introduction of one rate of subvention, which increases the maximum basic subvention to €300 per week, a stipulation that the principal residence be assessed for a maximum of three years from the date of admission and extra support for the enhanced subvention scheme. Having regard to the revision of the scheme as announced by the Minister and following consultation with the Department of Health and Children, the HSE had to revise the guidelines as completed by the working group in December 2006 to take account of the new arrangements to apply this year. This work was undertaken in December and early January and the HSE has now finalised a national standardised set of guidelines to oversee implementation of the scheme this year. Funding of the order of €85 million has been provided by the Department of Health and Children to implement the revised arrangements to apply in 2007.

The HSE's national guidelines document gives clear directives on the assessment of income and assets, including the principal residence, for the purpose of determining a person's entitlement to subvention. The document also includes guidelines on the allocation of enhanced subvention, which is discretionary. The amount of enhanced subvention paid will depend on the local cost of nursing home care, which varies significantly from area to area, the amount of basic subvention payable and the assessed means of the applicant.

Preparatory work on the implementation of the revised arrangements and the standardised approach to assessment of applications for basic and enhanced subvention, has commenced and the guidelines will formally issue to the system during the week commencing 29 January. The guidelines will achieve national consistency without taking away the obligation to consider exceptional cases on their individual merit. Monitoring and review of the implementation of the standardised approach to the scheme will be a key feature of the roll-out of the guidelines to ensure the continuation of consistent practice.

The HSE must deliver a 24-hour-a-day, 365-days-a-year health service. However, based on past practices, many of our critical delivery units are designed around the provision of service between the traditional office hours of 9 a.m. and 5 p.m. The demands on the health service over the past decade have meant these traditional working arrangements do not provide the level of service required to meet current demand. To address the shortfall, over the years the health service, on a piecemeal basis, entered into agreements, often brokered through the industrial relations machinery of the State. These resulted in generous payments for people who work overtime, provide an on-call service, work on a shift rota or the payment of a myriad of other allowances. Many of these agreements were entered into when the need to provide certain services outside the nine-to-five was the exception rather than the rule. The HSE has inherited agreements inconsistent with the demands of the public or the needs of the service. Some of these agreements limit our flexibility and are reflected in the figures for extra remuneration.

In 2005, €585 million was paid in extra remuneration, 14.5% of our payroll costs. Most of those who earned significant extra remuneration are involved in the provision of front-line services, including medical and nursing personnel. The extra remuneration figures in 2005 also include the severance packages for the former Health Board CEOs. These were worked out between the Departments of Finance, Health and Children, the HSE and independent facilitation. The critical element to addressing this situation is the agreement to an extended working day.

The Comptroller and Auditor General's report highlights that 22 of the highest earners are non-consultant hospital doctors. The HSE is continuing to work with the representative bodies of the non-consultant hospital doctors to change working practices that result in junior doctors working excessive hours. This also has to be seen in the context of our ongoing attempts to agree a new consultants contract, an essential element of delivering equal access to quality and safe health services when needed.

There is also a provision in the social partnership agreement, Towards 2016, that the parties will agree a basis for implementing extended working hours by the end of March 2007. This provision is extremely important for the HSE. Having an extended working day will provide us with the necessary flexibility to deliver required services. Obviously for staff, who in the past earned significant additional remuneration by virtue of historic agreements, there is a financial implication to extending the working day. While this makes negotiations more difficult, we need to consider this in the context of the provision of a world-class health service.

In a table attached to my submission, I outlined hospital activity during June 2005 which is above targets for the year.

Thank you, Professor Drumm. May we publish your report?

Professor Drumm

You may.

Nearly 100,000 people work in the health services. How many are medical personnel, and how many are administrative personnel?

Professor Drumm

We can send the Deputy precise figures. Our new employment ceiling for 2007 is 108,000. This figure represents whole-time equivalents because some people work part-time. Calculating the difference between front-line medical and administrative personnel has proved to be difficult. Within the HSE's functions, we have 3,800 people involved in finance, HR and essential corporate functions. The total figure for people in administration in the health services will be over 20,000. Covered in that figure will be secretaries in, say, outpatient clinics and radiology clinics. The question that arises in such cases is a payroll officer in a hospital system a front-line or back-room post? That is a constant challenge.

In June 2006, there were 7,538 doctors and dentists, 35,818 nurses, 14,391 health and social care professionals, including occupational therapists, 13,481 general support staff, and 17,252 administration staff. The latter figure is critical. It must be asked how many of them are secretaries in front-line services.

How many are medical personnel and how many are administrative staff?

Professor Drumm

The figure for medical and dental is 7,538; 35,818 for nursing; and 14,391 for therapists. The figure for management and administration is 17,252, of which a large number are involved in front-line services.

Professor Drumm can give us those figures in writing.

Professor Drumm

Yes.

In 2005, why did the Department of Health and Children hand back €60 million to the Exchequer?

Mr. Scanlan

There were two main reasons. One was an underspend on agencies that we fund through the Department under subhead F1. The body with the largest saving was the Mental Health Commission, due to the delay in establishing the mental health tribunals, because of the difficult negotiations with the representatives of the medical organisations. We were only able to implement it from 1 November. The other main saving was with the hepatitis C subhead which depends on the pace at which awards are made either at the tribunal or in the courts. The best we can do is provide an estimate at the start of the year of the expected demand. If the money is not spent on that it is surrendered back to the Exchequer.

Am I correct in saying there is an underspend in the IT section?

Mr. Scanlan

I believe there was a small underspend on my administrative budget. It was to do with an IT project in the general register office which did not progress in the way we had anticipated. There was a small saving. We only spent €1.2 million for computers on IT.

Does that indicate, as regards PPARS etc., whether there is any difficulty in the Department in connection with the IT area?

Mr. Scanlan

No, on the contrary, the money we are talking about here now is only IT spend within the Department and the GRO, which is a direct agency of the Department. It has nothing to do with the PPARS or the health service. In fact, as part of the modernisation programme within the Civil Service, the GRO has put in place a very good IT system. I understand it was just a question of the pace at which it was rolled out. I have no evidence of any problems with our IT system within the Department.

There was €5 million spent on capital projects in 2005. Was that a small amount as compared to the Department's overall capital budget? Given the fact of people not being able to get beds in hospitals, why is more of the Department's money not being spent on capital projects?

Mr. Scanlan

As the Comptroller and Auditor General said at the start, the Department of Health and Children's Vote now is much smaller, and not related to the health service. In the case of my capital budget, it is only €20 million altogether. However, none of that money would go to or be available——

Does the Department not administer it?

Mr. Scanlan

Yes, we administer the €20 million. However, my point is that capital investment in developing hospitals, say, beds or hospital units now comes within the HSE Vote. In the case of my Vote, the €20 million, again, is used largely either for ourselves or for some of the smaller agencies under our remit. Some €9 million was spent and there was a large underspend. In relative terms there was a €20 million provision and €9 million was spent, so there was more than €10 million that we did not spend, but this has nothing to do with funding the direct delivery of health services.

The total expenditure on inquiries was €64 million. What changes in practice have taken place, arising from the findings of those inquiries?

Mr. Scanlan

I am not sure about the figure of €64 million the Deputy speaks about.

The total——

Mr. Scanlan

I am just checking for the Deputy, as I believe that figure relates to payments made under the hepatitis C tribunal, as opposed to the cost of inquiries.

They are all inquiries, are they not?

Mr. Scanlan

No, one refers to payments made by the tribunals.

Are there any lessons the Department has learned regarding it?

Mr. Scanlan

The figure on the tribunals, which I have here, is much smaller. We have paid for the cost of tribunals including the one the Comptroller and Auditor General picked up on in chapter 13.1. With regard to the point made in the Comptroller and Auditor General's report, there is a lesson to be learned in terms of how to run the actual inquiry. I suppose one of the lessons to emerge, particularly from the inquiry examined by the Comptroller and Auditor General, and which was relevant across the public service generally, is the importance of addressing, as he said, the delicate balance between the need for an absolutely open independent inquiry and the concern about costs — in terms of how matters are organised, that clear terms of reference are established, the modus operandi is reviewed and interim reports are provided for.

In my opening statement I did not want to simply repeat everything I had already conveyed as an Accounting Officer to the Comptroller and Auditor General. Nonetheless, I set out in some detail the circumstances surrounding that inquiry and why I felt I could agree in principle with the points he was making, given the circumstances that applied at the time. It would not be fair to judge what happened in the light of current thinking, without regard to those circumstances.

More generally, I am not sure whether the Deputy is asking me about the individual inquiries, and what emerged from them. Again, if I stick with the particular inquiry on post-mortems, yes, lessons have been learned. As I said in the opening statement, there are two areas of action required. One is legislation and now that we have the two reports we are under clear instructions to prepare proposals for the Minister to bring to Government to provide a more modern regulatory framework for that area. The HSE, in turn, is implementing some of the operational requirements.

Similarly, one of the investigations mentioned is the inquiry into Our Lady of Lourdes Hospital by Judge Maureen Harding Clark. Again, absolutely, there are lessons to be learned, primarily in terms of the need to avoid a unit or even a hospital operating in isolation, without somebody having a duty or responsibility to examine whether the normal accepted national standards are being adhered to. We like to believe we are moving ahead on some of the lessons learned. The Medical Practitioners Bill was published recently, and the Minister has announced the establishment of the Commission on Patient Safety. One of the clear lessons from that report, as has happened in other countries, is that the total system must be examined. There are a great many aspects of policy designed to try and safeguard quality. However, one needs to step back and look at matters holistically.

I am not sure to whom to direct a question about medical cards. I was not clear from either of the opening statements whether there is agreement between the HSE and the Department as regards the discretionary medical cards.

Mr. Scanlan

I accept the facts as they exist, speaking for myself, although the issue arose in the context of the HSE's Vote. The Comptroller and Auditor General, because of the Accounting Officer's response and because of the fact that it was negotiated by the Department, asked for my views, and they are recorded in the report. I was simply making the point that the agreement on the discretionary medical cards — the decision to pay this money, now amounting to €10 million a year — was made in the context of very difficult industrial relations negotiations. That is the simple reality.

The talks were difficult because at the time we were negotiating the introduction of the medical card for the over-70s. In fact a review of the overall governance and systems of the General Medical Service by Deloitte & Touche was published some time ago on our website, when it looked at the true cost of the extension of medical cards to over-70s, including the cost of discretionary medical cards. The reviewers recognised and accepted that this was part of that industrial relations deal.

