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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 27 Jan 2011

Chapter 36 - National Treatment Purchase Fund

Mr. Michael Scanlan (Secretary General, Department of Health and Children) and Mr. Pat O’Byrne (Chief Executive Officer, National Treatment Purchase Fund) called and examined.

Before we begin I advise witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity inside or outside the House, or an official by name or in such a way as to make him, her or it identifiable.

Members are reminded of the provisions within Standing Order 158 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.

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

Mr. Michael Scanlan

Thank you, Chairman. I accompanied by Mr. Fergal Lynch from the acute hospitals division, Mr. Jim Breslin from the finance division, Ms Moira O'Mara from the child care directorate in the Office of the Minister for Children and Youth Affairs, and by Mr. Paul Howard and Mr. Larry O'Reilly from our parliamentary unit.

You are all welcome. I also welcome Mr. Pat O'Byrne of the National Treatment Purchase Fund and call on him to introduce his officials.

Mr. Pat O’Byrne

Thank you, Chairman. I am accompanied by Ms Liz Lottering, who looks after waiting lists with the NTPF, Ms Anna Lloyd, director of patient services, and Mr. David Allen, director of finance.

Thank you. I would like to welcome the representatives of the Department of Finance.

Mr. Tom Heffernan

Thank you, Chairman. I am Tom Heffernan from the sectoral policy division and I am accompanied by Ms Áine Stapleton from the administration budget unit.

You are all welcome. Before I ask Mr. Buckley to introduce the Vote, I would like to make a few comments since this will be the last meeting of the Committee of Public Accounts in this session. It is appropriate that I make a few points that might be useful to public discourse for the next committee.

Over the last few years, we have heard from some fine public servants who delivered their evidence in an open and effective manner, and I believe that there are parts of the public service in good hands. However, there have been instances of witnesses being less than fully co-operative with this committee, both in terms of unnecessary time delays and incomplete answers. I believe this attitude is detrimental to our system of governance and puts taxpayers' money at risk. This committee must be provided with greater powers so that there is full co-operation; but if there is not, we can get the documentation and evidence to pinpoint waste and inefficiency.

I would like to take this opportunity to thank everyone in the Office of the Comptroller and Auditor General for their hard work and dedication under difficult circumstances. We respect each other's independence and our different roles. The co-operation and support we got from the Comptroller and Auditor General, Mr. Buckley, and his predecessor, Mr. Purcell, who was here at the early stages of the committee during the lifetime of this Dáil, is much appreciated and without that support and goodwill, our job would have been extremely difficult.

I would also like to pay tribute to the staff of the Committee of Public Accounts, Ted, Eimear, Eoin and their predecessors. I marvel at the volume of work that they go through on a weekly basis, be it correspondence or preparation of documentation. It has been done in an efficient and professional way. The very small number of staff supporting this committee are a classic example of good public servants who are committed to their job. I thank the staff for their work. They had a tough job but they did it with a good attitude and have given us important help in finding the right questions to ask. Together, we operate a vital cog in our public service.

While I regret having to say this, and the Comptroller and Auditor General has not asked me to say it, the Office of the Comptroller and Auditor General, which was highlighted in a peer review carried out some time ago, and this committee need far greater resources to do an effective job in the interests of the taxpayer. A new Administration, whoever forms it, must strengthen public accountability. Top civil servants collectively will need to take a more robust attitude to value for money and accounting for mistakes. There has been a lack of professionalism on the part of what I stress is a small number who have come before this committee and who have been the subject of investigation. It is to the discredit of the entire public service that these people have been tolerated.

There is an argument for a serious shake-up of the Civil Service, although I may be straying into the policy area here, and for the recruitment of outside expertise to be appointed to some key positions so a genuine renewal can take place. We have a problem in our public service and we should face up to it rather than pretending it does not exist. The complacency of the Celtic tiger years must be replaced by a determination to get value for money and effective public services.

I wish our successors on the Committee of Public Accounts well and hope they are able to continue important investigations. There is an important job of work in scrutinising NAMA and the National Treasury Management Agency, a special report is due into the Dublin Docklands Development Authority and the committee will have to make up its mind about the public money that ended up in the control of two SIPTU officials. I would ask SIPTU to publish its report as soon as possible in the interest of public accountability so that people are at least given the truth after the fact. I regret very much we have not been able to finish some of the work we set out to do. In fact, we have been delayed in some instances in carrying out that work.

I am retiring from politics. I would like to thank another element in the whole process, the media, which attentively sat through what can be long sessions with very detailed evidence. The members of the media are a vital part of the public in their dealings with the Committee of Public Accounts. I thank them for this public service they perform. I wish to thank all of my colleagues on the committee for their hard work over the years - those who are present and not present, including those who have gone from the committee in recent years for different reasons. They have done hard work and shown determination to get answers for the people. I thank them all.

It appears this will be our last meeting of the committee in the 30th Dáil and, therefore, it is appropriate to say a few words in conclusion. I thank very much those who have assisted the committee in its work while I have been a member. I think in particular of the staff of the committee, who have done work beyond the call of duty at short notice on many occasions. The Comptroller and Auditor General and his staff have always been very helpful. I pay tribute to my colleagues, particularly the Chairman, who has been in the front line at all meetings. I compliment him for the work he has put into the affairs of the committee since he took over the Chair.

