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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 1 Mar 2007

Health Service Executive Annual Report and Financial Statements 2005.

Mr. M. Scanlan (Secretary General of the Department of Health and Children) 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 either by name or in such a way as to make him or her identifiable. They are also reminded of the provisions within 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.

Mr. Scanlan is welcome and I invite him to introduce his colleagues.

Mr. Michael Scanlan

I am accompanied by Dr. Tony Holohan, deputy chief medical officer, and Mr. Dermot Magan and Mr. Colm Keegan, principal officers.

Professor Drumm is equally welcome and I invite him to introduce his colleagues from the Health Service Executive.

Professor Brendan Drumm

I am accompanied by Mr. Liam Woods, director of finance; Ms Fionnuala Duffy, assistant national director, National Hospitals Office; and Mr. Pat Healy, assistant national director of primary community and continuing care, PCCC, directorate.

I welcome Mr. Mooney from the Department of Finance and invite him to introduce his colleague.

Mr. Joe Mooney

I am from the sectoral policy division of the Department of Finance. My colleague is Mr. Dave Ring, principal officer.

Mr. John Purcell

The committee is revisiting the Department of Health and Children and Health Service Executive Votes, having disposed of the relevant chapters in my annual report when it last considered this sector on 25 January. At my suggestion, the financial statements of the HSE for 2005, incorporating an income and expenditure account for revenue and capital and a balance sheet, are also on the agenda. The financial statements are in the form approved by the Minister for Health and Children and show a figure of €11 billion in current expenditure, of which €9 billion was funded by the Exchequer and €1.1 billion came from health contributions. The balance is mainly accounted for by income for services provided under EU regulations, patient charges and superannuation contributions. On the capital side, the HSE received its funding almost exclusively from the Exchequer and spent €351 million on its own projects and issued €183 million in capital grants to voluntary bodies.

As these are the first annual accounts of the HSE, much work was necessary to aggregate the balance sheets of the former health boards and predecessor bodies to arrive at an agreed opening financial position. Members will note there are large deficits on both the current and capital accounts. As explained in the accounting policies, these are, in a sense, artificial as they are largely attributable to timing factors and the resulting difference between accruals-based expenditure and cash-based funding.

Information relating to outstanding issues from the last meeting has been furnished by the Department and the HSE. This is included in relevant correspondence. The minute of the Minister for Finance on the committee's fourth interim report, received earlier this week, deals with issues arising from health sector audits and the committee may wish to refer to the content of the minute in the course of today's meeting.

Mr. Scanlan

In my opening statement to the committee on 25 January, I outlined the progress made in implementing the health reform programme and the considerable levels of service being provided by the health services. Today, I would like to focus my comments on the role of the Department.

The Department and the HSE must work closely together with the shared aim of improving the health and well-being of people. Both have their respective roles to play in meeting this objective. The Department is responsible for advising the Minister on the overall organisational, legislative, policy and financial accountability framework for the health sector. The HSE is responsible for the management and delivery of health and personal social services within the resources made available by the Government.

The Department's key priorities are to put in place a system of performance management which allows the Minister to assess the performance of the health system, particularly the HSE, in its service and financial outturns, value for money, adherence to governance and accountability standards, quality, equity, access, consistency and outcomes. It also must provide a legislative and regulatory framework that helps protect the interests of service users and supports practitioners in working to the highest standards.

The Department aims to provide policy analysis and advice on expenditure acquisition and allocation issues; service development, prioritisation and integration; overall industrial relations, human resources and workforce planning issues; and medium and long-term planning issues. It works with colleagues in other Departments and the social partners to ensure the aim of improving health and social well-being is advanced as appropriate in other parts of the public service. It supports the Minister and Ministers of State in their dealings with the Oireachtas and to ensure Ireland meets its obligations in North-South issues, the European Union, the World Health Organisation and other international bodies. It aims to ensure we have the internal capacity, in terms of structures, people, systems, etc., to equip us to meet our other key priorities.

Like the HSE, and other organisations in the public service, the Department has to manage within the staffing and financial resources made available to us. Although the approved staff complement for the Department is 653, some 120 of this complement belong to the Adoption Board, the General Register Office, the Office of the Ombudsman for Children, the social services inspectorate and the recently established appeals unit dealing with appeals in the repayment of nursing home charges. The approved staff complement for the core Department is just under 530. This includes nearly 70 staff in the office of the Minister of State with responsibility for children and some 50 staff working in the offices of the Minister and the three Ministers of State.

The total current allocation to the Department in 2006 under Vote 39 was about €372 million. However, the bulk of this, some €220 million, was allocated to more than 20 agencies such as the NTPF, Health Research Board, Irish Medicines Board, BreastCheck, Mental Health Commission, Food Safety Authority of Ireland, HIQA, the Office of Tobacco Control and the Office of the Ombudsman for Children. The allocation also includes over €90 million for compensation payments for people affected by hepatitis C, statutory and non-statutory inquiries and legal fees and payments to the State Claims Agency. The balance of some €57 million represents the Department's administrative budget and several other elements.

While the HSE is responsible for operational matters, the Minister remains politically accountable for the performance of the health services. The Department has to ensure there are appropriate systems in place to help the Minister assess and account for the performance of the health system. During 2006, the Department worked with the HSE to improve the format and content of its annual service plan. The 2007 service plan has recently been approved by the Minister and was laid before the Houses of the Oireachtas on 8 February. It outlines more clearly what services are being provided in return for the considerable investment by taxpayers. It also includes material dealing with quality, value for money, consistency, social inclusion and health outcomes.

Pay costs represent the single biggest element of the health sector budget. Increases in pay rates are essentially determined under the national partnership process. Accordingly, the management of employee numbers represents the best way of managing overall pay costs. During 2006, the Department developed and agreed with the Department of Finance a new employment management framework for the HSE which will establish clearer links between service developments, funding and employment.

Legislation is a core function of any Department. The Health (Repayments Scheme) Act, the Irish Medicines Board (Miscellaneous Provisions) Act and the Hepatitis C Compensation Tribunal (Amendment) Act were enacted in 2006. The Health (Nursing Homes)(Amendment) Act was enacted earlier this year. The Health Bill 2006 and the new Medical Practitioners Bill have been published and work is progressing on new pharmacy and nursing Bills, a VHI Bill, an adoption Bill, a public health Bill and an eligibility for health and personal social services Bill.

During 2006, the Department also dealt with approximately 43 statutory instruments, 12 of which transposed important EU directives into Irish law and one which covers the establishment of a statutory complaints procedures under the Health Act 2004 for persons adversely affected by an action either of the HSE or service providers providing services on its behalf.

Policy development and advice is another key area for the Department. During 2006, a number of important policy documents were developed and published. These include by way of example: the publication, as part of the Government's overall disability strategy, of the health sectoral plan on disability; the launch of a new policy for the mental health services, A Vision for Change; the publication of the second national cancer strategy, A Strategy for Cancer Control in Ireland 2006; and the launch in December 2006 of a new nursing home policy care support scheme, A Fair Deal.

The Department also dealt with many other policy and service development issues, often in collaboration with the HSE. These included the following: advising and assisting the Minister during the negotiation of the annual Estimates and budget allocations; the negotiation of the health aspects of the new national partnership programme, Towards 2016; a major new agreement negotiated with pharmaceutical manufacturers; contractual negotiations with medical consultants; the preparation and recent publication of the national pandemic influenza plan; progressing the development of the new national paediatric hospital; and the risk equalisation scheme, which was commenced by the Minister with effect from 1 January 2006.

One of the challenges facing us is the need to join up the health system with other Departments and other sectors of the public service. Better health and social outcomes can often be determined as much, or more, by action taken by other Departments. Obvious examples are housing, education, fiscal and social welfare policy. The Department continues to work with colleagues in other Departments to progress such cross-sectoral issues.

One of our key priorities, like any Department, is to support the Minister and Ministers of State in their parliamentary work. During 2006, the Department dealt with about 6,000 parliamentary questions and 140 Dáil and Seanad Adjournment debates. Over 5,000 ministerial representations were received and staff from the Department attended various Oireachtas committee meetings, either with the Minister or to give evidence themselves. The Department's staff also provided briefing notes and speaking points for the Minister and Ministers of State and attended a large number of meetings involving the Minister and Ministers of State.

Another key priority was to support the Minister in her dealings with other countries and with international organisations such as the EU, WHO and OECD. We also continued to work closely with colleagues in Northern Ireland to maximise the scope for all-Ireland co-operation.

The foregoing gives members a reasonable flavour of the many and varied issues with which the Department deals. Its staff have delivered an excellent service in a complex and challenging area, but the onus is on us to continue to improve our performance. We must improve our analysis and evaluation capacity, review our data sources and information needs, and strengthen our internal systems and procedures. In particular, we must ensure we work in an integrated fashion across the Department and with the HSE and colleagues in other Departments. We will continue to endeavour to respond rapidly and effectively to issues as they arise and to support the Minister and the Minister of State in meeting their responsibilities.

May we publish Mr. Scanlan's statement?

Mr. Scanlan

Yes.