I believe that the Comptroller and Auditor General acknowledged that while prima facie, there seemed to be a reasonable argument for it, it was claimed, nonetheless, that a specific group of people entitled to get cards would be proportionally higher users of the system. While there seemed to be some evidence to support the IMO claim that there were 75,000 of these cards in existence, in the real world this is an industrial relations issue. There is an extant agreement with the IMO, on which we are in negotiations with the doctors at the Labour Relations Commission, and that is one of the items on the agenda for those talks. In a perfect world I would have concerns similar to those identified by the Comptroller and Auditor General. However, I have to recognise that reality too.

Professor Drumm

It is even wider than just the issue of medical cards. We are in discussion with general practitioners across the country on how we compensate them for medical cards. Historically, we have compensated them on a straightforward capitation system. Most people are aware that the provision of services can vary greatly in the comprehensiveness of the centres that provide general practice services for the public. We need a more comprehensive approach to how we compensate them for services provided to the public, especially in a context where we want to move a great amount of current hospital work into the community. This is part of an overall approach to our agreements with the general practitioners.

Has any progress been made on the coding of the system?

Professor Drumm

Those who are getting a medical card who are above the income bracket can be coded on how far they are above the actual threshold. The Comptroller and Auditor General raised the issue whether we can code on the basis of why the card was given out. Was it given out for financial hardship or because of a medical condition that caused a patient to attend a doctor much more often? Our systems are currently not coding on that basis. We have begun to code on the basis of the number of cards that are out there, but not on the basis of frequent attendance versus financial hardship.

The issue of nursing home subventions creates much difficulty in different regions. How are the different rates being worked out? People experience much hardship and we get representations about it on an ongoing basis. They say that the rates for nursing homes are higher in some places than in others. Is any progress being made on this issue?

Mr. Pat Healy

We are making significant progress on that issue and we have established a set of national guidelines, taking account of what the Comptroller and Auditor General had drawn to our attention. We responded to that in the report of the CEO. The Minister for Health and Children made a decision to take account of revised rates for subvention at €300, plus the provision of €85 million towards enhanced subvention. We have taken that on board and we will be issuing the national guidelines next week, which will provide a standardised approach to addressing that right across the country. One of the critical issues will be the difference in cost and the price of nursing homes in different parts of the country. In the west, midlands and south east of the country, the provision of €300 as a basic subvention will address many of the issues that are currently at play. The enhanced subvention will be targeted towards the larger urban areas, where the costs of private nursing homes are significantly higher. The guidelines we are issuing will assist the decision makers to apply those rules in a standardised way.

Our intention is to balance, as much as possible and within our resources, the shortfall between what individuals must pay in different parts of the country and their entitlements under basic or enhanced subvention. The introduction of national standardised guidelines will assist significantly in that.

Will the guidelines refer to existing patients on subvention?

Mr. Healy

They will refer to them. Over 4,000 existing patients should benefit immediately from that. Work on preparing to allocate that changed position will be undertaken over the coming weeks, and it will backdated to 1 January.

Mr. Scanlan

I wish to acknowledge what the Deputy has said about the representations he has been getting. That would have been obvious to us in the Department. The new policy document launched by the Minister will not be brought in until 2008, due to the need for legislation. The approach in 2008 will mean that subject to some kind of assessment of dependancy — as some people will want to stay at home — there will be a uniform assessment of means. For someone of the same means, it should not matter whether he or she is in a private nursing home in any part of the country or in a public nursing home. The level of contribution such a person will be asked to pay is the same and the State will make up the balance. For 2007, the HSE has tried to put in place arrangements that will get us a close as possible to the arrangements for 2008.

There is much on the agenda but I will try to take the items in order. For the surplus surrendered under Vote 39, Deputy Hayes mentioned a figure of €64 million, but he did not say that this figure was 27% of the net estimate provision. It is difficult for us to understand how that could happen, considering the areas that need funding. Will the multi-annual budget allocations get away from that situation? Twenty seven per cent is a huge amount to be surrendered.

Mr. Scanlan

The Deputy is right as it is a very high proportionate amount of the Department's Vote. The Deputy is looking at the totality of the health system, the demands on the system and on politicians to improve those services and he sees money being surrendered from the funding that was made available to the health system. However, under Government accounting rules, the money in my Vote is not for the delivery of services by the HSE. Professor Drumm stated at the beginning that the vast bulk of the €11 billion he received was almost all spent. I assume that if my Department was provided with money to cover the cost of awards under the hepatitis C tribunal, it is provided for that under a best estimate. If the awards do not come to that figure, the Department of Finance would not be pleased if the money was spent for a different purpose.

The introduction of multi-annual envelopes is a big help for capital expenditure. If a Department happens to under-spend in one year, there is provision to carry it forward and it is not lost to the system. That represents a big advance.

I might ask the Department of Finance about that. Is there a historical aspect to the process of giving back a percentage of the Vote? I appreciate that the money is allocated for a specific purpose, but I had hoped that the multi-annual budgets would prevent this kind of thing from happening.

Mr. Mooney

The multi-annual budgeting approach applies in the capital spending area. In the Department's case, the amount capital received is very small at around €20 million. The current spending area is still voted on a year to year basis. While we produce estimates at budget time for the immediate year and estimates for the following two years based on existing policies, the money is only voted on year to year in the current area. There is no application of a multi-annual approach across the entire system. It was introduced in the capital area about five or six years ago. It has helped to improve matters in the capital area. The issue could be examined in the future, but the question remains to be decided whether it would be applied on the same five-year rolling basis as has applied in capital spending or on another basis.

I suppose we always get more accurate estimates when applying for funding. Amazingly, the €64 million outturn for the National Treatment Purchase Fund, NTPF, exactly matched its budgeted allocation. I appreciate that funding is split between the HSE and the Department but can Mr. Scanlan tell us whether this particular allocation was applied equitably throughout the State? Were there any hospitals or consultants who were reluctant to participate in the scheme? The allocation in this area came out exactly as budgeted, which means that if some did not use the funding, others got more than their fair share.

Mr. Scanlan

In this case, funding is not split between the Department and the HSE; the money comes entirely through my Vote to the NTPF. It is fair, therefore, that this question should be directed at me. I do not have details of the numbers of patients treated by region. The policy aim of the NTPF is to target what are called "long-waiters". To some extent, therefore, the regional spend will depend on the length of waiting lists for particular services and facilities. The NTPF acknowledges that co-operation with the scheme is significantly improved, but I understand some concerns remain in this regard.

There is anecdotal evidence that there are several specialties within which consultants are not putting clients on the waiting list. I do not know how the system operates but there is clearly something wrong when people are given a date for treatment that is four years away. What is the main cause of these difficulties?

Mr. Scanlan

The NTPF mentioned a couple of hospitals in this regard. I will name them if the Deputy wishes me to do so. We are aware of suggestions that particular clinicians and hospitals are not putting people on waiting lists. The NTPF has done its best to advertise its register and to inform the public that it can make direct contact with the fund.

The facility to do so is a relatively new development and it is only available because we demanded it. It was necessary because, as I understand, the king — the person at the top of the list of consultants — was not involving people. Has that logjam been broken and is progress being made?

Mr. Scanlan

I agree with the Deputy's point. This development points to the importance here and elsewhere of involving the patient in quality assuring the system. Patients have a key role to play and we must ensure they are aware of their entitlements and are encouraged to speak up for them.

If Deputy Dennehy is asking me whether we have broken the position of the kings at the top——

I am sorry, I should not have said that. I will withdraw that word and refer instead to what may be termed "the leaders" in the provision of health services. These are people whom the public has traditionally been afraid to confront. Ordinary people may be in awe of them and are reluctant to demand that Mr. X or Ms Y put them on their waiting list. It is up to us to put across the message that everyone is playing according to the same set of rules.

Mr. Scanlan

I fully agree. There are certain leaders in the system and we have clearly not reached a stage where we are managing that situation correctly. I agree with the Deputy's comments regarding the concerns of ordinary people in dealing with individual clinicians. The advantage of the approach the NTPF has adopted is that the patient does not have to approach the consultant; instead, he or she goes directly to the NTPF.

My parliamentary question on the NTPF was disallowed and referred to the HSE. Perhaps Professor Drum will update us on how the scheme is operating.

Professor Drumm

The NTPF is a separate entity whose function is to supply services to the patients on our waiting lists. We have identified problems in specific areas and, where necessary, have discussed those problems with the relevant hospital boards. There is often, for example, an association between failure to use the NTPF and waiting times in accident and emergency departments. It is of benefit to us as well as to our patients that the system should operate more efficiently. I invite Mr. John O'Brien, director of the National Hospitals Office, NHO, and someone with vast experience of how the system works, to comment.

Mr. John O’Brien

It is important that consultants and other clinicians do not control the procedures in regard to waiting lists. They must exercise some control in that it is they who determine whether a patients needs a particular procedure. Once that determination is made, however, the patient is put on a waiting list over which consultants do not generally have any further control. Managing the waiting list now becomes an issue for the corporate institution in which the patient is due to undergo the required medical procedure.

The difficulties to which the Deputy referred are difficulties we have experienced in several institutions. I met on three occasions with representatives of the NTPF in recent months. As recently as last month, they attended a meeting of a group of NHO network managers, who are responsible for hospitals throughout the State. An arrangement was made at this meeting whereby the NTPF will be given a clear indication of the numbers of patients that should be referred to them by individual hospitals on a monthly basis. These numbers have been agreed with the hospitals and provisions are in place to assure those referrals occur in accordance with anticipations. The hospitals will submit monthly reports to us and where they show that referrals are not proceeding as anticipated, we will engage the hospital board in a review process. In this way, responsibility is shifting towards the corporate hospitals themselves rather than individuals.

Alarm bells should go off when any specialty service does not seem to be operating correctly.

Mr. O’Brien

Absolutely.

The seven-year plan for cancer treatment includes a commitment of €25 million for the expansion of the BreastCheck programme. Is there any truth in recent rumours that the programme is experiencing difficulties and is failing to meet its targets? In particular, are there any difficulties with staff numbers or funding in respect of the project at the South Infirmary Victoria University Hospital in Cork?

Mr. Scanlan

That project is proceeding on target, as are other BreastCheck schemes in the south and west.

In response to the overrun in respect of the post-mortem inquiry, some might contend that this is inevitable because we are not geared to deal with inquiries. In recent years, however, we have established a track record of setting up inquiries, including the Ferns inquiry and the Lourdes Hospital inquiry. The post-mortem inquiry is a disaster in several respects. I appreciate that the Comptroller and Auditor General is concerned at financial overruns, but I am just as concerned by the failure to meet the needs of the parents for whom it was established. Parents for Justice Limited is doing excellent work in the area of counselling and other support services but its members must be shattered at the failure to provide any answers to their questions.