The Committee of Public Accounts is the oldest committee of the Oireachtas and has done its work since the foundation of the State. It shines a light on the expenditure of taxpayers' money and it is clear it has a huge relevance from the point of view of exposing expenditure, particularly inappropriate expenditure. It does not do that work by unnecessarily excoriating public servants but by highlighting waste and, in particular, by trying to ensure that changes will take place to minimise waste of taxpayers' money in the future. From that perspective, it does very valuable work. In a time of shortage of Exchequer funds, perhaps its role will become even more important.

This brings me to the question of the powers of the committee, which must be situated in the broader context of the powers of Oireachtas committees generally. In my time in the Dáil, which is now extending to 34 years, I have seen major issues of grave public importance being examined in different ways. Those that spring to mind are the issues that have been examined by tribunals. We have tribunals of inquiry that were set up in a rush in the Dáil to examine matters of extreme public importance with a view to having reports brought in within a short space of time - one was supposed to be for six months and another for nine months or a year. These tribunals have in many instances trundled on and on, and have resulted in enormous costs to the taxpayer. To take the Mahon, Moriarty and Morris tribunals, a recent estimate was put at €350 million for the three tribunals, which did not take into account third party costs that might add to that sum. When taking all the main tribunals into account, one is heading for a figure of €500 million.

Very simply, there has to be a better way. The people of this country cannot afford that kind of expenditure. For issues of importance, whether they are grave matters requiring special investigation or the week in, week out matters that come before the Committee of Public Accounts, there must a more effective way of protecting the taxpayer. One of the challenges for the next Dáil, which I hope all parties will throw their weight behind, is to ensure that better way is found. There will have to be changes to the system. There should be a change in the Constitution so there will be a clear power of investigation by committees of the Oireachtas under Article 15 of the Constitution. Question marks have been raised by various Supreme Court decisions, including a suggestion there is not an inherent power to conduct such investigation, which might lead to conclusions from which sensible proposals for reform could emerge. There is not much point in having an Oireachtas committee of inquiry sitting over a lengthy period and not having power to bring in conclusions, findings or recommendations for improvement.

There is a challenge confronting the Oireachtas at this stage. To me, the road is clear as to what should be done. Included in that will be changes to how the powers of the Committee of Public Accounts should be further reinforced. The Committee of Public Accounts by virtue of its constitutional role should be endowed with special procedures and protocols for the exercise of its functions so it can discharge those functions more effectively. That is my parting message.

The various committee members have served the country well during the years. Traditionally, the committee has been chaired by an Opposition Member and I hope that will continue. I hope the committee will be enabled to work in a more effective way, with greater powers to undertake the work taxpayers expect to be done by the elected representatives tasked with carrying out the functions of the committee.

I echo what Deputy Jim O'Keeffe said. At times we found our investigations were badly hampered by the majority decision of the Supreme Court in the Abbeylara case. As Deputy Jim O'Keeffe said, a referendum is long overdue to deal with that issue which has had a serious impact on our work.

Another issue of concern is the way in which the Data Protection Act has been used by some agencies and Departments to place obstacles in our way. The organisations in question may have been following legal advice, but this is an issue that must be addressed. Likewise, our rights and powers as a committee have been hampered by the limitations arising from the freedom of information legislation. These are issues which must be dealt with by any Administration which is serious about significant reform at all levels.

I take the opportunity to pay tribute to the Chairman. There are three Corkmen here today, including two O'Keeffes. The O'Keeffes were chieftains of Munster once upon a time. I have been very impressed by the work done by the committee. Deputy Allen has been the fairest Chairman under whom I have worked. He has never favoured one party over another, his policy at all times being equality and fairness, and there was no agenda to upstage others.

I have found my work as a member of the committee enjoyable, in large part due to the assistance of committee staff. The Comptroller and Auditor General has also been very fair in all the matters before him. I congratulate the clerk to the committee on the work he has done. I have known him for a long time because he was working in the general office when I was first elected to the Dáil. We were both young at the time and he will still be here after I am gone.

A highlight of my time on the committee was the book launched by Liam Cosgrave in the European office which outlined the history of the Committee of Public Accounts and the good service it had performed during the years. It is a very important book which I have at home on my desk because it highlights the successes and the importance of the committee.

I also take the opportunity to pay tribute to the media, whose members have always given us a fair crack of the whip. We always received our share of publicity when we merited it and there was no element of sensationalism in the reportage.

I record my disagreement with what seems to be the general consensus on a particular issue. The time I served as Minister of State confirmed in my mind that the public service was a very important part of our society. In recent years, however, it has been subject to much criticism and civil servants have been accused of not doing this or that. The reality is that there are bad politicians and bad public servants, but these are not the majority. From my four years as Minister of State I have nothing but praise for the civil servants with whom I worked. They are an important element of governance under the Constitution and in our system of government. We have nothing without a public service.