Professor Drumm

At the meeting of the committee on 25 January the chapters of the Comptroller and Auditor General's 2005 annual report relevant to the HSE were discussed and concluded. The purpose of this meeting is to discuss Vote 40 and the annual financial statements for 2005.

The opening statement I made to the committee at the last meeting highlighted that, in accordance with the Health Act 2004, the HSE was required to produce an annual financial statement and an appropriation account for Vote 40. The appropriation account is derived from the annual financial statement which is prepared on an income and expenditure basis. Both accounts were produced by consolidating accounts extracted from the financial systems used by the 17 former health agencies which, taken together, comprise the main operations of the HSE. The HSE plans to implement a fully integrated financial system in the coming years.

Both accounts have been subject to audit by the Comptroller and Auditor General. The appropriation account and the annual financial statement for 2005 were produced in accordance with the timeframe set down in the Health Act 2004, despite the significant challenges involved in amalgamating the 17 separate financial control systems. As Accounting Officer, I am pleased to confirm that for 2005 the board and management of the HSE succeeded in delivering the required health and personal social services within the allocated budget of €11.5 billion. We also reported a capital surplus of €50 million which was carried forward to 2006. That was a significant challenge and a notable achievement during a period of major change. It reflects our unwavering commitment to carry out and meet all our financial duties and responsibilities in accordance with the highest standards of governance and financial management.

I have supplied to the committee secretariat further information on several issues raised during the course of the committee's examination on 25 January: the breakdown of staffing numbers by category; an update on the continued use of PPARS; the current position on discussions with the Irish Pharmaceutical Union; negotiations with general practitioners on ShannonDoc; and the current position on the psychiatric unit at Limerick Regional Hospital.

I thank members for the opportunity to make this opening statement

I thank Professor Drumm for providing that very full additional information which was circulated with our correspondence earlier in the meeting. May we publish the statement?

Professor Drumm

Yes.

Before I call Deputy Dennehy, I have one or two questions on MRSA. For many of my constituents admitted to hospital, it is the one issue in their heads. They are afraid of contracting MRSA and their fear has been reinforced by a current practice, although I do not know how widespread it is. Consultants discharge patients from hospital soon after surgery and advise them that they are doing so because of a fear that if they remain in hospital, they might contract MRSA. Can Professor Drumm report progress on the HSE's fight against MRSA in major acute hospitals?

Professor Drumm

What the Chairman has raised is experienced across the country. The first matter on which to be clear is that one can come into contact with MRSA outside a hospital as readily as in one. Patients in hospitals are at greater risk from MRSA, since if one is particularly ill or has had major surgery, one is much more prone to what the infection can do. MRSA is one of many hospital acquired infections. There are even more devastating ones related to the use of antibiotics.

This country has a particular problem with MRSA that is shared by others in this part of the world. We recently conducted the first prevalence study across these islands which shows that our figures are lower than those in England, Wales and Scotland. However, they are still far too high. A small number of northern European countries have very low prevalence rates for MRSA. They have also been much lower users of antibiotics historically than those countries with a problem. To a large extent, this problem has been driven by antibiotic use. The interesting aspect about comparisons with other countries is that, outside MRSA, their problems with other hospital acquired infections and hospital risks are as high as ours.

I gave so much background information to set the context for something that will not be resolved overnight. The high prevalence of MRSA on the streets is related to antibiotic use over many years and can be brought down only by many years of work on how we use antibiotics. We have started major education programmes aimed at identifying the antibiotic use that causes high incidences of MRSA. This is currently being rolled out to a programme in Cork for general practice. We are also involved in a programme in hospitals that will begin to audit use of antibiotics. The level is much too high by international standards regarding the risks associated with some of them.

Clearly, the most fundamental issue, bringing about immediate changes, is the imposition of strict hand hygiene procedures for those moving between patients and their visitors. We have established a group equivalent to our winter initiative group for accident and emergency departments. It will set performance targets for each hospital across the system regarding changes relevant to MRSA, including the number of isolates from wound and skin swabs, as well as the number of blood isolates. Over a five-year period, we aim to reduce isolates of MRSA in the system by 20%. However, progress will be slow.

The Chairman raised the issue of early discharge. I certainly concur with the view that hospital stays, owing to their very nature, not only regarding MRSA but other significant inherent risks, should be kept as short as practical while maintaining quality of care. That should absolutely be a goal of the system. I hope giving people this message does not frighten them, although I am sure it does. We must focus on disseminating much better public information, as we are doing under the programme, on the circumstances in which MRSA presents a major health risk instead of being a benign presence on one's skin. We must educate people much more on the significant risks involved.

It may be platitudinous to say the public's sense of hospitals is one of centres of well-being. They believe one goes in ill and emerges healthy. However, there is now a reversal, whereby many fear going to hospital because they are afraid of contracting MRSA. That fear is reinforced by the policy and practice, with which I agree, of getting them out of hospital as quickly as possible, lest they contract one of these infectious diseases. It really turns the system on its head and people are finding it difficult to cope with the new concept.

Professor Drumm

It also brings to the fore something that was always true, even before MRSA, namely, that there are significant risks in hospitals. For instance, one of the major risks presented by MRSA is to patients with central lines into their deep veins to provide antibiotics or nutritional support. MRSA infection can present a significant risk and is one of the real dangers in the system. We have known for many years that if one is at home with a central line, which can be managed in the way parents, for instance, do it for their children, the risk of contracting one of these infections is significantly lower than within a hospital environment. There is absolutely no doubt that risks within a hospital environment are increased over risks in a community for these types of recurrences. We must minimise this but we shall never reach a point where there is not a risk associated with going into hospital.

The Oireachtas Library research facilities have been significantly improved. It has provided us with some information on the issue, which says Ireland's rate of MRSA is high in comparison with other European countries. The reference is from 2005. Is that still the case?

Professor Drumm

As I said we now have the first prevalent study on these islands. The Irish prevalence rate is lower than that of the UK, including Northern Ireland. Compared with Scandinavian countries such as Norway, Sweden and Finland, however, our rate is much higher. The figures for Spain and Portugal are comparable to Ireland's. There is no doubt the northern European countries have, by a long way, far lower MRSA rates than countries in this group of islands and in parts of southern Europe. These bacteria are present normally on everyone's skin. The question is whether they are resistant to antibiotics. The point is that in these countries there are much greater resistance levels in these antibiotics than in northern European countries based on their historical use patterns over the years.

In summary, yes we are way behind the northern Europe countries, but that situation cannot be reversed merely by changing day-to-day practices. It will take a major change in the way we use antibiotics over the years.

I have been informed, as well, that two recent cases of MRSA have emerged in Irish hospitals and there has been reduced effectiveness recently in the antibiotics being used to fight the infection. This is described in the documentation I have as "particularly worrying". The reference is Rosney et al., November 2006.

Professor Drumm

These reports will continue to emerge. MRSA, like all other bacteria, has an evolving capacity to generate resistance to antibiotics. As with all other bacteria, one will continue to see reports of isolates that are resistant to standard antibiotics. MRSA in itself is resistant to a certain group of antibiotics. No doubt within that group we will begin to see gradual resistance even to those antibiotics that work against most types of MRSA. We have to go back to controlling this in terms of antibiotic use. What is driving the problem in terms of that change in the organisms is antibiotic use. It is a major challenge across the system for this country and for many others not only in Europe but in other parts of the world.

It is generally agreed that the overuse of antibiotics in the community is a causal factor of MRSA and indeed other infectious difficulties. Has the HSE a programme in place to reduce the use of antibiotics in the community?

Professor Drumm

A programme is now being rolled out through the primary care group at University College Cork, which is starting to set guidelines for the use of antibiotics. Equally, within the hospital system we are now setting standards for antibiotic use. For a start we are beginning to audit the use of certain antibiotics. The incidence of antibiotic usage certainly is high in Ireland compared with the northern European countries I spoke about. There is good evidence from the literature that the overall use of antibiotics prescribed for the public in this country and indeed, these islands, is significantly higher than in the northern European countries. We are absolutely focused in getting those guidelines and audits implemented.

I thank Professor Drumm.

As a footnote to that, it is worth noting that the 2005 balance sheet shows that housekeeping incurred costs of €197 million, of which cleaning and washing accounted for €56 million. It had been suggested there was no money available for washing up. I want to thank Professor Drumm for his very detailed response to items I raised the previous day. If he does not mind I should like to revisit one or two of those.

First, I want to ask about health service employment. I note the number of nurses has gone from 34,000 up to 36,700 and they account for 32.11% of total staff. I have no wish to interfere in HR affairs, but I want to make a point in that regard. The very fact that they make up a third of the staff employed should not be cause for refusing to change their working week from 39 hours to the standard 35 hours. That seems to be the primary reason being used — the fact that, simply, there are too many of them.

Another issue is the difficulties with the Irish Pharmaceutical Union. I note Professor Drumm began by saying agreement had been reached between the HSE and the Irish Pharmaceutical Healthcare Association, IPHA. There is a note to the side, which might not have been intended, about "disenabling people". Does this mean there is an end to the problem? All public representatives are still being lobbied by employees in local pharmacies. Has that been resolved or is there still a problem as regards section 4 of the Competition Act?