What is the Department doing to provide those answers? What is the position regarding the guarantee given to those parents who participated in this process that a second phase would be delivered, involving a statutory inquiry? What lessons were learned from the entire exercise?

Mr. Scanlan said he agrees in principle with the Comptroller and Auditor General's comments. I am unsure what that means because an inquiry was set up to provide answers to those whose children had been operated on and such answers have not been provided. To be brutally frank, aside from the funding issues the operation of the inquiry has been something of a disaster. I would like answers to those three questions, specifically for the parents involved. When will the parents be provided with answers, what lessons have been learned and what is the position regarding a second phase, which was agreed with them?

Mr. Scanlan

Essentially, the position is as set out in the Comptroller and Auditor General's report. The report by Dr. Deirdre Madden followed on from the first inquiry and I understand that from the Department's perspective, it has provided answers to the questions asked. The Department is implementing the report and that will constitute the end of the process. I am unaware of the process going anywhere else.

I am unsure whether the letter, dated 24 January, from the administrator of Parents for Justice, Ms Charlotte Yeates, has been forwarded yet to Mr. Scanlan. It should be given to him because it is from those for whom the inquiry was established. They are completely dissatisfied and have not received answers, which is entirely unsatisfactory. Primarily, the inquiry was set up for them, as well as to avoid repetition.

The letter was forwarded yesterday.

I am surprised Mr. Scanlan believes that nothing further is to be done. Will the agreement to have a second phase be honoured? The Minister gave a commitment to the effect there would be a second statutory phase.

Mr. Scanlan

I received a copy of the letter and have it to hand. I will repeat my earlier comments, namely, it is my understanding that on the completion of Dr. Deirdre Madden's report, it was referred to the Oireachtas Joint Committee on Health and Children and that this what the Minister had initially discussed in terms of phases one and two. There are certainly no plans within the Department to conduct a further phase.

I accept the Deputy's point on the feelings of individuals in this regard. In many respects, my comments on the Comptroller and Auditor General's report were probably expressed in hard and cold Civil Service language. I was trying to convey a sense of the sentiments at the time when this inquiry was first established. As the Deputy noted, it is legitimate for the Comptroller and Auditor General to consider cash and financial issues. However at the time, the level of emotion and the other matters mentioned by the Deputy were probably the overwhelming considerations in respect of the Department's advice to the Minister, as well as the Minister's decisions as to how the inquiry should be conducted.

That said, events happened as they did. The Department has received a report from Dr. Deirdre Madden that has been referred to the Oireachtas Joint Committee on Health and Children. The Minister has accepted it, the operational elements are being implemented by the HSE and the Department is working on the legislative elements. I am unsure whether I can add anything useful that would not simply add further to people's hurt.

I must revert to the people involved in Parents for Justice to ascertain their views.

I wish to turn to discretionary medical cards as I am concerned about the direction of the discussion in this regard. I accept the Comptroller and Auditor General's significant concerns in respect of the financial implications of the question whether people have been paid for the correct number of cards and similar matters. However, I wish to defend the practice of issuing discretionary medical cards. People state that politicians become involved by arguing for medical cards, which is true and I make no apologies for it. Politicians always operate in respect of cases of what used to be referred to as category C, that is, medical hardship.

In my experience, many such cards have been given to cancer patients. Most of the cases with which I was involved concerned such patients, for whom there should be an automatic entitlement, as there was with the list of the prescribed medical conditions. I refer to the old pink card, whereby people with certain medical conditions received the card.

The practice of issuing discretionary medical cards should not be interfered with in any way. The number of and reasons for issuing such cards should be known and I have no problem in that regard. However, I am somewhat concerned that a message might go out. The Irish Medical Organisation, IMO, appears to be against the idea that cards could be issued by the equivalent of a health board CEO, his or her programme manager, or whoever. They are an essential part of the supply of front-line services. The degree of shock and trauma to people who find they or their family members have cancer is sufficient without the additional pressure posed by financial implications.

Does anyone wish to comment?

Professor Drumm

I will respond. I hope my comments did not lead Deputy Dennehy to make any inferences.

No, they did not.

Professor Drumm

The HSE agrees with the Deputy that discretionary medical cards are essential. To be fair to the Comptroller and Auditor General, his report highlighted an issue for the HSE, namely, the remuneration for such discretionary cards has been higher than would be the case for a regular payment on a medical card. The HSE must begin to clarify when such additional remuneration is, or is not, justified. However, we are at one regarding the need for discretionary medical cards and fully support the Deputy's view that the facility should remain.

I wish to make two brief points. On nursing homes, I welcome the proposed introduction of a new system. Is it worth including the proposals relating to the principal accommodation or the family home in this process? This aspect has been used to argue politically against the new proposals. While this is a policy matter, do the witnesses judge it worthwhile to include such a complication in what appears to be an excellent scheme?

During the debate today in the Dáil on the Health Bill I reminded Members that nothing was in place before 1993. Nothing was available to those who were obliged to pay in those days. One encountered people who became suicidal because they were obliged to pay for everything, but were unable to so do. We have come a long way and the position is improving. I appeal to the witnesses to ascertain whether this issue can be tackled. It would not have significant future implications in respect of people paying something back. It constitutes an irritant as much as anything else and should be reconsidered. However, I appreciate this is a policy matter.

As time is tight, I will make a final point. Several times, Professor Drumm has mentioned the difficulties involving the IMO, the consultants and the pharmacists. The chairman of the Labour Relations Commission has appealed to people to cast aside their vested interests, come out of the trenches and work together. If one accepts this, is it incorrect to tell the Irish Pharmaceutical Union, IPU, that the HSE may be committing a criminal offence by entering negotiations with it? I understand the provisions of section 4 of the Competition Act 2002 are being employed in this regard. The IPU has been informed that not only might it expose itself, but that each pharmacy contractor, as well as their directors, managers and officers would be at risk of criminal prosecution. This language is fairly extreme and worries me. Have the Competition Act, the relevant EU legislation and a few other matters boxed us into a corner in this regard?

I appreciate the negotiations were already difficult. However, I am particularly concerned in respect of this matter because everyone should be upfront and open and should try to work together. The prospect of having a separate contract with every pharmacist in Ireland is unwelcome. Does Professor Drumm have any comments in this regard and on labour relations in general?

Professor Drumm

Clearly, this issue has frightened many people to an extent. However, I must point out to Deputy Dennehy that the HSE did not set out to get a legal opinion in this regard. The IPU sought a legal opinion regarding our negotiations with wholesalers, as it had some objection to the HSE so doing. The entire issue was raised as a consequence of that legal opinion after we sought clarification in this respect. This led to the involvement of the Attorney General and to the HSE seeking assistance from the Department. These events were set in train from the pharmaceutical side and were outside our control.

Be that as it may, the present position is as it is and I am not in a position to tell the Deputy whether EU regulations might be overcome. I do not know whether the Department's representatives are able to comment.

Is it too much to ask whether there been any progress with PPARS?

I will allow that one.

Professor Drumm

I can comment on that issue. As the Deputy knows, we stopped rolling out PPARS after my arrival. People are tired of reviews, but an ongoing structured review of PPARS has led to its being stabilised where it exists, namely, St. James's Hospital, the midlands, the north west and the mid-west. It has been made operational and we have been able to return most of the people who had worked on it to the system. PPARS is no longer a system in development. It pays 35,000 staff and, in other areas, keeps the personal records of a large number of staff.

While we have controlled the expenditure on PPARS and stopped its roll-out, it should not be discontinued. Between now and June, we will have finalised the business case as to whether it should continue to be used. As a single organisation, this is what we must do because many of the problems encountered by PPARS resulted from trying to operate it slightly differently across 11 areas. We have learned much from the Comptroller and Auditor General's report and, by June, we will have a clear opinion on whether we will continue with PPARS and roll it out, which we will forward to the committee.

I want to pursue the issue of the post mortem inquiry raised by Deputy Dennehy. He is correct in that a commitment was given in writing to the representatives of the parents to the effect that Ms Dunne's inquiry, which was on a non-statutory basis, was phase one and would establish the facts while phase two, which would be on a statutory basis, would assign any culpability. Those who would not co-operate with phase one would be obliged under law to co-operate with phase two.

The Madden inquiry was never envisaged. It came about because the Dunne inquiry ended in a shambles. To say that the Madden inquiry was phase 2, as Mr. Scanlan suggested to the Deputy, is not correct. Will there be a statutory inquiry, will there be an attempt to decide whether people were culpable, will persons in institutions who did not co-operate with the inquiry be approached and is the Department holding ongoing discussions with the parents' group to determine whether their issues can be resolved?

Mr. Scanlan

I am sorry if I said the Madden inquiry was phase two. I meant to say that the Madden report was referred to the select committee last January. I would need to check the records for the letter from the Minister to which the Chairman referred.

From having read the file at the time and the Comptroller and Auditor General's report, there was talk of a second phase conducted by an Oireachtas committee and a possible statutory phase. There were subsequent developments regarding the issue of Oireachtas committees and their roles in such inquiries. All I can say is that there are no plans in the Department to have a further inquiry or phase. I will examine the letter received by the Chairman that he sent to us, but it would be misleading of me to sit here and say anything else.

What was the method of appointment of Ms Dunne?

Mr. Scanlan

It is my understanding that she was appointed by the Government on the advice of the Attorney General.

What were the full payments made to Ms Dunne and her legal team?

Mr. Scanlan

The figure given in the report for the legal costs of the inquiry team is €7.7 million.

If there was no end product, for what did the Department pay?

Mr. Scanlan

The Comptroller and Auditor General's review was a review of how the Department managed the inquiry, not how the inquiry operated. I am not sure about whether the Department has any role in that respect.

Did the Department of Health and Children sign off on the payments?

Mr. Scanlan

Absolutely. The payments were made by the Department on the basis that these were the agreed fees for the individuals involved. Perhaps I am picking the Chairman up incorrectly, but we seem to be getting into the territory of the way in which the tribunal operated.

I am not asking about that. There was an agreement to pay people fees for a particular project, namely, the production of a report. The people did not produce a report, but the Department paid them. This is what I am questioning.

To expand on this point and put it in context, to call 3,500 pages of script and approximately 20 boxes of ancillary documents, which were handed over to the Department, a report under pressure from the Department and the Minister is an abuse of language. If one examines the report of any tribunal, it does not have 3,500 pages, but when Dr. Madden was appointed, she was able to take the basic material and produce a report and make 60 recommendations in approximately six months. Why did the Department pay the people who failed to produce a proper report?