In this context, I disagree with what the Chairman said about bringing in outside expertise. Such an approach often does not work. I read in one of the newspapers this morning that the banking sector in the United Kingdom - we should remember that for all Frankfurt's prominence, London still controls the world in financial terms - is complaining about over-regulation. Over-regulation will choke any enterprise; there must be a middle ground. I totally disagree with the drive to bring in outsiders to our banking and regulatory sectors. We have a good education system and our workers have attracted industrial investment from North America and many other corners of the earth. We discredit what we have by in bringing external experts to the public service. I have strong reservations in that regard. There may perhaps be too many employed in the public service, but that is a separate issue.

I salute the public servants in this room who do such great work. When the Taoiseach in the next few days invites us all to go to the hustings, I will not be taking up that invitation, but I hope to have a representative in the House. I say to the public servants: "Well done." In my 28 years in Dáil Éireann my experience has been that they are always helpful. I never encountered a public servant who would not see it in his or her way to assist me whether I was in government or opposition. I do not agree with what is being said about the public service. It is populist nonsense.

I wish to note one issue in regard to the work of the committee. I have served on committees and boards in the private sector and it was a fundamental requirement that one's accounts be up to date. This morning, however, I see documentation before us detailing accounts dating back as far as 2007. That should not be tolerated. A code of practice should be introduced, whereby accounts should be submitted before a certain date.

I conclude with an observation on the National Asset Management Agency, an organisation about which the Chairman knows I have concerns. Its arrogance leaves much to be desired and could do damage to the public service. When representatives appear before the committee, they are reluctant to answer questions. We hear so much about the salaries of developers, Ministers and so on, but the first thing the people concerned did was to pay themselves. I cannot tolerate this. The gentleman in question receives €430,000, plus a bonus if he wants it, yet he is telling people in the development sector that they must have a different lifestyle. One must be even-handed, fair and honest in these matters. We cannot have a chief executive officer of a newly established State agency earning €430,000 while so many are consigned to the dole.

I would like to be associated with colleagues' comments about the work of the committee, of which I am the newest member. It is the best committee in the Oireachtas by a country mile. I take the opportunity to thank the Chairman and all of the public servants who assist us. We sometimes kick them around a little, but we are doing so in the national interest.

I thank members for their comments. I now invite Mr. Buckley to introduce today's business.

The full text of chapter 36 can be found in the annual report of the Comptroller and Auditor General or on the website of the Comptroller and Auditor General at www.audgen.gov.ie.

Mr. John Buckley

I thank members for their kind remarks which I will pass on to my colleagues. We are very much aware that the effectiveness of our office depends on the committee. A great deal of the work done in the office happens underneath the surface, with most of the accounts we examine receiving clear certificates. This indicates that, in general, public administration is done very well and effective. Rather like in the case of good policing, the people who do all of that work may not get the accolades and acknowledgement they deserve. It is only when there is not a good system of public accountability and administration that these issues come to the fore. While the committee tends to deal mostly with the exceptions, it is important for me, as Comptroller and Auditor General, to acknowledge that the vast bulk of accounts are given clear certificates and properly administered.

On chapter 36 of the 2009 annual report, the National Treatment Purchase Fund was established on a statutory basis in 2004. Its functions are to purchase treatments for patients who have been waiting the longest for these treatments and to validate the waiting lists in public hospitals.

The fund spent €90 million on patient care in 2009. Chapter 36 is a follow-up to work completed and reported last year. In particular, it seeks, using computer analysis, to merge the separate databases of the fund in order to gain a more complete assurance that payments were in line with contracts and that the patients treated under the fund were, in fact, those waiting longest for treatment.

From a financial control perspective, the audit found that 90% of the payments to private hospitals could be matched exactly with agreed prices and in the case of the remaining 10%, sampling found that in general, the variation could be explained by the circumstances of the case. The work also allowed us to conclude that while prices for procedures can vary from hospital to hospital, the average cost of the top ten procedures deviated little from the average contract price negotiated.

In the case of elective treatments, validation exercises carried out in 2009 found that of the more than 6,000 cases reviewed, no patient recorded as waiting more than nine months was actually available for treatment by the National Treatment Purchase Fund, NTPF. The lesson here is that the accuracy of information on patients is important in effectively targeting cases for intervention. The validation results point up the need to improve the reliability of waiting lists in order that they represent the true numbers of patients awaiting treatment and that they help to identify individual cases that are suitable for NTPF assistance. More regular reviews by hospitals would be necessary to achieve this. From the viewpoint of patients who benefited from the NTPF, the audit found that on average, patients treated from the fund had waited for approximately eight months prior to selection for NTPF-arranged treatment. Therefore, the audit testing gave a reasonable assurance that patients who were waiting longest were in fact those who were treated through the fund.

Since 2005, the NTPF has operated a pilot outpatient initiative that focused on defined specialty areas with the longest waiting lists. In 2009, 26 hospitals referred patients under this initiative. The committee will recall last year's report which dealt with HealthStat and which outlined that not all patients who should have been were recorded on outpatient lists. Apart from such completeness issues, the results of the NTPF validation work on outpatient waiting lists would suggest that considerable work must be done to ensure the outpatient lists are accurate. The validation exercise found that upon review, a high proportion of patients were removed from the list and while the level of take-up of offers has been increasing over the years, overall only 50% of listed patients contacted since the pilot began availed of the NTPF offer of an outpatient appointment. The inaccuracy of the lists cannot also but affect the capacity of the hospitals themselves to manage their own outpatient demand.