Professor Drumm

There is still a problem. This relates to an agreement with the manufacturers, who have finalised their agreement with us. I can clarify matters, perhaps. At a recent meeting of the Joint Committee on Health and Children I suggested the problem arose during our negotiations with the wholesalers, which is the next link in the supply chain. The IPU raised a legal opinion which suggested we could not deal with the wholesalers without the retailers being involved. In fact it was the wholesalers, not the IPU, who raised that issue.

The straight answer to the Deputy's question is "No". This is a signed agreement with the manufacturers. The problems that are seen to exist as regards competition are now at the next stage as regards agreements with the wholesalers and the retailers.

The recent Channel 4 programme on the British NHS, "Where Did The Money Go", highlighted the question of staff as regards the breakdown of management, administration, etc. In the British situation, the programme said there were five layers of administration involved within the NHS in the delivery of health services to the client. How would Professor Drumm respond to that? Are we in a much better position, or will he comment on that finding in the UK?

Professor Drumm

It depends on what the Deputy means by layers of administration. I can assure him that our focus is on flattening the organisation completely, so that the client is able to make contact with the system all the way through. We have discerned from the beginning that one of the biggest problems to be faced is access to service's by the patient. Our vision statement asserts that our ambition for the next four years is to have access made easier, securing the confidence of the public on this account, and to have pride in our staff as a result. I do not know how layers may be counted, but the consensus is that access to the system is complex and people often have to go from one door to another to find their way through the system. Our entire transformation programme is focused on the fact that whoever the patient meets on the first day takes responsibility for him or her.

An obvious follow-on from that is the issue of waiting lists. People regard this as a new phenomenon and I know the INO is highlighting it. However, in 1993, because of the size of the problem then, a waiting list initiative was created. Now we have moved on to the National Treatment Purchase Fund. I brought up a few issues about that the last time, as I felt that a number of consultants were controlling it. Professor Drumm assured me that they would be dealt with if they did that. I was told that the waiting time has fallen substantially, but how is the waiting list faring now? This is one of the major issues of public interest, as well as accident and emergency units.

Ms Fionnuala Duffy

The waiting times have come down, which is perhaps more important from an individual patient's point of view. People are certainly in a position to access services more quickly through the mainstream and the NTPF. We could follow up with specific information on the trends in patient waiting lists, if the Deputy so wishes.

Professor Drumm

We could provide the Deputy with the overall waiting lists, which are not that informative, but we could probably also give him lists on specific specialties such as orthopaedics and ear, nose and throat, for which waiting times are longest.

I would appreciate that.

On the costs of the commissions of inquiry, I raised this issue before following the letter from Ms Charlotte Yeates, the secretary of Parents for Justice. I indicated then that I would get back to that group, which I have since done. The group's members are very disappointed with the outcome of this. There are 50 recommendations in the report, and I see from the figures that we have created five or six new millionaires. However, the parents have not received anything. Mr. Scanlan received a copy of the letter from Ms Yeates and I wonder if there was any response. They have major problems. They have gone nowhere and they did not get the statutory inquiry which was not promised, but which was certainly put in front of them. They were told that if they were not satisfied, the alternative forms would be pursued. They have received no answers to date and they tell me there are hundreds of boxes of files to which they have no access, and that the report cannot be published.

The people who looked for and got the inquiry have not received answers. We have recommendations for the future, which is very important. What is the update on this issue? How can these unfortunate people be facilitated?

Mr. Scanlan

Immediately after my last appearance here, I had a discussion with a representative of the organisation and I also had correspondence with the organisation. I understand the parents' sense of hurt and the sense that they are not getting closure from all of this, but I am not sure that I can add much to what I said the last day and in the letter that I subsequently sent to the committee. We had one tribunal and the last day we went into great detail about the amount of money spent on it and the output from it. It was not a report, as the Chairman pointed out. As a result of what happened, the Minister decided to appoint Dr. Deirdre Madden and we now have what is accepted as a good report. From the Department's point of view, that is the end of the process. We have no plans for any further inquiries and I explained this in my correspondence.

We created four millionaires, two half millionaires, and one quarter millionaire, yet Mr. Scanlan is telling me that we cannot publish the findings. That is unfair on these people. They know exactly the number of boxes of information and the number of files, yet they cannot see any of it. As the head of the Department, can Mr. Scanlan make any recommendation on how they can get access to this information? What about the possibility of even reading up on their own cases?

Mr. Scanlan

The difficulty about the information was that legal advice stated that it could not be published. At the same time, Dr. Madden got access to it and was able to reflect the content of those boxes in her report. I am afraid I just do not have another answer. I do not want to raise expectations, but I will double check our legal advice on getting access to the documents and I will get back to the committee. I accept that is a slightly different issue to the question about another form of inquiry, but that is all I can do.

I promised to get back to these people and I did so. I will not get any closer to the powers that be than Mr. Scanlan and I promised to use that access. I can put down parliamentary questions, but I would prefer if we could deal with it here. They are only looking for access to information and I would appreciate if that could be done.

Mr. Scanlan

I will check that.

I wish to raise two other points. The surplus to be surrendered in Vote 39 was €64 million. What frightened me was that it represented 27% of the net Estimate provision. Mr. Scanlan gave me an explanation for that, but I have forgotten it. I hope he can explain it again.

Mr. Scanlan

The bulk of the surplus was accounted for under three broad headings. The first was a capital under spending of about €10 million. The second was an under spending on the money that we provide to the agencies that I mentioned earlier. The bulk of that under spending was accounted for by the delay in commencing the Mental Health Act 2001. It was planned to commence in 2005, but we had industrial relations difficulties with hospital consultants and the tribunals, so that Act was not commenced until 1 November 2006. The third heading under which there was a saving was the heading of compensation payments to people with hepatitis C. A point made by a committee member the last day was that with all the pressure on the health service to deliver services, this looked like a large surrender of money. I pointed out that the money for compensation payments is provided for on a best estimate basis. It is not provided to run health services.

We also spoke about multi-annual budgets and the Department of Finance official explained that while we had multi-annual budgets on the capital side which allowed us to carry over if we did not spend the money, we were not at that stage in current spending, which is done on an annual basis.

For a layman looking at professionals running a Department, a 27% surplus is hard to understand.

The long-stay charges issue was estimated to cost €1 billion in repayments to approximately 20,000 living patients and the estates of approximately 40,000-50,000 deceased former members. I read a story recently in the print media and I was surprised that a certain amount of money had been unclaimed under the heading. I have dealt with at least 20 cases in which people said that their elderly relatives received great treatment and did not want anything back. Has the HSE undertaken research on this or have witnesses ideas in this regard — I am not sure whether this applies to Professor Drumm or Mr. Scanlan? These people told me voluntarily that they got great service and do not want money back. Is the HSE aware of this trend? Is it only Cork people being so generous or could it be a national trend? The figure of €1 billion is obviously obtained by multiplying X by Y. How will this matter fare, in the view of the HSE?

Mr. Liam Woods

The provision for the scheme in the current year is €360 million and was €340 million for 2006. We commenced making payments under the scheme in December 2006. In the 2005 accounts, the only payment referenced is the €2,000 payment per patient that was made.

On the specific point the Deputy raises with regard to donations, or the estates of patients not requiring money to be paid back, a donations fund was established as part of the Health Act 2006, so a specific arrangement is in place for people to make donations. Payments have commenced only in December so the experience is only beginning.

I have to ask the obvious question. It is a Civil Service-type process. Do people have to apply to give back this money or would they simply say "I am happy to leave it to the State"? Is there a facility for contacting the approximately 40,000 people involved? Obviously, most people would not bother with this kind of process. If they are willing to leave the money with the State, I do not think they will go to the bother of stating they want to give it back.

The Revenue Commissioners have been working very proactively on removing the need for people to apply, and they do this automatically where possible. Will the HSE consider a mechanism for allowing people to know about this? It should not be simply a case of people not knowing they could claim or that they could leave it with the State.

Mr. Woods

The process is claims-based at present. If there are people who do not claim, they will not be visible in the process at this time. There may be people who will claim and who will then donate the proceeds. It is a separate point to the one the Deputy raises with regard to whether people who do not claim could be identified. I imagine it would be practically difficult to identify them because it is a claims-based process.

My next question comes under the heading "enhanced internal controls". When I first raised the issue of PPARS, Professor Drumm told me there were 1,271 separate trade union agreements throughout the country. The HSE is dealing with 17 former health agencies. While much has been done, how is this area progressing? The HSE code of governance is to include, among other requirements, "the nature and quality of service that persons being provided with or seeking health and personal social services can expect". That is the HSE mission statement. How is the HSE progressing with regard to re-uniting the troops and providing that service?

Professor Drumm

In terms of bringing together the organisations, we believe we are making progress. We are dependent on significant agreement from the trade unions involved with regard to rolling out what will be a truly unified structure. The structure will be truly unified when we have, for example, a common financial system and a common HR system.

The Deputy referred to the number of variances across the system, which are of major concern to us and which would have to be almost individually negotiated. We hope, in negotiating agreements with the unions representing major parts of our workforce, that central to those agreements will be the removal of those variances as a block, rather than having to deal with each individual variance, such as whether one is due a half day more in the north east than one would be due in the south. There are many variances.