Mr. Scanlan

I would need to check the file, but I am fairly sure that the agreement, which was approved by the Government and sanctioned by the Department of Finance, was to pay a daily rate of fee for people engaged in this work. This is my understanding of the basis of the engagement. It was not a fee to produce a project. One could argue that this is a lesson to be learned, but it is not. As the fees were claimed throughout the course of the inquiry, the Department had no basis for assuming that people were not working on the inquiry, which was the basis of the engagement.

Is it not like someone paying for a house when all that is on the site is a couple of thousand concrete blocks, a couple of loads of gravel, timber for the roof and slates? Is that not a reasonable analogy?

Mr. Scanlan

I agree with the Chairman in the sense that, reading this, I thought of something similar. If I was getting work done on my house and entered into an arrangement with a builder or so on, would I be the sort to pay a daily rate without having a sense of how long the job would take or the quality of the work or would I agree a fixed price for the job?

As the Comptroller and Auditor General's report records, the basis upon which the tribunal was set up was not the way the Chairman or I would arrange a job on either of our houses. An arrangement was approved and sanctioned and the money was claimed and paid on that basis.

Did the Department draw up terms of reference?

Mr. Scanlan

The terms of reference were approved by the Government, but as the report records, the interpretation of the terms were left to the chair of the inquiry, as stated by the Minister at a meeting with the chair.

That is right. The Government handed down the terms of reference, but it was left to the chairperson to interpret them. What does that mean in the real world? Terms of reference are either followed or not followed. If one allows someone to interpret them, it looks as if the person is making it up as he or she goes along regardless of the terms of reference. I cannot understand what happened.

Mr. Scanlan

I have two points. There is no point in denying the facts and I can understand what the Chairman is saying and his questions, which show the value of the findings of the Comptroller and Auditor General's review. It is my understanding that what happened in this inquiry was mirrored in many respects by other inquiries. While the Comptroller and Auditor General only records the fact that the Attorney General wrote to the chair of this inquiry in the context of a general review of tribunals, it would be fair to say that an investigation of the genesis of the general review would reveal an emerging concern about the very points raised by the Chairman.

The issue of patient accounts has been raised on a number of occasions over the past three or four years. The Comptroller and Auditor General made a recommendation on the issue in 2005, which he might rehearse for the committee.

Mr. Purcell

The Chairman is probably referring to the special report we prepared on health sector audits in August 2004. That report covered several areas, including patient private property accounts, which we had previously raised in the context of individual health boards. Chapter three of the report illustrates the different approaches taken by the various health boards but perhaps the Chairman wants me to quote paragraph 3.21: The existence of conflicting legal advice places a question over the policy of retaining interest and charging administration costs without an agreement with the patient. The legal position should be resolved as soon as possible and all the health boards should be placed on a common footing with regard to charges and investment income.

We received commitments from Mr. Scanlan that this would happen a long time ago. What is the present position?

Mr. Scanlan

I recall discussing the issue with the committee because it was my first appearance before it. Mr. Kevin Kelly, the interim CEO of the HSE, was with me and my memory of the meeting is that Mr. Kelly confirmed that the HSE was going to seek single advice. The Chairman put it to me that the issue was of such importance that I should seek the advice of the Attorney General, which I undertook to do. While Professor Drumm can discuss the HSE, we have received advice from the Attorney General on the issue.

The issue arose on a subsequent occasion and I wrote to the committee in July 2006 to update it on what the Department had done about it. As we promised, we have provided in legislation for the future operations of these accounts. We put them on a sound statutory basis by providing appropriate protections for the individuals concerned and the legislation also makes provision for regulations to be introduced by the Minister regarding the charges to be levied on accounts. During the intervening period, the HSE has been receiving legal advice, about which Professor Drumm may wish to comment.

Professor Drumm

I will ask Mr. Woods to comment on the issue

Mr. Liam Woods

With regard to the points raised by the Chairman and the general report of the Comptroller and Auditor General, the HSE, on its formation, sought legal advice on the matter of patient private property accounts and received the first advice in September 2005. The issue to which the general report of 2004 refers concerned the nature of the legal relationship between patients and the health boards. The clarity provided in the opinion of September 2005 was that a trustee-truster relationship existed rather than the proposed alternative of bailee-bailor relationship. The implication is that it is permissible in a trustee relationship to charge for the administration of patient private property accounts.

Further advice was sought regarding what charges could be imposed and around the end of the first quarter of 2006 it became clear, based on the arrangements put in place historically by health boards for patient private property, that it was not appropriate to impose charges. In that context, the decision triggered a series of actions within the HSE. The HSE has examined the implications of the decision and, as the Secretary General has stated, legal provision has been made in recent legislation for imposing charges. The HSE is currently carrying out an exercise to estimate the charges made over the years to patient private property accounts and we are taking advice with regard to how far into the past we should go. The challenge we are now facing is that the records will not go as far back as we would wish. We hope to have full quantification of the matter by the middle of this year, based on the best information available to us. By way of indication, the effect of this charging arrangement on one client with an average balance in 2005 would be the loss of between €70 and €120. However, we clearly need to calculate these amounts.

The HSE has introduced interim guidelines for charging which have become a national standard across the structure. These guidelines set out clear criteria for the management of patient property. We have also established a central investment fund for ensuring best return for patient on the funds available for investment, a matter to which the Comptroller and Auditor General's 2004 report referred. That fund is now operating out of Tullamore and is being managed through a single system linked to the health repayment scheme. The final legal opinion clarifying this issue was received during 2006. We are now calculating the extent of any liability that may exist.

With regard to the interest earnings held, the HSE has already established a scheme with KPMG and another accounting firm to arrange repayments on the illegal nursing home charges. Will another scheme now be required to repay the relatively small amounts of interest accrued on patient private property accounts? Will a considerable degree of overlap not exist between the two schemes?

Mr. Woods

There is no intention at this stage to establish another scheme. The requirement on us will be to quantify the amounts charged, which we believe will be significantly smaller. The scheme to which the Deputy referred is intended for making payments under the health repayment scheme, which is also operated from Tullamore with the involvement of an outside contractor. In the first instance, we will carry out an evaluation based on the available data of the potential quantum and we will use the information which has already been obtained through the repayment scheme to the extent it is possible to do so.

Is it the case that a high percentage of elderly or psychiatric patients in long-term care would not make use of the patient private property account schemes? What percentage would hand over their pensions to hospitals?

Mr. Woods

I do not have the figures to hand but I can tell the Deputy that approximately 15,000 patient private property accounts exist across 170 locations.

It is high. Many people opt for it. Does Mr. Woods know what the money earned on the interest on the private patients' accounts was used for? There were suggestions that it was used in various institutions for partial refurbishments, painting or extra curtains. Is that correct? That was the common understanding.

Mr. Woods

The guidelines issued make it clear that patient funds can be applied only for purposes directly relevant to the patient and not for the kind of matters to which Deputy Burton refers. I have not anecdotally come across instances such as the Deputy mentioned.

What was it spent on?

Mr. Woods

In the time of the health boards the main intention was to use the resource to fund the cost of administering the scheme across the 15,000 accounts in the 170 locations.

Was that accounted for in the accounts as an administration cost?

Mr. Woods

Yes, in the patient private property accounts, not in the accounts of the HSE.

Has Mr. Woods a timeframe for the contractors to arrange the repayments? We receive a number of complaints from people. Yesterday my colleague Deputy McManus raised a case of a lady who is happily celebrating her 101st birthday, but it is proving difficult to find out when she might get her refund. Is there any prioritisation of people who are entitled to refunds who are reaching a venerable age? We would like to see them receiving the funds while they are still able to use them. Is there any way to indicate to such people the timescale for repayment by the contractors?

Mr. Woods

There is a commitment in the scheme that payment to all valid applicants will be made within 28 days. The scheme commenced repayments in December 2006 and the guaranteed 28-day turnaround time is being adhered to.

I refer back to the issue of the additional remuneration paid. In the Comptroller and Auditor General's report I noticed that the extra remuneration was approximately 14.5% of the payroll payments by the HSE and that there was an analysis of the 22 top earners. The three highest earners worked an average overtime of 75, 68 and 51 hours per week on top of their ordinary standard working week of 39 hours. Do I understand that correctly? How could that possibly be safe? We have all heard horror stories of what unfortunately happens to some people in hospitals. Under health and safety risk assessment could those extraordinary numbers of overtime hours be safe?

Professor Drumm

Perhaps I should comment on that. The answer is no. We have to accept that there is a significant risk at all times if people work very long hours. As the Deputy knows this has been highly prevalent in the health services and therefore the European working time directive was a serious challenge to health services in Ireland and across the world. Although these hours breach the European working time directive, we accept that we must come within the directive and are working hard to do so. We are in an ironic situation where we also have to negotiate with the representative bodies for non-consultant hospital doctors to bring those hours down because a significant loss in income is potentially associated with a reduction in overtime.

What is the baseline rate for a non-consultant hospital doctor? What are their average gross earnings excluding overtime?

Mr. Woods

At a registrar level it is approximately €55,000. The house officer and intern would earn less. The specialist registrars would probably be in the range of €55,000 to €65,000. At the extreme end, figures indicate that some of these people could make €150,000 to €160,000 above this.

Would they not be in a complete state of exhaustion unless they were simply sitting in an ante-room waiting for a bell that never rings?

Professor Drumm

That is an interesting point because there is a significant difference in on-call work. Some people are on call at home, others are on call in busy specialties in hospitals, and they are paid the same.

Professor Drumm

One could be on call for a specialty that has little call-in. Call-in rates are itemised in this jurisdiction and elsewhere. Deputy Bruton is pointing out an inequity in how we pay for that overtime. It raises the question how somebody could work those long hours and be working all the time.

Is the HSE doing anything about it? Is it part of the national negotiations?

Professor Drumm

Absolutely. There are several pilot projects under the auspices of the LRC. At nine pilot sites we are exploring how we can meet the extended working time directive. We are trying to see how new rosters can be put in place on these pilot sites, which include some of the biggest hospitals in the country, to see if the service can be run without affecting quality of service. As we run them on reduced overtime hours we continue to pay all the overtime we paid beforehand because those are the conditions under which the——

Can Professor Drumm explain that?

Professor Drumm

It is good that the Deputy has asked——

He is paying the same overtime although people's hours have been reduced. So somebody who used to earn €150,000 as a registrar with these extraordinary hours is guaranteed to retain those earnings although those hours have reduced dramatically.

Professor Drumm

Absolutely, on those pilot sites. It was the only way agreement could be reached.

Could that be called a bribe or an inducement?

Professor Drumm

The representative organisation involved agreed to enter the pilot projects examining a reduction in hours. Deputy Burton will remember that for many years the cry was constantly in the public arena about the number of extra hours we had. We now have to pay for those hours to enter into a process that allows us to examine how they might be reduced. I have to accept that this agreement has been reached under the LRC and we have to work within it.