The NTPF also has functions in the procurement of nursing home care and while the fair deal costs under the nursing home support scheme fall to be met from the HSE Vote, the charges are now negotiated by the NTPF. A total of €148 million of the total long-term residential care payments, which are approaching €1 billion, are projected to go through this scheme in 2010 and negotiations are continuing with other nursing homes.

If one looks at the Votes briefly, clear reports were issued both on the Vote for Health and Children and the Vote for the Office of the Minister for Children and Youth Affairs for the year 2009. In respect of money, the Vote for Health and Children comprised expenditure of €420 million and that on children and youth affairs comprised €439 million.

I thank Mr. Buckley. I now call Mr. Scanlan to make his opening statement.

Mr. Michael Scanlan

With the Chairman's permission, I will respond briefly. I am conscious that, as the Chairman noted, this is the last meeting of the committee and as a public servant, there are things I perhaps should and should not say. Members will not be surprised to hear that Accounting Officers do not particularly look forward to appearing before the Committee of Public Accounts. However, that perhaps is a tribute to the committee and as both members and the Comptroller and Auditor General have stated, I believe that most civil and public servants are doing their very best and are doing it well. However, the Chairman is correct that there are examples of waste, ineffectiveness and inefficiency. In fairness to this committee, which I have been attending since 2005 in the days of the Celtic tiger or before the recent economic downturn, even then it was, and continues to be, focused on the value for money the taxpayer was getting. While I may not personally enjoy the visits, the committee has a very important role in Irish society. Moreover, I accept that the Civil Service requires reform. We need to be self-critical and to be subject to the sort of review or critique that this committee brings to the Civil Service. I acknowledge and thank members, as well as the Comptroller and Auditor General and his staff, for their fairness over the years and wish them well.

I will move on to the business of the day. I am pleased to meet the committee to discuss the appropriation accounts for Vote 39 - Department of Health and Children and Vote 41- Office of the Minister for Children and Youth Affairs, as well as chapter 36 of the 2009 annual report of the Comptroller and Auditor General, which deals with the National Treatment Purchase Fund.

The total gross outturn in 2009 for Vote 39 was €425 million. This included approximately €285 million for agencies such as the National Treatment Purchase Fund, the Crisis Pregnancy Agency, the Office of the Ombudsman for Children, the National Cancer Screening Service, the Mental Health Commission, the Health Information and Quality Authority and the Health Research Board. The Crisis Pregnancy Agency, National Cancer Screening Service and Office of Tobacco Control have since been subsumed into the HSE and three other agencies have been subsumed into the Department, namely, the National Women's Council, the National Council on Ageing and Older People and, on an administrative basis to date, the Children Acts Advisory Board.

The outturn also included €97 million for compensation payments for people affected by hepatitis C, for statutory and non-statutory inquiries and legal fees and for payments to the State Claims Agency. Responsibility for payments to the State Claims Agency has since been transferred to the HSE. Finally, the outturn included €37 million for the Department's administrative budget. In 2009, a total of 56 staff left the Department through a combination of the incentivised scheme of early retirement, the incentivised career break scheme, normal age-related retirements and redeployment to other Departments. There are now 440 staff employed in the Department, including in the Office of the Minister for Children and Youth Affairs.

Vote 41 covers programme expenditure by the Office of the Minister for Children and Youth Affairs. The total gross outturn in 2009 was €444 million. This included €231 million for the early child care supplement, €132 million for the national child care investment programme and €48 million for youth affairs, responsibility for which was transferred to the Department of Health and Children in 2009. The early child care supplement, ECS, was introduced with effect from 1 April 2006. It was payable in respect of children aged six years or under who were eligible for child benefit and was paid by the Department of Social Protection on behalf of the Office of the Minister for Children and Youth Affairs. Following the economic downturn in 2008, a number of steps had to be taken to reduce the cost of the ECS and it was eventually abolished with effect from December 2009.

The ECS was replaced in January 2010 by a free preschool year in early childhood care and education, known as the ECCE scheme. The cost of the ECCE scheme in 2010 was €154 million and it is expected to cost €166 million in 2011 because of an increase in the number of eligible children. The aim of the ECCE scheme is to benefit children in the key developmental period prior to starting school by providing an annual programme of early learning. It is open to both community-based and private sector service providers. Some 95% or approximately 4,300 of preschool services are currently participating in the scheme and about 94% or approximately 63,000 of eligible children are currently benefiting from it.

The provision of a free preschool year to all children, regardless of income or circumstance, will give every child in the country an equal chance to arrive in junior infants with improved personal development, speech and language skills and capacity for socialisation. The value of the scheme will become evident as these children make their way through the primary education system. The ECCE scheme is administered by the equivalent of 11 full-time staff in the child care division of the Office of the Minister for Children and Youth Affairs. This involves, among other things, preparing contracts for each of the 4,300 preschool services, checking qualifications, verifying returns from the services relating to the number of eligible children in each service and issuing regular payments to the services by way of capitation fees. It is important to note that in addition to ensuring all children have equal access to preschool education, the ECCE scheme is also helping to sustain 4,300 services and up to 20,000 jobs throughout the country.