In terms of bringing the organisation together, we have had much success in focussing the organisation on providing a standardised system throughout the country. The major issue this organisation has been able to identify is that there is huge variability in how resources are applied across the country. We have begun to roll out, with the support of the Department, much more accurate figures on what we get in return for the investment in our service plan. In the coming months we will further advance that process, so we will be able to see clearly from updates and reports on the service plan how the money invested applies overall to the number of people who work in a specific area and the actual activity that comes from that area. That kind of transparency throughout the country will make a huge difference.

Is the organisation working at a national level? There is a degree of paranoia with regard to negative issues concerning the health service but 100,000 inpatients and outpatients were seen in the hospital system in January alone, which is a 7% increase on the figure a year earlier. We have seen a consistent rise in the number of outpatients being seen — a 14% increase on the previous year — which relates to the Deputy's earlier question on waiting lists. The activity figures clearly show the organisation is having an impact.

The accident and emergency issue is the other major issue where it has been shown that a unified organisation has suddenly brought the focus onto whether this is a national problem or a problem in individual hospitals. For example, in Deputy Dennehy's area, by focusing on this issue at an individual hospital level, the big unit at Cork University Hospital, probably the biggest in the country, was able to turn around a very bad situation and make major improvements by dealing with the issues at local level. We are seeing changes.

The Deputy also raised an issue with regard to pharmacy. Not only have we seen increased activity and improvements in areas like accident and emergency, we have seen the HSE, as a unified organisation, able to negotiate with the pharmaceutical industry in a situation that will see us make a saving of at least €300 million to €400 million in the next few years. That would have been very difficult to achieve when we were operating across 17 organisations.

The changes in the accident and emergency unit in Cork might be a good reason for giving nurses a 35-hour week.

With regard to section 35 of the Health Bill 2004, dealing with the code of governance, the HSE was as soon as possible after establishment to include, among other requirements, "the nature and quality of service that persons being provided with or seeking health and personal social services can expect". Does that override the old patient's charter? Has the code been published, given it was to be delivered as soon as was practical after the establishment of the HSE?

Professor Drumm

The code of governance is with the Minister at present. We hope it will be signed off on in the relatively near future. The nature and quality of service that people may expect is a matter that will override the patient's charter. We have not put it in the public domain yet but it is something we must do.

I will begin with Mr. Scanlan. The Chairman has already referred to the statistical bulletin on health statistics we received from the Library and Research Service of the Houses of the Oireachtas in December. I will put some of those statistics to Mr. Scanlan for confirmation, in particular the statistics regarding how the Irish health system compares internationally, particularly in the OECD area.

A published OECD health data report for 2006 measured Irish health resources against those of other OECD countries. The report stated there were 2.8 physicians per 1,000 of population in Ireland as opposed to an OECD average of 3 per 1,000. While that difference sounds close, in proportionate terms I estimate Ireland would be short physicians to the extent of needing somewhere between 800 to 850 doctors to bring it up to the OECD average. The second statistic concerns acute beds. In Ireland the average is 2.9 per 1,000 whereas the OECD average is 4.1 per 1,000, which is a substantial difference. I estimate the shortage of beds in respect of the OECD average at somewhere between 4,800 and 5,000. Are these fair statistics?

Mr. Scanlan

Professor Drumm may wish to respond on the question about physicians. In regard to bed numbers, the previous report, known as the Mary Codd report, looked at data for acute beds in this State but did not include private acute beds. Adjusting the data to take this into account gives a figure of 3.8 acute beds per 1,000 population, compared with the OECD average of 4.1. I did not catch the figure Deputy Boyle mentioned. Factoring in private beds changes the figures significantly.

Is Mr. Scanlan saying we are only short by between 1,200 and 1,500 beds?

Mr. Scanlan

Another point that must be factored in is the age profile of the Irish population. The demographic structure here, in comparison to elsewhere, is significant because of the evidence that health care is directly related to age. Our population is much younger than that of other OECD countries. Some 11% of our population is over 65 years compared with an average OECD figure of 16.5%. Furthermore, our hospital admissions rate, at 14.1 per 100 population, is lower than the EU average of 17.5. One could argue that more patients are not being admitted because there are not sufficient beds. However, the demographics suggest we have more than enough beds, at least for now. I am not sure we can conclude from the available figures that there is a shortage of acute hospital beds.

Mr. Scanlan has acknowledged that people are being admitted to hospitals but not admitted to beds. Surely this distorts the statistics. Are trolleys being counted as beds?

Mr. Scanlan

No. I am counting beds, not trolleys.

The HSE is leading a study that will look at acute bed capacity until 2020, in addition to all the other types of beds. There is a danger that we may focus too much on acute beds. A needs analysis has been undertaken in regard to beds for long-term residential care, respite care and rehabilitation. We must consider acute beds as part of the totality of health service requirements.

In regard to physicians, I have another figure that shows we have 15 nurses per 1,000 population against an OECD average of 8.5.

That figure can be reduced in terms of how it is measured. Taking only the numbers for public hospital nurses reduces it closer to the OECD average.

Mr. Scanlan

I am not sure that in examining any aspect of our health service we can focus only on the public system. We have a significant private component to health care. There was some concern that the figure for the ratio of nurses to patients was based on the number of registered nurses as opposed to working nurses. Even based on the latter, however, the figure is 12.5 per 1,000. There have been suggestions that part of the reason for this is that much of the work done by nurses here is performed elsewhere by other grades. One must take into account the skill mix in Irish hospitals. We are trying to move towards a better mix.

I assume the age profile of the State has an impact on physician numbers. I do not know whether the figure includes GPs, junior doctors and hospital consultants.

Professor Drumm

Without age adjustment, the OECD data are completely misleading. If this country is to use resources equivalent to those of countries with twice the need for resource based on age, where will we be when we reach the point when the age profile is less favourable? Up to 60% of our bed days are taken up by patients over 65 years of age. Some 25% of the population of Germany, for example, is in that demographic, compared with some 11% here. The figure for the United Kingdom is 18% or 19%. It makes sense that the figures should be far lower here for this reason.

I do not accept that. It is akin to the health service asking that health statistics should be given community ratings.

Professor Drumm

Health statistics are not looked at in a reasonable way anywhere in the world other than in terms of collecting the costs.

We also know that poverty is an indicator in terms of how people access the health system.

Professor Drumm

Absolutely.

Why is that not also weighed into the balance?

Professor Drumm

We can do that and look at it across the OECD, which probably will not help Ireland in terms of the numbers of people required. The bottom line is that if the figures are age adjusted, Ireland has a ratio of 3.2 doctors per 1,000 population, whereas the figure for the United Kingdom, for instance, is 2.1. Those figures are provided by the Fraser Institute in Canada, which is the only source of health data that are age adjusted. According to its figures, we have close to 50% more doctors than the United Kingdom and significantly more than Canada and the United States. On the other hand, there are European countries such as Italy which are significantly ahead of us in terms of the numbers of doctors.

We must compare ourselves to states that operate a similar health service to ours. Age adjustment is essential in this regard. Otherwise, I have no idea how we will judge what we are doing in the health service. I do not see how we can provide an efficient system if we ignore the fact that the vast majority of funding goes on those over 65 years of age. That makes no sense.

The same applies to acute beds. A judgment on the number of acute beds must take into account the type of health service one is running and how community services operate. In addition, in the Irish context, we must also factor in the significant numbers of private beds. To ignore them is clearly a huge advantage to the public system in terms of its efficiency. It would be great if we were allowed get away with that but I expect it would not be fair. If we factor in age adjustment, which nobody has done, and the fact that 60% of bed days are taken by patients over 65 years, a figure of 2.9 acute beds seems reasonable compared, for instance, with the situation in the United Kingdom.

As the Secretary General said, we are undertaking a full review that will take into account not only the age of the population but, most important, how a reorientation of community services can change our use of beds. Average lengths of stay for various procedures are an important factor. A patient with acute appendicitis will remain in hospital for anything from three and a half days to close to six days. We cannot continue to run a system that operates on that basis. We must have an average length of stay that is up to international benchmarking standards. Patients admitted with heart failure will all have entirely different lengths of stay depending on the hospital to which they are admitted. Without dealing with these issues we will be building beds forever. The system will simply absorb beds and allow patients to remain in them for longer.

When I was in secondary school, the IDA ran an advertisement about Ireland being the country of the young Europeans. At that time, 50% of the population was under the age of 25 but we had 3,000 more hospital beds than we do now.

Professor Drumm

Beds numbers have reduced everywhere in the world.

Mr. Scanlan

The figures show there has been a reduction of some 30% in bed numbers across Europe in the period since the mid-1980s.

Professor Drumm

The critical issue in respect of the figures from 20 years ago is that some 10% of surgery was performed on a day patient basis at that time. Close to 80% of surgery is now done on that basis. It is a completely different system of operation across the world.