On the remuneration, Professor Drumm's statement also referred to the fact that some of the payments related to former senior staff in the old health boards who were, presumably, taking redundancy or retirement packages. Does Professor Drumm have an indication of the highest and lowest or the average package figures?

Professor Drumm

If we could refer to Mr. Woods on that we could give the Deputy that information.

One understands that a number of these people have been re-engaged as consultants. Is there a policy on that and to what extent are they re-engaged as consultants or contractors in part to their former jobs or areas?

Mr. Woods

The arrangement was common across all the former chief executives of the health boards. It included a normal lump sum pension, a severance element of 26 weeks pay and an ex gratia payment which equated to the same. The final element was a €10,000 retraining grant which was subject to being vouched. The lump sums ranged from €189,000 to €274,000. The pension elements are standard at approximately €60,000. The severance and ex gratia payments were approximately €60,000 each. For one person the total was approximately €380,000. For 2005——

Is that €380,000 the average payment?

Mr. Woods

It is not far from being the average, though arithmetically it is not quite so.

Could Mr. Woods give an indication of the highest amounts?

Mr. Woods

It is a fair enough average. The highest is approximately €385,000. I am adding a full-year pension but 2005 was a half year, the termination coming at the end of June 2005. In that context, the pension would only be €30,000, rather than €66,000. What was the Deputy's second question?

How many of those people would be engaged again as consultants or contractors or provide services, primarily to the HSE but also to the Department, through companies?

Mr. Woods

I am not aware of the figure. Pension abatement would normally apply if a person who had retired from the service returned to work. In that context earnings would be offset against any pension receivable to the extent that those earnings were from the health service.

Will Mr. Woods inquire as to the situation in that regard?

Mr. Woods

I will.

Can Mr. Scanlan clarify a point relating to discretionary medical cards, which were discussed earlier? I understand why they exist and have no difficulty with them but my concern is about their number. Is the figure of €10 million per annum, €50 million for the period examined by the Comptroller and Auditor General, negotiated rather than based on the number of discretionary medical cards allocated to individual doctors?

Mr. Scanlan

The figure of €10 million was negotiated with the IMO and was based on a suggestion by that body that there were 75,000 discretionary medical cards in existence. The Department carried out certain checks to validate that figure in general terms but there were no absolute figures. As the Comptroller and Auditor General stated, the money was paid pro rata through a doctor’s GMS list, as opposed to being tagged to each card.

So it was not tagged per discretionary medical card.

Mr. Scanlan

It was not.

The issue of medical cards has previously come before this committee. My specific concern is about the fact that, some years ago, we looked at the number of duplicate medical cards and those in circulation for people who were deceased. I am disappointed to learn that, several years on, the fundamental programme of monitoring and controlling the issue of medical cards has not been tightened so that we can see how many cards exist, irrespective of their category. Are the medical cards issued in the normal way monitored closely or could the problems experienced recur?

Mr. Scanlan

The Deputy is correct. The money is not tagged to particular cards, enabling the identification of the number, because it was an industrial relations concession and we never pretended it was based on an exact number of cards. My colleagues from the HSE may wish to comment but my understanding from a briefing I received some time ago was that the system for cross-checking medical cards with PPS numbers was now all but complete and far more robust. There were, however, some suggestions that caused me some concern, on which the HSE may comment.

Professor Drumm

A much more robust system is now in place. Medical cards are reapplied for every year and we must wait for that process to be completed. In the coming year all medical cards will be accurately recorded on the new and very advanced IT system now in place, that allows a general practitioner to check in his or her surgery, the eligibility of a patient to have a new-born baby logged on to the system. Our PCRS people have developed very advanced systems, to the extent that they can even use their mobile telephones to deal with GPs. They may also remove a patient whom they know to be deceased so there will be no excuse for GPs not to do so, or for the HSE not to enter a patient. The system is much more comprehensive and will allow us, in a short period, to identify all discretionary medical cards.

I ask Mr. Purcell to comment on this issue.

Mr. Purcell

I know what Mr. Scanlan is saying to the effect that this was part of a negotiated deal with the IMO at the time, in the context of broader negotiations relating to the extension of medical cards to the over-70s. We held a few sessions on the costings for that and the way it was implemented. In this case there was a condition, as Professor Drumm said in his opening statement, that a person had to be significantly in excess of the medical card guidelines and have a medical condition requiring more frequent attendance at a GP. Not all of the 64,000 discretionary medical cards, which is the latest figure, fit that condition. Effectively, the Department entered into an agreement but was unable to police it. The original intention, stated in the chapter, was for an analysis of the cards to be carried out to see what doctor provided what services to what people. The problem with entering into an agreement of that nature and undertaking to carry out the exercise presupposes that a body has the necessary records for obtaining the information. This agreement dates back to 2002 but we are not really any closer to that goal in 2007.

The HSE is trying to ascertain by how far people exceed the limit but events have overtaken it. As recently as last December the Department wrote to the HSE. One interpretation of a letter from the director of primary care in the Department to the assistant national director of contracts, primary, community and continuing care is that it suggested forgetting about determining the number of discretionary cards issued in the past. I have a real concern that GPs are being overpaid in this regard on the basis of the agreement entered into. Also, certain GPs are getting paid but have no discretionary medical card holders, because they are issued on an average basis by reference to their panel. That is why I was so upset about it.

The problem was identified four or five years ago. Initially there was supposed to have been an additional €2.5 million for 20,000 such cards. It subsequently emerged that the figure was 75,000 and for the past five years we have been paying approximately €10 million per year, €50 million in total. Is the problem still current? Are we still paying for 75,000 so-called discretionary cards when in reality there could be substantially fewer? Is it not time for a conclusion to be brought to the issue?

Mr. Scanlan

I will answer both questions together. I agree with all that the Comptroller and Auditor General said, with one caveat concerning the letter issuing from the Department suggesting we forget about the discretionary cards. I agree with Professor Drumm about the need for cards to be granted to individuals who have particular needs or expenses. I also agree with the Comptroller and Auditor General that events have overtaken this matter. Part of it relates to industrial relations peace, on which we are now back in discussions with the Irish Medical Organisation. Part of it relates to the introduction of the GP visit card which has added a whole new category.

There is a big issue relating to how non-discretionary medical cards are granted. I assume the information collected by the Comptroller and Auditor General related to the number of discretionary medical cards. I agree that a total of 66 indicates that not all of them fall into the category supposed to be covered by this payment. I wonder if ordinary medical cards are granted below the line, owing to higher medical outgoings, rather than purely on the basis of income. I previously said to the committee that the system of eligibility for medical cards should be examined to ensure it was fair, equitable and consistent across the country, while taking medical needs into account. There is a commitment in Towards 2016 to this effect. My point is that all of these factors have overtaken that commitment. For good or ill, a little like the case of the junior doctors, we did a deal which involved the payment of what initially was a sum of €2 million. A subsequent IR deal saw this amount rise to €10 million; it was not that someone had underestimated the number of medical cards.

It was alleged that there were 75,000 such medical cards and that was the basis of the deal.

Mr. Scanlan

I agree absolutely. If I had a choice, I would like to stop paying this money but I do not think the Health Service Executive is in a position to make that decision in the immediate future because it is still involved in an IR process. I told the committee previously that, given the issue of industrial relations with the highly unionised health service workforce, it was important peopled realise many of these deals imposed significant costs on the health service and, therefore, had an impact on the services delivered. Such matters are often portrayed in the light of the Government, or the Department, refusing to deal with a bunch of well meaning and caring people.

They say all politics are local and as Professor Drumm is present today, there is an issue I must raise with him. A plan for the use of an alternative site for the national children's hospital has been lodged. The Department painstakingly examined the McKinsey report and selected the Mater Hospital site as a result. What is the current situation regarding the planning application lodged today — this may be outside Professor Drumm's remit — and the delivery of a national children's hospital?

Professor Drumm

As Mr. John O'Brien is head of the transition group charged with initiating the process to deliver the national children's hospital, I will ask him to comment.

Mr. O’Brien

Where is the M50? Is the committee member referring to that big parking lot circling the city? An individual, identified in this morning's newspapers, made an application for planning permission, having previously made a submission to and been interviewed by the original task group regarding a similar project, in the vicinity of, although perhaps not on the same site. Contrary to newspaper reports, nothing new has been presented that was not, by and large, part of the considerations of the original task group.

Effectively, is the planning application that has become public knowledge today something the HSE has already evaluated?

Mr. O’Brien

It may not have been precisely what the individual had sought planning permission for but the same grouping made a submission to the task group that made the recommendation that the national children's hospital be built on the Mater Hospital site. This submission would have been considered within the framework of locating a hospital on a greenfield site in that general vicinity.

Regarding the site to be given to us by the Mater Hospital, this is not a Mater Hospital issue. The Mater Hospital will cede a site, free of charge, fully unencumbered to the HSE to build the new hospital. It will be independent of the Eccles Street site, straddling the site to the North Circular Road. The transition group is in the process of securing this site from the Mater Hospital. The critical issue concerns the development of what we call a framework brief — the description of the hospital. It will cover factors such as model of care and how the service will function and will take around three months to complete. This will form the blueprint for a development board which is to be established to develop the hospital on the site. It is difficult to put a precise timeframe on the development but it will probably take four to five years to complete.

Not everyone has been fully supportive of this idea and the co-location argument has also been made. Does Professor Drumm believe any of the other options make sense or is the matter closed?

Professor Drumm

I did not come to this saying I would build a co-located hospital. I said for many years that we needed an international review to get beyond the internal fighting between the children's hospitals which had paralysed progress. As a result, McKinsey was brought in and, despite the confusion, had a great deal of interaction with 19 centres across the world and came forward with a very clear recommendation that we needed one tertiary centre. It is amazing that we needed international agreement because it was self-evident to everyone with a knowledge of children's health care matters in dealing with complex diseases that what had gone on for 20 years was a disgrace.

The location of the hospital was the second issue and McKinsey stated that ideally it should be co-located with an adult facility. That did not provide me, or anyone else, with an à la carte menu to make decisions. My job was to say on behalf of the HSE what had been described. We had a meeting, which we thought might be fractious, with all interested parties, including the children’s hospitals and parents’ groups, in a local hotel and, remarkably, everyone thought the plan was wonderful. Reaching that point was considered a wonderful achievement but, lo and behold, not everyone thought it was so wonderful when we went to pick the site.