As the Comptroller and Auditor General has stated, the National Treatment Purchase Fund was established in 2002 and put on a statutory basis in 2004. Its primary remit is to purchase treatment, mainly from private hospitals, for public patients who have been waiting longest for elective surgical procedures. It also has responsibility for collecting and reporting national inpatient and day case waiting list data. In 2009, the NTPF was given responsibility for price negotiations with private and voluntary nursing homes as part of the new nursing home support scheme known as the fair deal. More recently, in the context of budget 2011, it has been decided that the NTPF would be asked to work with the HSE on two new initiatives. The first involves the development of an internal purchasing system for elective orthopaedic activity in certain public hospitals and the second involves a study of the cost of providing respite care for persons with a disability and the examination of alternative delivery models. The aim in both cases is to establish a clearer link between public funding and the treatment and care of individual patients and service users. The initiatives are designed to use the NTPF's experience and expertise in purchasing care and to build on the improvements in recent years in the HSE's service planning process. They also take account of the report of the expert group on resource allocation and financing in the health sector. Arrangements to implement both of these initiatives are currently being developed.

I thank members for their attention.

Thank you Mr. Scanlan. May we publish your opening statement?

Mr. Michael Scanlan

Yes.

I invite Mr. Pat O'Byrne to make his opening statement.

Mr. Pat O’Byrne

Before I make my opening statement, I thank the committee on behalf of the NTPF for its assistance over the years. By highlighting certain issues, it brings a focus to our work. At the end of the day, the health service is funded to serve the people, whether patients in hospitals or people in nursing homes.

The primary function of the National Treatment Purchase Fund is to facilitate the treatment of those who are longest on hospital waiting lists for surgery by acting as a resource to patients of the public hospital system. The NTPF was established as a targeted solution to a particular problem. From the start, it has stated that the number of patients waiting for operations is not the critical factor because the length of time they have to wait is more important when measuring progress in hospital care provision. In 2002, the year the NTPF commenced its duties, patients typically waited two to five years for their operations, whereas in December 2010 the national median wait time was 2.4 months. There are currently 16,060 patients on the patient treatment register awaiting surgery. Approximately 200,000 public patients have benefited from this initiative to date, including 33,000 in 2010. The NTPF is a resource for public patients which helps to shorten the length of time spent waiting for treatment.

The volume of patients to be referred under the auspices of the NTPF is agreed each year with public hospitals. This includes agreed levels of inpatients and outpatients. Most referrals to the NTPF are by the public hospital which places the patient on the patient treatment register but patients are also referred by their general practitioners or may contact the NTPF directly themselves. The NTPF's remit is to deal with those patients waiting longest in each individual hospital. Waiting times can vary in different hospitals. That is why, while patients are eligible to be considered under the NTPF initiative after waiting three months on inpatient waiting lists, there may be persons not yet treated who have waited longer on the same waiting lists. By virtue of the NTPF's remit the longest waiters are our priority.

The NTPF is mandated to refer no more than 10% of its cases to public hospitals. Among the reasons for this is to allow for surgery that is not suitable to be referred outside the public hospital system because of matters such as complexity of care required, instances where patients have other underlying medical conditions or lack of specialised paediatric capacity in private hospitals. This means that some surgery will be undertaken under the NTPF initiative in public hospitals on the basis that there is no alternative and that it does not interfere with the core activity of the hospitals. To do otherwise would deny patients quicker treatment. In 2010, 7% of NTPF activity occurred in public hospitals.

The following table sets out the volume of cases treated and expenditure:

2010

2009

2008

Inpatients

20,603

19,995

20,829

Outpatients

9,025

6,388

12,342

MRIs

3,515

2,513

3,098

Total Activity

33,143

28,758

36,269

Allocation

90 million

90 million

104 million

Administration Ratio

4.7%

5.3%

4.5%

The costs associated with the fair deal were incurred by the NTPF from 2009.

The NTPF works to maximise the number of patients that can be treated from its budget. If particular treatment prices offered to the NTPF by a private hospital are higher than the market rate, the fund will source an alternative supplier. We do not have to accept the prices offered by private hospitals. This means that when and where it makes sense to do so, NTPF patients are steered to quality providers that represent value for money.

The NTPF negotiates prices with each treating hospital in advance for the full episode of care. Prices are fully inclusive per procedure of all hospital and consultant costs, incorporating preadmission and post-discharge care. We do not enter into discussions with consultants or any other staff on fees. No payment is made to a hospital until the full episode of care is complete. In that way payment is made on an output basis and with this model it is known what each and every treatment per patient costs. Also, for a given input of funding to the NTPF there is a measurable output in patients treated.