The Health Research Board census of psychiatric units and hospitals found there were 3,389 patients as of 31 March last year. Does Professor Drumm have a figure for the average cost of treatment of patients in the mental health system? Some 22% of patients on 31 March — in the region of 750 — were in hospital on a non-voluntary basis. How does this compare internationally? The other statistic that stands out is that 29% of these patients had been in psychiatric units or hospitals for a period longer than five years. This equates to more than 1,000 people. How does this compare with international norms?

Mr. Scanlan

I am afraid I do not have the international psychiatric figures to hand. However, I am almost certain that the figure quoted by the Deputy, of non-voluntary admissions at 22%, is extremely high by international norms. This is why we were so anxious to commence the part of the Mental Health Act that deals with mental health tribunals. I consider it to be almost a human rights issue, in that we were obliged to have such protection in place for people who were being involuntarily admitted.

I have a figure to hand stating that in 2005, involuntary detentions represented 11% of all admissions and 12% of first admissions. However, without getting into a dispute about statistics, my recollection is that the figures for Ireland are higher than is the case abroad.

That is what is stated here.

Mr. Scanlan

Yes. My understanding is that the Irish figure is higher than the equivalent in other countries, which is why we consider the mental health tribunal system to be so important.

I do not have figures on the length of stay. The Deputy mentioned a figure stating that 29% stay for more than five years. I also do not have comparative figures for other countries.

Can Mr. Scanlan supply the committee with them?

Mr. Scanlan

Yes, I will search for them.

Does Mr. Scanlan have figures for the average cost per treatment?

Mr. Scanlan

No.

Mr. Pat Healy

In acknowledgment of the Secretary General's comments, the document, A Vision for Change, the commission's reports and so on indicate that our intention is to move to a more community-based service that will reduce the length of stay in psychiatric hospitals. It is acknowledged that our levels are higher. Geographic differences also occur nationwide, with longer stays in certain localities than in others. This has been acknowledged previously. However, as we begin to implement the report, A Vision for Change, improve the focus and move towards a community-based service, we will see an improvement in this regard.

I will move on to the accounts and will ask a series of questions of both Mr. Scanlan and Professor Drumm. In respect of the 27% of the Department's net expenditure that was returned in 2005, Mr. Scanlan spoke of the three areas in which savings were made. Why was there an apparent overestimate in each area? I will cite the examples. In respect of developmental consultative, supervisory and advisory bodies, the Department spent €55 million in 2004, while in 2005 it spent €77 million. However, the Department had estimated its 2005 expenditure in this regard at €97 million, which is more than twice what was spent in 2004. Why was this estimate included? In 2004, payments pertaining to hepatitis C compensation on foot of the tribunal were €62 million and they rose to €72 million in 2005. However, the Department had put aside a provision of €101 million. Is it still expected that payments of that level will be paid out? Finally, Mr. Scanlan mentioned a saving of €10 million on grants in respect of building and equipping of agencies. He may already have explained the third point.

I refer to the Health Service Executive's appropriation accounts. In respect of the issue of long-stay charges, a small provision of €40 million was made in 2005, of which €20 million was spent. Is Professor Drumm still of the opinion that the overall cost is likely to be €1 billion? At the end of December 2005, a total of 2,536 other claims were outstanding against the Health Service Executive. Are they all being dealt with by the State Claims Agency? Can Professor Drumm provide a breakdown as to how they are divided? Are some public liability claims, or do some pertain to possible medical negligence?

Mr. Scanlan

On the agencies issue, I noted earlier that the main cause for the underspending was the delay in setting up the mental health tribunals. While we had expected they would be up and running in 2005, in the heel of the hunt, the Act did not commence until November 2006. If one considers the Mental Health Commission alone, its allocation in 2005 was more than €15 million, which was what we had projected to spend. However, the actual spend was only €6 million. In 2006, despite having provided €12 million, we did not spend much more than €6 million because the tribunals did not get under way until very late in the year. We made provision for that lower sum because we had learned something by then and had become more cautious about our chances of setting up the tribunals. In 2007, we have provided more than €20.5 million, based on the best advice received from the commission as to the cost of the tribunals when up and running. While one could argue this was an overestimate, our intended aim was to commence the tribunals. However, we encountered a problem with medical consultants that dragged on and on.

On the hepatitis C issue, the short answer is that I am unsure. It is driven by the claims made. The Deputy noted that we only spent €72 million and asked the reason we provided €101 million. I am unsure of the basis for our estimate at the time. It was based on information we received from the tribunal on envisaged claims. We are naturally inclined to include this as a contingent provision. In other words, if such a sum was likely to be our exposure based on a best estimate from the tribunal, we would feel obliged to find that money.

I noted earlier and have been reminded again that the funds pertaining to hepatitis C are provided in a very particular way by the Department of Finance solely for that purpose. In that sense, it is probably unfair to consider as a surrender any provided money that is not spent subsequently.

Professor Drumm

I will ask Mr. Woods to comment.

Mr. Woods

On the first question regarding long-stay charges, the performance in 2005 is as stated by the Deputy. As I noted previously, we have just commenced payment in this regard. As we have made a provision for it this year of €360 million, the pattern will only become clearer as the year progresses. There is a substantial number of claims and our commitment is to turn them around within 28 days. The pattern will only become clear in the course of this year. As for the Deputy's point regarding insurance and outstanding claims, I can provide him with a breakdown in this respect. As the State Claims Agency deals with all clinical negligence claims, the claims to which we refer here primarily pertain to employer's liability and public liability. The split is roughly 50:50 between the two types of claim.

The State Claims Agency has approximately 2,500 cases that are separate to the aforementioned claims.

Mr. Woods

Yes, the cases with the State Claims Agency are separate. There are approximately 1,255 public liability claims and 1,271 employer's liability claims.

Has the Health Service Executive made a provision as to their possible cost?

Mr. Woods

They are covered by insurance. The Deputy's addendum to that question pertained to the main causes. I have a note on this subject and if it would be helpful, I can forward something to the members on the causes giving rise to those claims.

May I ask one more question?

One final question.

It pertains to the staff ceiling. The last time Professor Drumm was before the committee to discuss the Vote, the 2005 figure, in whole-time equivalents, for people working within the health service was more than 101,000. While there was a ceiling of 98,000, it has been increased recently to 108,000. Is this figure likely to be reached or will it be exceeded?

Professor Drumm

We are obliged to live within that ceiling. However, it will also change as new developments are rolled out. Consequently, it will be revised this year and in the future, based on new developments voted to us by the Oireachtas. However, the legal position is that we must operate within the ceiling of 108,000. At present, the ceiling is being broken down to match individual local health offices and hospitals, in order that each unit knows exactly what it is responsible for in terms of controlling its numbers. This will allow us to begin to devolve much central control back to such units and is being done as we speak. However, the answer is that we are obliged to live within that figure.

Mr. Scanlan is aware the committee has gone through the costs of the post mortem inquiry in detail and I do not intend to go over the ground that has been covered. In terms of going from here and the future policy of the Department of Health and Children with regard to future tribunals or inquiries, Mr. Scanlan will be aware that since we last met, the costs of the planning tribunal came into public focus quite sharply. We will leave aside the Ministers who are pretending to be champions of the taxpayer, having set up the arrangements by which those costs escalated. From the figures sent to us subsequently by Mr. Scanlan, I work out roughly that the senior counsels were on €2,300 every single day they worked, giving us a situation where every three weeks, a senior counsel made the equivalent of an average industrial worker for a full year.

Following on from that, has a policy been drawn up in the Department as to how legal costs will be handled in any ongoing or future inquiries?

Mr. Scanlan

I can recall saying on the last day that when we were talking about the post mortem inquiry, one could not, and perhaps should not, look at it in isolation. It was my sense that what brought matters to a head with that inquiry was not just the inquiry itself but the lessons that were becoming apparent across the system in terms of inquiries and tribunals in general. Again, while I was obviously happy to provide the figures, I said to the Deputy on the last day that the rates paid were in line with the rates paid in other areas and were approved. I am not talking about the value or otherwise that was got for those payments.

For the future——

Mr. Scanlan

The reason I am setting it in that context is because I think that looking forward, it is not just an issue for the Department of Health and Children. The entire system must look at how inquiries in general are conducted. Certainly, in terms of any inquiry that is conducted in the future, I strongly advise that the sort of points that emerged in the Comptroller and Auditor General's report on the post mortem inquiry be reflected in how a future tribunal is run so that, for example, there would be very clear terms of reference and greater clarity in terms of a timescale and the total cost, not just the daily costs. On the last occasion we met, I believe the Chairman made the point that we, as individuals, would not engage in business in this way.

On that last occasion, I asked Mr. Scanlan about Parents for Justice and its disillusionment with the whole process but that it had requested a meeting with the Minister. Has the Minister agreed to meet with it?

Mr. Scanlan

I am speaking from memory, but I think I saw a reply to a parliamentary question recently where the Minister said she had agreed to meet Parents for Justice.

So presumably that will happen.

Mr. Scanlan

Yes, she is arranging a meeting.