On the choosing of the site, there has been a great deal of emphasis on paediatric input and Dr. Berman, with his places in Florida, who contributed to the McKinsey review. As a site had to be picked by experts in the areas of infrastructure, transport and so on, the main part of the group was comprised of engineers and architects. The third group, critical to this, was comprised of population health doctors — those who plan for the services which will be required in the coming 20 or 30 years and determine what demographic changes will mean for services. I was a paediatrician; I have no expertise when it comes to population health matters and demography but it is funny how a remarkable level of expertise seemed to appear in these areas. Paediatric input is now needed at this stage of the process when, as Mr. O'Brien said, we are setting up the framework of what should go into the hospital. It is ironic that at the point where we needed engagement at this level, people suddenly decided not to engage. It is now that we need huge paediatric input.

Through having many experiences with them — I was part of the group for 15 years — I am hopeful and convinced that the people on the Crumlin site who have contributed so much to child health care in this country are absolutely committed to doing what is right. There will always be fear in a process of change, but I believe the people on that site will commit to this and they are central to getting it right.

Mr. Scanlan, I am seeking further clarification on the point on which the Cathaoirleach pressed you earlier, namely, the costs of the post mortem inquiry which is more accurately known among ordinary people as the inquiry into the scandal of organ retention. When the legal costs are laid in front of us, even for someone like me who has witnessed in this committee inordinate figures arising from legal costs to tribunals, it still shocks. How can the Department have agreed to circumstances where, from March 2001 to March 2005, €7.7 million in legal costs are spent? Not only that, €5.6 million of that sum is divided between three individuals. I thought it was a misprint. It was €2.5 million for the chair and two barristers got €1.65 million each, approximately €412,000 per year over four years.

When I read in the Comptroller's report that the inquiry team caused 54 bankers' boxes and materials to be furnished to the Department of Health and Children, it came to mind that perhaps the boxes were stuffed with returned fees from the barristers who had an outbreak of decency considering that after four years they had produced a mishmash. It was either that or the fork-lift on which the 54 boxes were brought must have been made of solid gold paid for by the barristers. It beggars belief. One can understand how these figures would cause outrage to the ordinary taxpayer.

Mr. Scanlan did not fully clarify the position to the Cathaoirleach. Before this inquiry was launched, did the Department of the Health and Children sign off and agree that these barristers would get €400,000 per year and the chairperson would get €2.5 million overall?

Mr. Scanlan

I can confirm that the figures the Deputy has are correct. The Chairman asked if agreement had been reached beforehand that people would be paid those amounts per annum or in total. This was not agreed. Brief fees and daily fees were agreed and approved at the outset by all the relevant parties. That was the nature of the remuneration system for legal people involved in this inquiry and, to the best of my knowledge, this was in line with the arrangements applicable to other tribunals.

Let us take the example of barrister X. Barrister X sent a paper to Mr. Scanlan's desk outlining how many days he worked and stating his fee. How much per day did the barristers get?

Mr. Scanlan

Broadly speaking, claims were certified by the chairman, submitted to the Department and paid on that basis. The Deputy is broadly correct in how he described the process. The documents I have are not dated, but the currency is punts so it must be back in the early days. The chairman had a brief fee of £30,000 and a daily fee of £1,500.

Is that in punts or euro?

Mr. Scanlan

That figure is the total in punts and I do not have it converted to euro.

Does Mr. Purcell have a converted figure?

Mr. Purcell

Yes. The brief fee for the chairman was €38,092 and the daily rate was €1,902. The brief fee for the two senior counsel was €31,473 each and they got the same per diem rate of €1,902.

In the Comptroller and Auditor General's report, there is a record of a letter from the chairperson to the Minister dated February 2001. The chairperson sets out the terms under which the team were embarking on the inquiry. She indicated that it would take substantially longer than the six months envisaged. She also indicated that she would require at least one senior counsel on a full-time basis. She also indicated that she and two members of the legal team would be operating with flexibility and this would allow them to tend to legal work other than that of the inquiry. She felt this was necessary in order to maintain connection with the Law Library and their respective practices.

Therefore, the individuals in question were not full-time and were able to work with flexibility. When Mr. Scanlan completes his round of questioning with Deputy Higgins he might return to this point. How many days did they dedicate to private practice and the inquiry?

This is worse. We have three moonlighting lawyers holding the taxpayer to ransom. In view of what we are hearing today, the Law Library, or certain elements of it, should adopt an effigy of Dick Turpin as its mascot.

After seven or eight months had passed and the bills kept arriving, did bells not start howling around the Department of Health and Children saying that this could not continue? Why was not it stopped?

Mr. Scanlan

As recorded in the report, there was a point at which the chair of the inquiry told the Minister it was not envisaged that the work could be carried out within the six months. I understand an 18-month period was then agreed. When it became apparent, in the summer of 2002, that the deadline was unlikely to be met, alarm bells certainly rang. There was a great deal of discussion about this and the Minister again met the chair. Throughout the process it was becoming clear that a deadline would be missed. The Minister met the chair of the tribunal on several occasions. The difficulty is the Deputy's final question. He asked me if the thing should have been closed down. Ultimately, one could say — the facts are set out there — that on foot of the Attorney General's review a decision was taken that the inquiry's proceedings would be brought to a halt at a given date. As the Chairman has already said, that did not translate into what would be seen as a normal report of the type that other tribunals would have provided, but it was brought to a conclusion at that date.

The other question that arises is the nature of an inquiry. I may be simple-minded in ways and I probably am, but why could we not have a few people assigned on reasonable wages to go into the hospitals and ask them what their procedures were, what they did with the organs they retained, where they went and if were they sold to pharmaceutical companies for money? Why do we need to pay people millions to ask a few basic questions of the hospitals concerned, when others could come back with the information?

Mr. Scanlan

It is recorded in the Comptroller and Auditor General's report that the establishment of the terms of reference were approved by the Government.

We understand your position, Mr. Scanlan.

From the point of view of ordinary people, what amazes me about this is the dignity of Parents for Justice and the parents concerned who had been put through such trauma. This matter was sprung upon them, including the fact that children's pituitary glands had been sold to large pharmaceutical companies. The inquiry should have been able to bring information, closure and consolation, instead of which they got this. Up to 20 December, they were still seeking a meeting with the Minister for Health and Children, Deputy Harney. Can Mr. Scanlan tell me if the Minister has agreed to meet them? Is any legislation being drafted arising from this situation with regard to organ donation? I reiterate that Parents for Justice have said how essential organ donation is. For the purposes of medical research, it is necessary for people to donate their remains. If the matter was approached in the right way there would be voluntary donations by bereaved parents. What is the current situation with regard to that?

Mr. Scanlan

The Deputy is absolutely right in terms of his final conclusions. My understanding is that this was the central recommendation aimed at the Department by the Madden report. It was all around the issue of "appropriately informed consent", or some similar language that was used. That is what caused people hurt — the sense that things had been done without their knowledge or consent. As the Deputy said, most people, if informed and given a chance to give their consent, will agree and would see the benefits of it. On the issue of legislation, the Department is now in the process of preparing proposals — it will go through the normal channels obviously — that would lead to legislation in this area. As regards the actual inquiry, the Chairman acknowledges that I can only repeat the facts as they are. In fairness to all concerned, this was only one of several tribunals.

On the question the Chairman asked me, I have some figures on days. They are only approximate and are only for the Chair as it happens. I am not sure if we have them for the other members. I can give them to you, Chairman. Perhaps we should also confirm them when we go back and write to you, if you like.

Mr. Scanlan should confirm them and write to the committee. We will circulate it in correspondence.

Mr. Scanlan

I will do that. I think the Deputy asked me another question.

Mr. Scanlon said that other legislation was being prepared arising from this. I have three brief questions for Professor Drumm, before I conclude. As regards overtime in hospitals, the Comptroller and Auditor General gave the example of 22 non-consultant doctors earning €100,000 each in overtime. Another 22 doctors could have been employed full-time on that pay scale. Does the service not have the flexibility to work out in advance what will be required? I know there is always a need for overtime at various times because unforeseen events arise and people get sick. Surely, however, given this example, it should be possible to make provision for that and hire extra staff.

Professor Drumm

We agree fully with the Deputy. This is a huge investment of money. As I said earlier in response to Deputy Burton, the flexibility in terms of taking this money back out of the system that has been paid as overtime has not proved to be so simple. We have had to negotiate to take down the number of overtime hours. We are focused on trying to get the European working time directive in operation right across our system. At the moment, it applies to 30% of junior hospital doctors. We are currently in negotiations, under the auspices of the Labour Relations Commission, to get agreement on bringing in rosters that would allow those hours to decrease. As I said to Deputy Burton, we have pilot sites running at the moment whereby we can show how alternate rosters can work. However, we still have to pay the overall overtime while those pilot sites are in operation. It is a bigger issue than appointing more junior hospital doctors. It is an issue of skill mix because there are other grades of people. For instance, with the advancement in nursing we would argue that there is a huge amount of this type of work that can be done by nurses who remain within our system, who are not trainees and who are constantly building up their skills. Therefore, there is a whole skill mix issue about the work we are currently giving junior hospital doctors that could possibly be done extremely well on a consistent basis by other grades, as well. From our perspective, it could be done more consistently going forward because every 1 January and 1 July the system would not be challenged by skilled people leaving it. We are anxious to see a great deal of movement in this area but we need negotiated solutions at an IR level to achieve that. The Deputy's point is accepted absolutely by us.

I am sorry I had to leave for ten minutes for an appointment that I could not avoid, so I hope I am not repeating questions. My second last question refers to the €78 million surplus to have been returned in 2005. I take this to mean that the moneys were available but were not used. If that is the case, why is there not flexibility to look around the country to see where there are urgent requests for extra scanners and equipment, etc? Blanchardstown hospital, for example, has been seeking vital equipment for years, but it has not been provided. Ideally, there should be more funding to meet those requirements but, in the meantime, why can the current system not be flexible and the likes of this reallocation be done at the end of each year?

Professor Drumm

I will ask Mr. Woods to comment on the figure of €78 million in a moment. Deputy Higgins asked why we do not get the money back into the system, which seems like a reasonable approach. That has happened to some degree historically with capital moneys. The plan is to spend the money, but if projects get held up and it is not spent, the obvious solution is to suggest applying it to absolute need. The procurement industry, or the suppliers of equipment such as CAT scanners, have done well out of us doing this. They know we must spend the money by November or December so prices tend not to be competitively negotiated then. Therefore, there is a danger in taking that approach. I will ask Mr. Woods to comment on the overall situation in that regard.

Mr. Woods

On the €78 million, €25 million of that is represented by an excess in appropriations-in-aid, or to put it more simply, we collected more income than we thought. In Vote accounting terms and under normal rules, that excess is returned to the Exchequer. Some €36 million of the moneys was capital related and this has not been lost to the system. Under the multiannual nature of the capital programme, they can be carried forward into the following year and used for health projects. As Professor Drumm said, these moneys help us manage effective procurement of equipment for hospitals and community facilities. Therefore, the major elements are not lost to the system. The appropriations-in-aid are automatically returned and the capital can carry forward.