The NTPF has provided some outpatient appointments on a limited basis since 2005. Currently this is one of the bottlenecks in the public hospital system. Access to outpatient consultant clinics is one of the big differences between public and private medicine at the present time. Our experience over the past five years has consistently been that it is necessary to call almost double the number of patients one wishes to treat. By the end of 2009, 82,144 patients had been contacted with an offer of an NTPF outpatient appointment, of whom over 50%, or 41,193, accepted. The number of patients contacted reached approximately 100,000 at the end of 2010. Just over one quarter of patients, or 20,989, were immediately removed from waiting lists as no longer wanting an appointment, 11%, or 9,354, declined the offer and chose to remain on the list and 13%, or 10,608, did not respond to the offer. Many of these cases were subsequently removed from lists. It is clear from the results of the pilot that a large proportion of patients currently recorded on outpatient lists do not belong on them. Approximately 50%, or 40,951, of the 82,144 patients contacted did not want to avail of an appointment, did not know they were on a waiting list or were removed from the waiting list due to validation by their hospitals. Furthermore, 11% of patients who have already been waiting a long time chose to turn down the option of faster assessment. It would be worth investigating why this is the case.

Not all patients on outpatient waiting lists require procedures. However, patients who require further treatments as a result of the initial outpatient appointment are facilitated by the NTPF, which means they do not go onto public hospital inpatient waiting lists. In any event, these patients have already waited a considerable period as outpatients.

The NTPF's annual involvement in the provision of outpatient consultations has thus far been on a small scale. Hospitals are invited to submit proposals on specific outpatient areas as part of the annual agreements on numbers to be treated. However, by applying our particular focus to specific specialties it is possible to validate and reduce waiting lists very quickly. For example, in 2009 waiting times for rheumatology in St. James's Hospital were reduced from 52 weeks to eight weeks and respiratory waiting times in St. Vincent's Hospital were reduced from two years to three months. With a wider focus, it is our belief that similar results could be achieved throughout the country.

The NTPF's function in the administration of fair deal costs approximately €250,000 per annum. This expenditure is constant as the negotiation of prices with the private and voluntary nursing homes is an ongoing process. In addition to the face-to-face negotiation meetings the process involves drawing up and controlling the dispatch and receipt of formal contract deals. The National Treatment Purchase Fund, NTPF, requires these deals to be formally signed by the nursing homes before notification of agreed prices is conveyed to the Health Service Executive. Under the scheme the function of the NTPF is to set the maximum prices which the State will pay in respect of long-term elderly care in private and voluntary nursing homes. There are 440 homes and, under competition law, the NTPF is obliged to conduct negotiations with each home separately. There are approximately 20,000 private beds in the system and a potential market worth €850 million annually. Therefore, it is important for the NTPF to maximise the outcome for the State as far as possible.

The NTPF achieved its targets in 2010 although some of the price negotiation discussions with hospitals and nursing homes were difficult. The NTPF managed to negotiate prices equivalent to a reduction of 8% with private hospitals in 2010 over 2009 prices. The NTPF will continue to arrange procedures for those public patients waiting longest while, at the same time, ensuring that treatment is provided to the highest standards. We will continue to seek further productivity increases for the expenditure allocated. Patient satisfaction levels remain high with access to faster treatment under this initiative. While 2011 will be challenging, our main priority will be to keep overall waiting times as low as possible. In total we expect to treat in excess of 32,000 public patients in the current year.

I thank Mr. O'Byrne for his comments and I call Deputy Michael D'Arcy to speak.

Mr. Scanlan stated that €285 million was allocated for agencies out of the overall €425 million allocation. That leaves €140 million for the Department of Health and Children and its officials. When we raise the question, we are continually informed that the Department formulates policy. What marquee policy was established in 2009 that we could say was value for money at €140 million?

Mr. Michael Scanlan

To clarify the point, the €140 million to which the Deputy refers includes almost €100 million for compensation payments for the hepatitis C statutory and non-statutory inquiries, legal fees and the State Claims Agency. The actual administrative budget for the Department amounted to €37 million. I indicated that 440 staff are employed in the Department.

That said, the Deputy is correct to point out that many questions have been raised about the role of the Department and the respective roles of the Department and the HSE. Recently, a review of the Department was carried out under what is called the organisational review programme, ORP, put in place by the Department of the Taoiseach. I am unsure whether members of the committee saw the report but it was commented on in the media. I accepted the report, which was a fair and balanced assessment of the Department. On the one hand, it highlighted the strengths of the Department in policy areas such as developing the policy in A Vision for Change. It also addresses the weakness, to call it as it is, in terms of being clear about the policy goals. Some of the policies were too high-level and not specific enough. A difficulty arose in the absence of that specificity in ensuring that they were implemented.

I would be pleased to discuss the role of the Department with the committee because one thing of concern to me is that while the Department is generally seen as the policy arm and the HSE is seen as the operational arm, a range of work is ongoing in the Department that has little or nothing to do with the HSE. The child care directorate is one example and there is a good deal of international work as well. We have a unit that deals with food safety, medicines and medical devices, all of which are important industries in Ireland. Thankfully, it is not a unit that attracts much attention most of the time but it carries out remarkably important work, invariably at European level and sometimes at Irish level. The work involves the Irish Medicines Board and the Food Safety Authority of Ireland, FSAI, as well.