I want to ask Professor Drumm about capital spending of €491 million in 2005. This is obviously a substantial amount and relates to the provision of additional beds as well as other aspects of the service. I have not been able to clarify exactly where the HSE stands vis-à-vis the 3,000 beds the Government has promised. Professor Drumm and Mr. Scanlan seemed to be saying this number of beds, which were promised a number of years ago, are not really necessary. Is that Professor Drumm’s view and is there a conflict between the HSE and what the political masters of the health services are saying?

Professor Drumm

Absolutely. The capital spend would often be related to rebuilding beds that already existed and many other health care facilities. One of the big challenges is to bring our present stock of beds not only in our acute hospitals but even more so in our long-stay facilities up to a standard that is acceptable because the standard of our facilities is one of our big deficits. This is where much of the capital spend can go.

I hope I have always been entirely clear on the beds issue. There are two forms of beds — long-stay and acute. In respect of acute issues, we cannot deal with reports that are even five or six years old. The entire provision of health care has changed dramatically in terms of the roll-out of health care at a primary care level. I have said from the beginning that we must focus on getting our services in the community to a level where people do not have to go in and wait two days in hospital for a CAT scan or ultrasound that could have been performed without them ever going into hospital. We must focus on the provision of these services in the community by building up of our primary care community structures. We cannot spend the same money twice. We must focus on moving to a model upon which most developed countries have focused for a number of years.

Is Professor Drumm saying the Government figure provided is outdated?

Professor Drumm

I am saying that, at this stage, the Government figure of 3,000 beds needs to be revisited in the context of the modern services we are now aiming to provide. We are well down that road and within the next few months, will have a very comprehensive view, which will look at how our roll-out of money into the primary care community structure will impact on that figure and how our entire rehabilitation services that are evolving in the community fit into that context.

What Professor Drumm has said is very significant. However, we, as public representatives, are still fed the same line by the Government with regard to 3,000 additional acute beds. No one in Government has come in honestly and said that, according to the HSE, it must work on a different situation and 3,000 beds will not be provided.

Perhaps Mr. Scanlan wishes to comment before Professor Drumm replies.

Mr. Scanlan

I have a few comments to make. Since the health strategy was published, there has been a significant increase in acute beds. I have figures which show there has been an overall increase of 1,200 acute beds since then. The Deputy is correct in that as part of the capital programme, more acute beds are coming on stream each year so additional beds will be provided in 2007.

The other point made by the Minister is that the co-location initiative launched by her is designed to free up 1,000 beds in public hospitals. One needs to look at it in the sense that in any given year or over a period of years, one is making decisions about resource prioritisation and allocation. Money has been allocated to increase the stock of acute beds, but at the same time it is only appropriate for me as a public servant to review evolving practice and evidence and build them into whatever recommendations I would make to the committee.

I am not saying it is Mr. Scanlan's issue, but those with political responsibility should come to the Dáil and be frank about the situation, rather than dragging us all along on a pretence.

Mr. Scanlan mentioned the co-location initiative, upon which I will focus. Arising from future capital investment, it is quite clear that the Minister essentially sees the privatisation of future hospital development as a way of saving on capital expenditure. Where stands co-location at the moment? What agreements have been reached with private entities, developers and speculators who are now moving into the area for profit?

Regarding the issue of contracts being signed between the Health Service Executive or the Department and these private entities, the lead-up to a general election is a sensitive period, after which a new majority in Dáil Éireann might be opposed to the line taken by the current Minister. Will any contract concerning private hospitals on public lands be signed before the general election or will the HSE take the precautionary principle, that is, the verdict of the people should be awaited?

Professor Drumm

I have always been clear on this matter, namely, private hospitals on public sites is an issue of the HSE selling a site——

Is it a lease or a sale?

Professor Drumm

While I understand it is a sale, I must check. It will be done at full market value, but I do not know whether long-term leases will be involved. The site will become the responsibility of whoever takes it on to provide a service.

The HSE's job is to provide a superb service for the public through public facilities. What the private sector does through private facilities is for it to decide. I am sure gains will be achieved if public facilities decide to contract with private facilities or, in terms of intensive care support, vice versa, but that business will be separate to the HSE’s business in many respects.

Regarding the signing of contracts, we have been mandated by the Government through the Department of Health and Children to proceed with a formal process. The negotiations on individual sites — the site we are willing to sell is not always the site the private sector wants — are under way. The timeline could see us signing contracts in mid-April if agreement is reached. I am not in a position to say that the HSE will not sign because we must follow Government policy.

Mr. Scanlan

Neither Professor Drumm nor I are here to comment on policy, whatever the Government's persuasion. Our role is to provide advice and to implement policy decisions. I can confirm that both lease and sale options are open, but there is a clear message that full market value is to be obtained in a transparent way.

With respect, the Deputy did not ask about a policy issue. He asked about the disposal of an asset that is now the property of the State. Specifically, he asked whether contracts will be signed for the disposal of HSE land to the private sector between now and the general election.

Mr. Scanlan

My understanding is that the answer is "Yes", as that is the timeline being worked to.

Which are the sites in question?

Mr. Scanlan

I had a full list, but it has since changed. That list included Limerick Regional Hospital, Waterford Regional Hospital, Cork University Hospital, St. James's Hospital, Beaumont Hospital, Blanchardstown hospital, Tallaght Hospital, Sligo General Hospital, Galway Regional Hospital, Letterkenny General Hospital and Our Lady of Lourdes Hospital in Drogheda, but there is not sufficient interest from the private sector in the last three and they have been removed from the list.

Is Mr. Scanlan stating that eight contracts will be signed for the sale of public land before a general election in which this issue has already assumed first rank importance in the debate on the future of the health services? Is it a diktat from the Minister for Health and Children that the contracts should be signed in April?

Mr. Scanlan

It is my understanding of the timeline for the procurement process that such contracts are expected to be signed. The Deputy can examine the timing of the different stages of the process.

A timeline must come from somewhere. From where has this timeline come?

Mr. Scanlan

I am not sure that the Department set out a firm timeline in terms of dates and months. In mid-2005, the Minister issued a policy direction under the Health Act.

Professor Drumm

From memory, the matter goes back more than a year to when the HSE was asked to put a timeframe on it. These are business negotiations and the HSE must ensure it gets full value for money for its sites. We can only operate to the timeline if we believe it delivers a proper business outcome.

Are we expected to believe it to be pure coincidence that on the eve of a general election where a policy change may happen, eight major contracts will be signed?

Professor Drumm

I must check, but we were asked at a board meeting of the HSE to produce a timeline. To be honest, it originated within our contracting structures and was not influenced by the general election.

The timeline will be subject to what I expect will be ongoing and difficult negotiations. The HSE will operate with total probity in ensuring that this business will be conducted in the interests of the public health sector. I am not in a position to state whether eight contracts will be signed because we have not reached that point. It is not an absolute deadline; rather, it is a business case on which we will follow through in the best interests of the public health sector and the taxpayer.

I will change the subject to ask Professor Drumm about a public health issue that is becoming a serious cause of concern, namely, sexually transmitted infections. In 1989, 2,228 cases were reported, but according to a report published in 2006, 10,695 cases were reported. The 2006 publication, which is our latest information, refers to the figures notified in 2004 and is out of date.

The rate of incidence is increasing. The Health Promotion Surveillance Centre reported that 75% of general practitioners are not notifying or refuse to notify certain forms of STIs. A serious situation is emerging in which the incidence of STIs is increasing rapidly and there is significant under-reporting. Has the HSE better figures than these, does it have a plan to get better figures and what is the programme to reduce the incidence of STIs?

Professor Drumm

The last question is the easiest to answer. I am not an expert, but the incidence of chlamydia has increased considerably and is of significant concern. We run programmes constantly in respect of sexual health and sexual practices that would avoid the transmission of infections. I cannot answer the Chairman's question about the numbers being reported today. I will have to revert to the Chairman on whether we have sought to improve reporting from a population health perspective. I can do so promptly.

Does the HSE have any cross-departmental initiatives? The trend is upwards but is due to a number of factors, including the fact that the first sexual encounter is experienced at a younger age, the lower likelihood of using contraceptives, an increase in drug taking and drinking, an increase in the number of partners, our young population and ambivalent attitudes to sex education.

Professor Drumm

All of the factors outlined are common to the increases in these infections. Chlamydia has taken off at a high level. We have cross-departmental interaction with regard to sex education but there is a major challenge in terms of how this is applied across different parts of the education system. There is now agreement that sex education should be provided. It is a challenge to see if we can increase the use of contraception, particularly condoms. It is a challenge faced by other countries as well.

The fear of HIV was the major driver of the use of condoms but HIV is now seen as a disease that can be treated by drugs. This is not true although it can be kept in remission by drugs to a greater extent than in the past. This incorrect belief is linked to the concern that the use of condoms is decreasing. The infections to which the Deputy referred to are dependent on the same provisions.

I will revert to the Deputy on the matter of under-reporting and mandating reporting.

Is the HSE in charge of the disposal of State lands with regard to private hospital initiatives?

Professor Drumm

Yes.

Can the CEO say how many acres of development land will be sold for private hospital development? There are eight projects. Does each project cover ten or 20 acres?

Professor Drumm

I will get that figure for the Deputy. There is a joint issue in the case of voluntary hospitals, which are in control of the land bank. We want to be involved in deciding what property will be sold.