Perhaps Blanchardstown could be allocated some of the next surplus to be surrendered.

We must come back to discuss these matters again because we have hardly touched on the issue of mental health today. There are issues related to funding and outcomes for that area that we do not have the opportunity to deal with now.

I will finish for now with a question for Professor Drumm. The experience of many of the people who have dealings with the health service leaves them with the impression that it is at times an obtuse bureaucracy and that it is difficult to get a message through to it. In today's newspapers we read the story of a young woman from Waterford who died tragically. Her story has been in the public arena. She had been referred with a strong recommendation to the health service, including a recommendation from a Deputy. Notwithstanding that representations from public representatives may have been devalued by the activities of one or two people, I believe that when representations are made by professionals in the community or public representatives who have seriously examined a situation, made a judgment on it and requested urgent intervention, the intervention should be made. While I am not familiar with all the ins and outs of this tragic situation, I wish to ask whether there will be an inquiry into the case to see whether everything possible was done or what weaknesses existed in the system. It is too late for this family, but an inquiry could teach us some lessons for the service in general.

Professor Drumm

That is right. We cannot speak on the specific details of this case, but automatically in a situation such as this we examine all the steps taken to see if there was an error in terms of a decision to do something not being implemented. I agree this is a tragic situation for the family, especially when the person involved is so young.

I would like to speak in more general terms about the issue of contact with our services. As the Deputy is aware, the mental health service can be a particularly difficult area in which to work. Often decisions are made to take a certain step or appropriate action, but these decisions are not like those made in the regular hospital service where a decision to remove a gall bladder is made and all that remains to be decided is the timeframe. In the mental health area, the original decision will often change over a few months. A worker in the field dealing with a person may decide residential care, which is something we want to avoid generally because it is the last choice anybody wants for a child, is no longer the best option. When this happens, the decision is made on the judgment of an individual committed to the care of the person is question.

Such situations are extraordinarily sad for families, but from the perspective of the HSE, they can also be traumatic for the people working with them and with young people who subsequently die by suicide. Often the professional in question has made a judgment decision not to recommend residential care for the young person so that he or she can stay with his or her family. That can turn out to be the wrong decision and be hugely traumatic for the care worker involved. We need to keep that in mind.

The Deputy raised an issue close to my heart, namely, how people interact with the health service. I am a fan of the idea of what we call "key workers". These "key workers" could be the porter in a primary care centre, a social worker or a physician, etc. We will constantly struggle with our complex system in terms of access and feedback if it depends on contact with the HSE as a bureaucracy or as a significant clinical provider. We must get to a situation — something that is happening in some areas of mental health already — across the organisation that facilitates access. Most of the people involved with us on a day to day basis have a chronic illness and this small portion of the population unfortunate enough to be afflicted with a chronic illness need access to a "key worker" so that when they face a problem or crisis, they can pick up the phone and get a response. The problem might not be in that person's direct area of service, but he or she would be responsible for making contacts for the patient within the organisation.

I believe the Deputy has touched on what is a critical need for the health service, namely, the need for a "key worker" within the structure who would link to the person in the community in need of a service. Time and again I remind people that the difficulties of the system are not within the system but in navigating one's way into it. Most people get a superb service once within the system. We must work hard to ensure this process is simplified.

The Deputy may not be aware of our transformation programme, but our ambition for the next five years is to reach a stage where we will have made access easier, people will have confidence in the service we provide and we can be proud of the way we provide it. That is our challenge, but we must start with access.

On the issue of contingencies and contingent liabilities for claims against the health service, what is the situation with regard to MRSA and similar related infections? I sent a letter on this matter, a copy of which I have with me, to Professor Drumm a few days ago. Catastrophic events happen to families within the health system from time to time.

The case raised in the letter I sent a few days ago concerned a woman having a baby who ended up with a serious infection as a consequence and became gravely ill. In the context of the discussion on discretionary medical cards, this woman and her family were amazed to find they got a bill for her emergency treatment because she had to be accommodated in one of the hospitals dealing with the infectious disease she had acquired. I understand bureaucracy, but can Professor Drumm understand the inability of the family to understand how this could happen? When such a devastating event happens in a family, the issues of income and whether the family has access to a medical card arise.

In the context of the earlier discussion of discretionary medical cards, where people acquire serious hospital-related illnesses such as MRSA and MSSA, is there some kind of protocol and path through this for the relatives? In terms of the contingencies, has the HSE a system to address this? The Minister suggests there has been an attempt to address the infection risk side by trying to improve cleansing. I am one of many who now go to hospitals and to visit people in nursing homes only if I carry wipes so that I can wipe my hands, their hands, the bed and the locker table, which is often not cleaned at all. This is a shattering state of affairs. If Professor Drumm undertook a small survey of the people in this room, many of us would be extremely nervous of ending up in surgery unless it was absolutely necessary because of the horror stories we are hearing and experiencing.

Professor Drumm

Much of what Deputy Burton stated about MRSA is true, but the first point to make clear is that MRSA is a huge international problem. Everybody quotes a couple of countries in northern Europe that have a low incidence of MRSA. The bottom line is that most countries have misused antibiotics and used them for long periods, which is what has generated MRSA. The bug itself exists in its native form in all of us. Many of us in this room may have MRSA on our skin and transmit it by shaking hands today, and we need to realise that.

We, for instance, now have the figures from a recent study across the UK and Ireland, and Northern Ireland and England have significantly higher prevalence than we have. That is not to say we do not have a high prevalence. There seems to be a feeling out there that in some way this is something that has taken off in Ireland and not somewhere else. There is no reassurance in that except to say that it is not simple and it is not that somebody else has got it perfect.

Equally, in northern Europe, where they have lower levels of MRSA, they have as high a level as us or others of other hospital acquired infections. I stated at this committee previously that there are more devastating infections one can pick up in hospital that are antibiotic driven — clostridium difficile being the common one. They are even more devastating than MRSA. They have been with us for years.

There are several factors we need to take on board and Deputy Burton has hit on the major one. While we want our hospitals to be as hygienic as possible, the evidence is it does not have a massive effect on MRSA. What has the effect is what Deputy Burton is talking about — people washing their hands as they move from visitor to visitor or patient to patient — and there is no doubt that we have to get far more focused on that within our own structures to stop it spreading.

We also have to realise that it is a significant risk coming into hospital. We have to reduce the average length of stays in hospital, which by international standards are high, so that people spend as little time as possible there. We really have to make people aware that if they go in for surgery or they are debilitated in any way, they are specifically at risk.

After an earlier one of these meetings, I was accused of trying to hide the figures. Far from it, I was pointing out that giving the figures for MRSA in the oncology unit in St. James's Hospital on the same list as that giving the percentage figures for MRSA for a general hospital in the country has to be interpreted in the light of what the committee is speaking about because there are certain groups of patients who have been exposed to antibiotics in high-risk units that are much more likely to have them. That was portrayed as me saying that I would not give the members the figures. I was saying that one must give the figures in the context of relevance.

Can we take on this problem and succeed? Yes, but slowly. One will not wipe out MRSA until antibiotic prescribing pharmacists play the biggest part in it in terms of watching and controlling how physicians prescribe antibiotics and bring in a cautionary note to that. In terms of bringing down the overall existence of the organism, what we have to control is the spread of it. Hand washing, as simple as it is, is imperative and it does not cost money; it is what we do every day.

From the point of view of medical cards, nobody should be billed for any room in the system when they did not ask for a private room. Everybody is entitled to be treated free in the hospital system. At least, that is the way I would see it. It is a statutory right.

A healthy woman in her 30s acquired this infection but would not have been at risk otherwise. As a result of acquiring this illness, she then had to be treated in a hospital dealing with infections and was sent a bill for €600.

Professor Drumm

In terms of statutory charges for bed days or whatever, whether we were going to levy charges or not would clearly be a decision for the Department. The same is the position in the case of medical cards — that is a decision for the Department. I would just caution that the existence of MRSA in the community and, as I stated, within this room is something of which we are not yet aware.

Perhaps I did not explain myself well. This person is now facing colossal medical bills for treatment that will take a significant period of time. I am confident the hardship fund will deal with that but the person's spouse must take her to and from hospital regularly to be treated. The person's life has changed. Six weeks ago this couple in their 30s were both working and paying a mortgage, and now one of them is gravely ill with a hospital acquired infection. The point is that when it happens it is a catastrophic event for people. Has the HSE got some kind of a system where people can relate to what they are going through and how they may deal with it? Obviously, the financial implications of becoming ill like this for young people with a mortgage are horrendous.

Professor Drumm

Apart from hardship funds and being able to use discretionary funds at that level, we certainly are not in a position to make a policy decision about whether we will supply medical cards or whatever to people who acquire MRSA.

Does the HSE even have a central system for such a person, who six weeks ago knew nothing about this and for whom this will have grave implications for her life and family for quite a long period? I hope the person will recover. However, the person must learn all of this on her own and it is devastating when it happens. This person suffered heart failure as a consequence of this event. As I stated, I wrote to Professor Drumm earlier about it and I have a copy of the letter with me.

I am sure the Chairman is well used to this. When this trauma happens in a family, there does not seem to be a central contact point in trying to find one's way through the maze of what one must deal with in coming to terms with this. There was a reference when the HSE was set up to a concept called shared services, along with PPARS. Shared services seems to have gone by the board now. Is there, even in the HSE concept, some notion of a shared or common point at which people who are being devastated by this change in their circumstances can get access to uniform information?

Professor Drumm

In terms of somebody who has suffered a devastating event such as that of which Deputy Burton speaks, the primary source of that information has to come from the clinical team with which they are dealing. That is from where the HSE would have to get that information. As Deputy Burton described, this infection can affect a person in many different ways and there are a number of other really serious infections like this. The responsibility for dealing with people in a caring way and dealing with how this occurred has to rest with the local clinical team and with the wider support.

The clinical team does not deal with the costs that a couple in their 30s with a family who are paying a mortgage and working have to deal with.

Professor Drumm

Our scope there is, as we discussed earlier, through issues like discretionary medical cards. We could issue a discretionary medical card in that situation and certainly we would be perfectly open to doing that.

I have the details and I will give them to Professor Drumm. I gave them to his office and to the Minister's office. I will give them again.

My final question is in the context of Professor Drumm's comment that the HSE is continuing with PPARS. Has the notion of shared services been abandoned? If so, with what will it be replaced? The Estimates for this year were cast in terms of the old health boards and not the new regional groupings. What accounting structure is in place? Have shared services been abandoned and, if so, what does this imply? I accept that more information may be forthcoming when the Revised Estimates emerge at the end of February. Will Professor Drumm indicate what is happening?