To pick a topic that has been in the media recently, we have a role in overseeing the private health insurance market. Although it is linked, one must consider the totality of the health system and this area has nothing to do in the main between ourselves and the HSE. It is quintessentially a role solely for the Department. The Department has a legislative role and there is no grey area: it is our role and has nothing to do with the HSE.

Health accounts for a large share of total Government spending and a large proportion of total public service employment. Under the Act and from the point of view of the Departments of Finance and the Taoiseach, we are looked to and required to exercise particular roles in the negotiation of the annual Estimates or budget. There is an onus on the Minister and it is his or her job to report to the Cabinet on a regular basis about expenditure trends during the course of the year. A range of issues arise in terms of implementing Government employment policy and change policy. The change policy was formerly known as pay policy but it has become more of a change policy in recent years.

Unfortunately, the perception is that the establishment of the HSE has kept any responsibility away from the Department and the Minister. Mr. Scanlan has named ten agencies funded by the Department from the €285 million allocation. If there is a problem, everyone else passes the buck. If there is a difficulty somewhere along the line, it is someone else's fault. Mr. Scanlan is shaking his head. Does this not happen? It happens all the time.

Mr. Michael Scanlan

I realise there is a perception to that effect and that, in some sense, there is a perception that the Department tries to use the establishment of the HSE to absolve itself of responsibility. I can only inform the committee in terms of my day-to-day and week-in week-out work that while I have referred to areas specific to the Department and for which the Department is responsible, the reality is that whatever happens in the health service comes on to the Minister's desk - any Minister - in terms of overall political accountability. In that sense, it is important to distinguish between who has authority and responsibility to do something. The health service has the authority and responsibility to deliver a service but, ultimately in this country, a Minister remains politically accountable for how that is done and for the performance of it.

To given an example, Deputy D'Arcy asked about 2009. The nursing home support scheme commenced on 1 October 2009. Let us consider the roles of the Department and the HSE. A small but good team in the Department spent three years developing policy proposals, drafting legislation and supporting the Minister in piloting it through the Oireachtas. It was complex legislation. Then, it became effective on 1 October 2009 and the responsibility for delivering it moved over to the HSE. I am pleased to inform the committee that during the transition period there was a close working relationship between the staff in the Department and the national staff in the HSE. There was no point in taking the view that we completed the legislation and it was up to the HSE to go and operate it. Those involved worked together during that period to ensure the people who would be responsible for implementing it were at one in terms of what the scheme was intended to deliver and what it required. This has shown in the success of the implementation of the scheme. Policy is one issue, but how the scheme has been implemented is important.

A Vision for Change was published a number of years ago and most people accept it is the correct approach to mental health and the treatment of people with difficulties. Nursing homes were mentioned. There are not many real policy changes which have been truly beneficial outside of the two mentioned in the past number of years. The perception is still that people are still looking for somebody else to blame. Political accountability will land on a Minister's desk but there also is real accountability, which involves the Departments. That has not been taken on board.

When I refer to waste, I refer to money which is wasted. It bothers me and I am aggrieved that money is wasted in the public sector and nothing is done about it. We get a standard response stating it is a matter for the HSE or somebody else. Those of us who table parliamentary questions to the Department of Health and Children all get standard one line responses that the issue we raised is a matter for the HSE. One might get a response nine months later.

The statement of 31 March 2010 referred to Vote 39 for the agencies the delegation outlined. Vote 41 concerns the office of the Minister of State with responsibility for children and youth affairs. The end of the statement refers to administrative and financial controls. There is a management advisory committee that meets monthly and the report also includes the details of Vote 40, which concerns the HSE. The buck comes back to the delegation and the members of the advisory committee in terms of controlling and overseeing the spending of funds. Is that the case?

Mr. Michael Scanlan

We have had this debate a few times. The Accounting Officer for Vote 40 is the chief executive of the HSE. I am the Accounting Officer for Votes 39 and 41. The Minister is responsible at Government level for the total health spend, in terms of reporting on how it is being spent, whether it is ahead of profile or trend, if there is likely to be in excess and what, if any, corrective action should be taken.

We have two roles as a management advisory committee. One is to manage our two Votes and the second is to examine the reports we receive from the HSE and advise the Department of Finance of our views on what they state, such as whether there is an emerging problem in expenditure, if it is likely to breach its budget and whether there are pressures in one area rather then another. That is the role of the Department. It is similar to the role the Department of Finance would play in any Government Department.

I am trying to explore the extent to which the management advisory committee has the ability to say to the Department of Finance that the budget is running over by 1% or 2%. It is not particularly difficult to pull it back. If there is a significant outlay or budget for the HSE, what is the role of the management advisory committee? At what stage does it step in and say something is not acceptable and the numbers will have to be revised downwards? It is not particularly clear who is really in charge.

I accept the HSE is in charge of Vote 40. How many people are on the management advisory committee? What areas are included? How many officials from the Department of Health and Children and HSE are on the committee? It is important to be able to fully understand the extent to which the Department of Health and Children unofficially holds the purse strings if there is a difficulty or an overrun on budgets.