Does the CEO have an estimate of how much State land will be sold?

Professor Drumm

No, but I can provide the Deputy with the precise figure.

I presume it is unlikely to be less than ten acres per site.

Professor Drumm

I think it will be because these sites will not be that large. One could not take ten acre sites from St. James's Hospital, Beaumont Hospital, Limerick Regional Hospital or Waterford Regional Hospital.

Professor Drumm said the sites would be sold at full market value and that negotiations were difficult. Have successful bidders been selected?

Professor Drumm

The tenders have been short-listed. To the best of my knowledge we are negotiating with a shortlist of parties for each site.

Is the HSE advised on tax issues that arise from sale of these lands? Perhaps I should direct the question to the Department of Finance. When someone is purchasing State lands or land owned by a hospital, matters arise such as stamp duty and the structure of the deal.

Mr. Mooney

I am not an expert on tax and do not work in that area. I understand that co-location projects are proceeding on the basis of the existing tax regime that applies to the development of private hospitals. I do not know the mechanics of the scheme but no change has been made to accommodate the projects now under consideration.

Perhaps Mr. Mooney might read the amendments tabled on Report Stage of the Finance Bill. Changes are proposed.

Mr. Mooney

Do these not refer to residential units?

That is another change but changes are also proposed in respect of stamp duty. If there was to be a stamp duty concession would the vendor seek a higher price? Is the HSE advised of tax issues? Is there consultation between the HSE, the Department of Health and Children and the Department of Finance in respect of tax issues?

Mr. Woods

To clarify that point, the team in the HSE working on this matter has access to tax advice based on the current body of tax law.

Can Mr. Woods tell us of the situation with regard to stamp duty?

Mr. Woods

I cannot.

What is Mr. Woods's understanding of it? Professor Drumm and Mr. Scanlan stated that lands would be transferred by ownership rather than by a leasing arrangement. In that event stamp duty will be imposed.

Mr. Woods

Yes. Subject to proposed legislative changes to which the Deputy refers, that is my understanding.

Is the HSE advised of taxation issues?

Mr. Woods

Yes. I am not personally involved in this are but the HSE is advised on taxation.

Has the HSE held discussions with the vendors about stamp duty on the purchase prices to be negotiated? It amounts to 9%, a significant amount for a commercial operator.

Mr. Woods

Given that I am not directly involved in this area we must revert to the Deputy with a response.

Ms Duffy

I am not directly involved either.

Professor Drumm

We must clarify the sites and the size of the sites. There is not yet agreement on all sites. I must revert to the Deputy on whether the arrangements are for long-term leases or ownership. We will also provide the information requested on stamp duty.

With regard to the eight deals the HSE expects to conclude, is one company or private hospital group likely to acquire more than one site?

Professor Drumm

I cannot tell the Deputy at this stage. I cannot find this out prior to completion of negotiations.

Can the HSE forward the information in writing?

Professor Drumm

The rest of that information can be provided quickly. It is unfortunate that Mr. John O'Brien, who deals with this matter, is at consultant contract negotiations today.

Mr. Scanlan

In case I misled the Deputy, my understanding is not that all or most of these sites will be sold. My understanding was that they would be leased. The issue of sale has arisen in negotiations.

I am surprised Mr. Scanlan is not apprised of the tax issues given the three bodies represented at this meeting. The tax implications of such a deal could be quite significant depending on the structure of the deal. If favourable tax situations exist, we might expect the vendor, namely, the public purse, to get a better price.

Mr. Scanlan

Absolutely. I wish to make a few quick points. The Department is also advised by the National Development Finance Agency on the financial test to be applied across the board on these sites. We are not involved in the procurement of individual sites. However, I accept Deputy Burton's point that tax is one of the parameters which should be built into it. We had a previous experience where an individual hospital did not take account of the tax cost to the Exchequer. Our view is that we must take account of the total cost benefit to the Exchequer.

Neither Professor Drumm nor I deal with the issue but I understand the process is not yet at a stage where it would be on the table. We are still clarifying the service requirements on each of these sites and the services which could be provided by a number of interested parties. I am open to correction on this but I believe it must then go to tender among the remaining interested parties.

I wish to make a lay person's point. If I buy a house, closing the deal may take a month or two. Does Mr. Scanlan wish to revisit the comment he made to Deputy Joe Higgins that he feels it could all be concluded by the middle of April before the general election? It sounds like a great deal of detailed work has yet to be done. Is this wise in a context where Mr. Scanlan is not apprised of the tax situation? It is now 1 March. The middle of April is less than six weeks away. A normal person purchasing a modest house would find it difficult to conclude the deal so quickly.

Mr. Scanlan

My apologies if I did not make it clear. I do not believe I stated the entire deal would be concluded. I did not refer to any election. I understand the procurement process will proceed along a timeline which means contracts could be or would be expected to be, whatever phrase the Deputy wants to use, awarded some time in April. This is the latest information I have. In terms of buying houses, I know other steps must be gone through to take possession.

Professor Drumm

We have a very professional team dealing with this under Mr. John O'Brien. I am certain the team is fully apprised of all tax implications and I will come back to the committee. No more than anybody else at this meeting, I personally do not deal with it. However, our organisation has a professional sales and procurement team and it works with John O'Brien's team. Its members are experts on tax and stamp duty. There is no question that the team is aware of what is going on.

As I stated to Deputy Joe Higgins, the timeframe for finishing this was set quite some time ago. We will continue to negotiate the deals as we go along. Will they be completed? If they can be completed to everybody's satisfaction and everybody is in agreement on the cost and amount of money to be transacted, then the answer is "Yes". However, I have no way to predict that.

Does the Deputy have a final question?

I asked the parliamentary affairs division of the HSE about James Connolly Memorial Hospital in Blanchardstown. Approximately 1,200 trips were made last year by patients who had to leave the hospital for MRI scanning and imaging purposes. Is Professor Drumm aware of the cost of this? The hospital has a long-standing request for improved radiology facilities. The report mentions a capital surplus of €50 million which was carried forward.

I suppose this is a micromanagement issue. I understand the cost of imaging equipment, such as high-level scanners, is a couple of million euro. I am sure it also has staffing implications. However, James Connolly Memorial Hospital is now a major trauma hospital. It receives a significant number of patients with serious gunshot injuries because of the level of crime on the west side of Dublin and it is beside the M50.

We have a surplus at a time when 1,200 trips per year are made to Beaumont Hospital and the Mater Hospital by patients along with accompanying staff in ambulances or taxis. The medical team loses efficiency because reports must be transmitted in a less than efficient manner and contact personnel are in a distant location. Professor Drumm frequently refers to a business case. This was promised to the hospital for a long time. When are business cases at that level likely to be dealt with?

Professor Drumm

The Deputy alluded to the fact that capital costs are a minor issue in terms of the long-term costs. Once we put these into play, significant revenue costs and whether a sufficient workload exists to justify maintaining the scanner are the major questions. The second issue refers to whether organisations can put forward proposals on how these might be funded from within their existing revenue bases. James Connolly Memorial Hospital is the best funded hospital in the State according to ESRI statistics. Funding could be examined within the present allocation. Ms Duffy may be able to comment on whether a plan exists.

Ms Duffy

I am involved in the capital side. When we prepared submissions for the Department for the 2007 plan, it did not emerge as a priority for consideration for inclusion and did not feature. I recall a CT scanner did and that is being dealt with. However an MRI scanner did not come through the system as a priority. From within the HSE, I did not see a business case put forward for the capital investment or, as Professor Drumm stated, a case for it potentially being revenue neutral and a better way of delivering a service to those patients.

Does Ms Duffy imply the business case for the CT scanner was addressed?

Ms Duffy

We will have a capital meeting later this afternoon and one of the items on the agenda is the CT scanner for Blanchardstown hospital.

I have a brief question to finalise on the issue of the sites. I take the point that it is Government responsibility. Unfortunately, it intends to sell and further privatise the health service. How will the price of land be determined? Grounds in Blanchardstown hospital were rezoned for housing and apartments quite some time ago. It enormously increased the price of the land, bearing in mind the madness in the housing market and the speculation which occurred. Would the fact that, theoretically, some of these lands might have been rezoned for housing development be a factor in the price?

Professor Drumm

I will have to ask the team conducting these negotiations. We can do so quickly and I will give the Deputy the exact details of how it is set. A tendering process is in place. I must clarify with the negotiating team how we establish the benchmark for the value of the land.

I am happy a crucial hospital in my constituency, Blanchardstown hospital, may receive good news. However, regarding another constituency which is dear to me, do plans exist to progress the hospital in Dingle? It is on the cards for a long time.

Mr. Pat Healy

Dingle Hospital is in the final stages of planning. It has already been approved as a project in the HSE capital plan and we are at the final negotiation stage on certain matters, which will be finalised very shortly.

Is there a starting date?

Mr. Healy

I do not have it but we have previously communicated the likely date. A two-year build is envisaged.

Are we talking about Dingle or Daingean?

Mr. Healy

The local community will not mind as long as it gets its hospital.