Professor Drumm

Absolutely. The process of introducing shared services into the HSE was examined by a group of people charged with considering the business case for bringing such services on board and how these could then be implemented. The first stage was carried out and we considered what would be required — in terms of the changes that would need to be introduced — to put in place shared services in the areas of finance, HR, procurement and ICT. Finance is probably the largest area in respect of which such services could be introduced. We then considered how shared services might be implemented. Our conclusion in this regard was that the new system would be best implemented through the individual directorates. Instead of moving large numbers of people out of the various areas and into new shared services, we will centralise shared services relating to finance, HR and procurement within those respective areas. Shared services are being implemented according to a model that we consider to be the best for us.

That is a completely different model from that which was originally advertised, particularly those on the political side. The original intention behind the HSE was to provide shared services, whether through PPARS or in respect of other functions——

Professor Drumm

No.

We are not concluding our deliberations on this matter today. The Deputy will, therefore, have a further opportunity to pursue that matter in greater detail.

Professor Drumm

The original idea behind the HSE related mainly to the provision of clinical services on a consistent basis throughout the country. Many of the points raised at this meeting are relevant in that regard.

In terms of business functions, shared services represent one of the gains. Such services are still being implemented. The model we are using is employed by many major corporations. We examined the entire process and this is the model we have identified as being the best, from a business point of view, from our perspective. In three to four years time, we may have common financial and human resource systems. In such circumstances, we might alter the model at that point. However, this is the best way to proceed at present and our decision in this respect has been validated by expert input from outside the organisation as well as from within. We do not want to place ourselves in a straitjacket in respect of how to proceed. We have learned from past experience in this regard.

Professor Drumm conversed earlier with Deputy Dennehy regarding the controversy involving the IPU. Will he provide a succinct summary of the position and does he have suggestions regarding how the logjam might be broken?

Professor Drumm

No. The position as regards the Irish Pharmaceutical Union is that a joint approach was taken by the Department and the HSE to see how maximum value for money could be achieved in respect of our pharmaceutical spend, which, in terms of drugs and devices, is approximately €2 billion a year. This is an enormous figure even by international standards. It appeared to us that we should be able to obtain significant savings in respect of the spend. There are three legs to the negotiations that normally occur. One must first negotiate with the manufacturers, then with the wholesalers and distributors and then with the retailers. There are many links in terms of ownership across these three groups and, in particular, the final two. We dealt with the manufacturers and moved on to negotiate with the wholesalers and distributors. At that point, the retailers communicated to us in writing to the effect that, depending on the deals we achieved with the wholesalers, we would be affecting their businesses and that they were seeking legal opinion about our right to negotiate with the wholesalers independently of them. That might come as a surprise to members and it certainly did come as one to us.

We were obliged to seek legal opinion of our own, which indicated that not only were we not entitled to negotiate with the wholesalers but that we were prevented from doing so not in the context raised by the IPU but in view of the fact that it was anti-competitive. It emerged that we had no right to negotiate agreements with groups of wholesalers or retailers. Essentially, this means that we are obliged to deal with all pharmacies as individual providers to the system. Does this have knock-on effects outside the system in respect of dentists and general practitioners? The answer is more than likely "Yes".

Is this driven by the anti-competition or pro-competition EU directives? Is it from this standpoint that the legal advice emanates?

Professor Drumm

That is my understanding. I ask my colleagues from the Department who have been involved in dealing with this matter to comment.

Mr. Scanlan

I confirm everything Professor Drumm stated regarding the way this matter emerged. A joint team has been working on it at various levels of the supply chain. We have spent a great deal of time discussing a payment of €10 million to GPs. We approached this matter jointly in the interests of obtaining value for money for the health service. That is important to bear in mind when one comes into contact with groups that take certain views. My understanding is that the legal advice obtained by the HSE and the Department indicates that, under the law of the land and EU law, we have no choice in the matter. As Professor Drumm stated, it is a major change. We are trying to clarify——

I asked the question because almost every Member of the Oireachtas has received letters from his or her local pharmacist. We require accurate information to allow us to reply.

The second aspect of this matter is whether what Professor Drumm and Mr. Scanlan have said represents the end of the story or whether a way can be found to maintain some form of centralised system rather than being obliged to enter into contracts with individual pharmacies, which would be extremely onerous.

Professor Drumm

I need to discover how best to do so but we would be happy to provide the Chairman with a summary of the current position. It would then be a question of whether we would discuss the matter further with this committee or whether we would do so with——

Our guests may return to this committee in the first instance. They may then make a decision as to whether the information should be circulated to every Member of the Oireachtas.

Professor Drumm

Okay. We can also provide clarity. There is a process — it is, I understand, established in other areas — where if an organisation or agency is seen as being in a near-monopoly situation, as the health service clearly would be in respect of how it deals with many of its providers, it is necessary to place advertisements in the newspapers and obtain independent arbitration regarding the prices applied in respect of individual services. One then indicates the price one will pay for a service or commodity and it is the responsibility of individual providers to decide whether they wish to supply it at that price. That is a high-level, but not an expert, opinion. Those are the circumstances in which we currently operate. We can provide an update on the position that obtains.

That would be great.

An issue arises in respect of the provision of out-of-hours services by GPs and GP co-operatives in that financial provision appears to have been made in some parts of the country but not in others. I am particularly interested in the position relating to ShannonDoc because if the issue to which I refer were resolved, every GP in Limerick city would join with their colleagues throughout the county in respect of the provision of the services to which I refer. I understand that a statement of claim has been submitted which would, if approved, increase the grant-in-aid to the co-ops. If Mr. Healy is familiar with the matter, perhaps he might report on the progress that has been made.

Mr. Healy

Negotiations are taking place with the GPs in ShannonDoc. As I understand it, the GPs have agreed, in principle, to enter the co-op in Limerick. The discussions are at a sensitive stage and perhaps we might report to the committee in the coming weeks on the conclusions reached therein.

That is fair enough.

What is the position regarding the psychiatric unit at Limerick Regional Hospital? This project has been left hanging for many years and an inquiry took place in the aftermath of a suicide. The inquiry found that the physical structure of the facility made it impossible for staff to ensure that there will not be a repetition of the tragedy to which I refer.

Professor Drumm

I will have to come back to the Chairman——

In effect, it is a refurbishment and reconstruction project.

Professor Drumm

The Chairman asked whether it is progressing.

It was the subject of a parliamentary question last session and the Minister replied that it would shortly go to tender.

Professor Drumm

It will take a few minutes to check that information.

Professor Drumm dealt with the issue of breast screening on a national basis. A pilot cervical screening programme was carried out in the mid-west region in 1997. At the time commitments were made to extend the programme nationally. We are all aware of the arguments relating to all cancers. However, if breast cancer is identified at the screening stage, a 100% success rate is achievable. A national screening programme would prevent between 75 and 80 deaths among women every year. I fail to see why the successful pilot project has not been rolled out nationally or what is holding it up.

Mr. Scanlan

The former breast screening board has been changed to a cancer screening board and will be tasked with rolling out the cervical screening programme on a national basis. There is no question from our perspective about the case for doing so but the key issue in a screening programme is that if we offer screening, we must be in a position to provide absolute assurance in terms of follow-up services that patients may need. All this must be put in place. The expansion of the programme is scheduled to commence late this year.

I am glad to hear it. This was decided when I introduced the first cancer strategy as Minister for Health in 1996. This was a given and there was no debate about its effectiveness at the time. There might be a debate about other screening programmes but this was regarded as absolutely effective all the way through. However, it still has not happened. It was always unfair but it is now recognised to be very unfair because if one is a private patient, an appointment for screening does not present a difficulty, whereas if one is a public patient, the position is different.

Mr. Scanlan

The Chairman is correct.

Inequities are built into the system which, apart from the issue of treating all citizens equally, leave the Department exposed.

Mr. Scanlan

I accept the points made by the Chairman. We are committed to expanding and rolling out the programme. It will happen later this year but we have to expand it on an affordable basis. That is important in terms of groups we will have to deal with.

Has progress been made in improving neurological services and deploying them on a national basis?

Mr. Scanlan

I understand that matter was discussed earlier at a meeting of the Joint Committee on Health and Children. Officials who are familiar with it were in attendance but I have not heard how it went.

Will Mr. Scanlan forward a letter to the committee on the matter?

Mr. Scanlan

Yes.

Will he do something similar regarding rheumatology services? In both cases, will he make particular reference to the mid-west region?

Mr. Scanlan

Yes.

Mr. Purcell

Much of what was contained in my report was the result of the diversity of the previous arrangements. They may have had their strengths but it was clear they also had weaknesses. Legacy systems were not joined up and we witnessed the consequences with PPARS and other issues raised earlier. Professor Drumm and Mr. Scanlan are correct to highlight an issue that does not come through in the chapter, that much of what needs to be done must be done in a difficult industrial relations environment. This means that while one knows what must be done and the way to do it, it is not possible to do so while going through the hoops with people who legitimately have vested interests in the delivery of medicine and medical services. Perhaps that did not come through in the report but it was emphasised by the two principal witnesses.

I am not sure whether the committee will have another session on the Vote.

I will be advised by the committee but I am disposed to closing the chapters and keeping the Vote open. I have indicated to both the Department and the HSE that Thursday, 1 March is available and if that date suits, we will meet again.

Mr. Purcell

I have stated that the Appropriation Account for the HSE, in particular, is not the most informative account, even for the cognoscenti of Vote accounting, because of the different systems that had to be amalgamated as a practical consideration, as Professor Drumm explained. However, the HSE's income and expenditure account could be placed on the agenda because it is much more meaningful and a richer source of potential questions for members, which could be a double edged sword for the witnesses.

We will not note Votes 39 and 40. They will be kept for our next meeting when the HSE income and expenditure account will be added to the agenda and circulated to members. Is it agreed to dispose of chapter 13.1 and chapters 14.1 to 14.3, inclusive? Agreed.

Professor Drumm

We may have a difficulty. Our board meets on the first Thursday of the month. We may inform it about the meeting and see what can be done.

Every other meeting between now and April has been fixed.

Professor Drumm

I will have to come back to the Chairman regarding the psychiatry unit on the Dooradoyle site. Perhaps he will furnish me with more details.

It is known locally as 5B.

Professor Drumm

We probably have it, now that we have the terminology.

I will speak to Professor Drumm afterwards.

The witnesses withdrew.

The committee adjourned at 3.10 p.m. until 11 a.m. on Thursday, 1 February 2007.
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