It would be Dingle Hospital or Ospidéal Daingean Uí Chúis. Professor Drumm said the cost of drugs in the health service could be cut by hundreds of millions of euro in the years ahead. Will that be achieved by the HSE opting for generic drugs? What precisely will contribute to these cuts?

Professor Drumm

There are several areas. Saving starts as of today, with the agreements with manufacturers taking effect. First, savings will take place in respect of manufacturers' own label products where there will be a reduction of 35% in the next few years, starting with 20% today and 15% in two years' time. That is a significant saving but there will be a greater reduction in costs in the generic market because producers will have to reduce prices to compete. We will continually drive to achieve generic prescribing, which is in our control, and to push family and hospital doctors to prescribe generically. That has been somewhat successful in the past but not hugely so, so we wanted to drive down the price of trade names, in which we have been successful.

The second phase relates to distribution costs. Historically, for reasons I am not clear about, we have been responsible for the costs of distribution from the manufacturer to the retailer. Costs of 15% have been set aside for distribution costs but we have been negotiating a significant reduction. We cannot negotiate further and are now in the process of setting the cost, which will be significantly lower than the 15% to which I referred.

The final phase will not involve further negotiation but the setting of a framework for how we remunerate community pharmacists for the provision of drugs.

Mr. Scanlan supplied the committee with a note showing that the number of nurses had risen above 36,000. Can he say how many nurses qualify each year and what is the loss to the Irish health service of nurses either not practising or going overseas? Nurses and nursing unions have said there is a loss of valuable, trained people. In view of that, is it not untenable for the HSE to insist on lower pay levels for nurses than for other professionals who work beside them and even answer to them?

Is the shorter working week, which they were promised a long time ago, not crucial to retaining a much higher complement of nurses, both from Ireland and abroad, the latter of whom are an essential component of the service, as well as attracting more to the profession?

Mr. Scanlan

I have figures which may answer the Deputy's questions. From 2006 onwards, the annual intake of nurses has been 1,880 students. That compares with just under 1,000 in 1998, a significant increase. The Deputy suggested that many nurses leave Ireland to go abroad and there were very misleading media statements to the effect that between 1,500 and 1,800 emigrated per annum. However, An Bord Altranais has given the Department figures showing that 689 requested verification of their qualifications so that they could work abroad in 2005. Our understanding is that many of those returned to Ireland. Nursing is seen as one of those careers in which one can work abroad, Australia being mentioned as a popular destination, but many return to Ireland.

Part of the attractiveness of nursing as a career is the fact that the points requirement for entry into the profession has increased. I saw figures last night, which I did not bring with me today, showing the number of applicants for the 1,880 appointments to which I referred. As for the pay anomaly and working hours, the INO and the PNA took all claims to the Labour Court. On pay, the court stated there was a structure for dealing with public service pay — benchmarking — which applies across the board and recommended that the two unions avail of it. I dealt with public service pay at a time when that was not the case and the claims of various grades were determined individually, either by the Labour Court or the arbitration board. That caused many difficulties.

The court did not recommend against the claim relating to working hours but pointed out that concession of the claim would have major cost implications and would impact on patient services. It stated it might be possible to resolve the hours issue if countervailing measures were negotiated. The court stated that such measures would inevitably involve other groups of health service employees. It recommended that management and the unions, the INO and the PNA, sit down and review the way they use our nursing resource. However, it cannot be done for the nursing workforce alone without including junior doctors and care assistants, etc. The Minister has already made it clear that she would support such an approach. The Department's very strong view is that there is no need for industrial action. There are ways in which nurses can pursue their claims. I accept that the INO and PNA represent the majority of nurses, but IMPACT and SIPTU represent some and have chosen to stay within the partnership process. They have signed up for Towards 2016 and have used the benchmarking body.

Does Professor Drumm understand why staff of the intensive care and high dependency units in St. James's and Beaumont hospitals might be upset at some of the recent comments made regarding the difficulties they experienced in providing beds for patients who were on ventilators following major surgery? References were made in the public media to manufactured and off-the-shelf crises, whereas my understanding of the matter is that the staff of the units feel incredibly challenged and stretched by the atmosphere of crisis and strain in which they have to work. With regard to the professor's earlier comments on beds, the staff certainly think there is a shortage of beds in their part of the system. St. James's, for example, has sought an additional 50 beds but these were not forthcoming.

Professor Drumm

Mr. John O'Brien, who is the expert on these matters and who has a strong connection with St. James's Hospital, addressed the issue recently at the Joint Committee on Health and Children and I can provide the Deputy his response on the specific question of St. James's. We are conducting a bed review which will include a review of high dependency and intensive care unit beds. Differences exist between the two and, because of the way the system is designed rather than through any fault of the staff, hospitals tend to use intensive care unit beds for patients who should occupy less intensive or lower dependency beds. That is a design issue which we are now focussed on addressing.

Could Professor Drumm repeat his comment?

Professor Drumm

The system as it operates at present relies on intensive care beds or ward beds. We need to move towards the practice in much of the world by providing higher intensity beds which are not intensive care beds. We have to be able to put those beds into the system in order to take the pressure off intensive care units. That may involve a reconversion of existing ward beds into higher dependency beds. At present, we tend to have a clear break in many places between a regular ward bed and an intensive care bed, which leads to a situation where patients are occupying intensive care beds who could be in a less intensive location. That is not the fault of staff but because of the way the system was designed.

A number of claims were made that the crisis in St. James's Hospital was manufactured. Would Professor Drumm say it was not a manufactured crisis?

Professor Drumm

I do not know what comments were made. I am completely unaware of the comments to which the Deputy refers nor do I know who made them.

The Minister made a comment that the crisis was off-the-shelf and manufactured. I can understand the distress of many staff members who work under heavy pressure.

The other issue that arises for hospitals such as St. James's and Connolly is that a lot of elective surgery is cancelled as a consequence of the pressure on intensive care and high dependency beds and on accident and emergency units. Does Professor Drumm have figures on the proportion of elective surgery that is cancelled or postponed? Could he comment on the concerns expressed by a number of doctors that the repeated cancellation of elective surgery is damaging the traditional medical training structures? If people who are employed to concentrate on elective surgery have to go home at 11 a.m., what happens to their students? Is that a management issue?

Professor Drumm

Elective activity increased last year compared with the previous year. I can provide the figures for the Deputy. Elective activity decreased in three or four hospitals throughout the country but the overall figure is up. Elective activity has not been reduced by the resolution of accident and emergency problems in most hospitals. Tying the two together is not supported by the figures in any way. Elective activity is clearly very important.

With regard to whether elective operations will be cancelled, we can provide the Deputy with the precise figures on cancellations but in every demand-led scheme, elective surgery is cancelled in certain periods of the year. I do not think one could identify a health system anywhere in the world where elective surgery does not have to be cancelled at times, just as intensive care issues sometimes lead to cancellations of elective surgery. There is little that can be done about the problem in a demand-led scheme, unless infrastructure is massively over-built and even that would not be a guarantee. This is a demand-led system and it will at times be hit by issues such as increases in accidents or acute outbreaks of severe influenza and other diseases. Ms Duffy may be able to provide the total figures for cancellations so that we can compare them.

Ms Duffy

We can provide the figures compiled by the performance monitoring unit.

I understand the HSE is contracting beds in the new Beacon private hospital and that patients are being transferred there from several Dublin hospitals, including Beaumont and St. James's. Has the HSE any overall agency contract with Beacon? Issues arise for families of patients from the northside. Professor Drumm is probably aware of the recent case involving St. James's in which a long-stay comatose patient died within a number of days of being transferred to a nursing home. When he refers to intensive care beds which were not properly used, does he mean to imply that long-term patients will be transferred from hospitals to Beacon or to nursing homes?

Professor Drumm

No, we have set up one-month contracts with Beacon and a couple of other private hospitals.

One month.

Professor Drumm

There are possibly also contracts with the Hermitage and Mount Carmel. These are one-month contracts and they came into being due to an issue which arose in Beaumont over the past couple of weeks in terms of a significant rise in demand and an excessive number of long-stay patients.

One of the challenges of the system for long-stay patients is the dependency of patients. There are low, medium and high levels of dependancy among patients but we have a significant lack of high dependency long-stay beds in the community. These are not acute hospital beds for people who need a significant level of care. We are currently building units, with 250-bed units being built in Cherry Orchard and St. Mary's in the Phoenix Park, as well as an additional 50-bed unit on the northside. Those units will begin coming on-stream from the middle of this year. It is anticipated that we will move the patients currently contracted with the private sector back into our own services very quickly.

Mr. Purcell

I have nothing useful to add to what has been said.

Is it agreed that we note Votes 39 and 40 and the Health Service Executive annual report and financial statements 2005? Agreed. There is no other business.

The witnesses withdrew.

The committee's agenda for Thursday, 8 March 2007 is as follows: 2005 Annual Report of the Comptroller and Auditor General and Appropriations Accounts; Vote 38 — Department of Social and Family Affairs; chapter 12.1 — overpayments; chapter 12.2 — prosecutions; and the Social Insurance Fund 2005.

The committee adjourned at 2.20 p.m. until 11 a.m. on Thursday, 8 March 2007.
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