Mr. Michael Scanlan

I agree. The management advisory committee is like the management board committee in any Government Department. It comprises myself, the Secretary General and the assistant secretaries or directors, as they are called, of the divisions within the Department. Nobody from the HSE or any outsiders are on it. We have regular meetings with our management team and that of the HSE, but the committee to which the Deputy referred is an internal Department team.

Based on the statistics from the HSE.

Mr. Michael Scanlan

Yes, absolutely. Mr. Breslin might be able to give the Deputy more details. We, like any Government Department, are required to send monthly reports on issues and Votes to the Department of Finance. The agency is required to send its reports to us and we send them on to the Department of Finance. The HSE also runs an income and expenditure account, an issue which the committee has discussed. It submits monthly accrued income and expenditure accounts to the Department. By studying both reports and talking to HSE officials, we are better able to brief the Department of Finance and our Minister on what are and are not emerging pressures and what steps should be taken. When major expenditure adjustments were taking place in 2008 and 2009, they were based on the discussions, analysis and advice to which I referred.

At the last committee meeting a member said the absence of a good financial management system in HSE is a deficit, which the CEO acknowledged. When the HSE was established, it is fair to say it and ourselves had a lot of difficulty understanding what the figures were saying. The Vote figures said one thing and the income and expenditure figures said another. The reports we receive are far better but there is still a significant deficit and risk, which the CEO acknowledged at the last meeting.

On a budget of approximately €16 billion for the HSE, if one is looking at a monthly report the figures will be €1 million or more. No other official sits with budgets of that nature to analyse and scrutinise. Is Mr. Scanlan satisfied the HSE is giving him all the data at the right time in order that he can move early if there is an emerging problem?

Mr. Michael Scanlan

I am satisfied that I am getting better data but it still needs to improve. There are times when we do not get the quality of data we need in time. In fairness to the HSE, it is because of the absence of a good financial management system running across its system. I understand there are still 11 different systems running within the HSE and we need to try to pull all of those together. The Comptroller and Auditor General tried to explain how all the information is pulled into an appropriation account.

What drives most of the spending is employment numbers. We are beginning to get better data on the numbers employed, where they are employed and the staff categories such as nurses, doctors or whatever. If we were to ask how many people are employed and how much money is being spent on a particular care programme, one can get information for the geographical region. However, if I asked exactly how much money was spent and how many people are employed in services for people with disabilities, the data is not readily available or the figures are estimated.

It may not be fair to ask Mr. Scanlan some questions, but why is the data not available? Why is the HSE not told it is not acceptable that the data is not available quickly enough in order that an emerging problem can be dealt with quickly rather than snowballing and becoming more difficult to deal with than it should be?

Mr. Michael Scanlan

I want to be fair to the people in the HSE. I am outlining the reality of the situation as I see it. I should make two points. I want to make it clear that it is not the case that it has the data and is not providing them to me. At corporate level it has its own difficulties getting behind the data and getting them in the absence of a good financial management system. In the last three years when there has been pressure to remain within budget, there have been sufficient data and good relationships with the HSE to provide sound advice to the Department of Finance and it has ultimately come in within budget. Early last year there were public suggestions the HSE would not remain within its budget but because of our analysis with them of the data, we were able to tell the Department of Finance that provided it takes action in certain areas, it will come in within budget and, apart from income, which was not its concern, it came in within budget.

HSE west was not within its budget.

Mr. Michael Scanlan

Yes.

The perception was then there would be cutbacks but those were happening because HSE west was not within its budget. If the committee meets once a month and can what numbers are not coming and it takes months, it should have been dealt with earlier rather than wards being closed to make the final budget meet the estimate.

Mr. Michael Scanlan

I agree with the Deputy that the worst thing is to overspend at the start of the year leading to a situation where action must be taken later in the year. The data we had showed from early on that the pressure on spending was in the acute hospitals in general and in the west there was a particular issue. We knew what was happening. The issue was for the HSE to bring it back within budget. I am not trying to dodge accountability. We had the information but the action to bring it back within budget goes down to the HSE west.

My criticism is that by the time the information is assessed and the Department acts, there is already a problem that should have been dealt with in the system.

Mr. Michael Scanlan

That is a fair point.

The point was also made that a lot of funds go towards the payment of staff. There are other circumstances outside of that. A legal contract has been awarded to a company but it has been widely reported that a company tendering for the same contract was €2 million cheaper per annum.

Mr. Michael Scanlan

All I would say is that the Department is not involved at all in the procurement process other than it would have received figures over the years on the amount of money the HSE spent on legal costs and fees.

It has been widely reported that the runners up were €2 million cheaper than the people awarded the contract.

Mr. Michael Scanlan

I am aware of that.

Does that not come up on the Department's antennae when it comes to how much should be spent, particularly when the Department's management advisory committee meets once a month? With the HSE costing €16 billion it might not be a lot of money but for the public looking at this, how can it be the case that one company gets a contract that is €2 million more expensive without the Department reviewing that?

Mr. Michael Scanlan

Let me say €2 million is a great deal of money, I agree, even in the scale of the billions spent on the HSE. The role of the Department in this space, however, would be to identify how much money was spent on legal costs, to encourage, require and support the HSE to get better value and procure a better value service, which is precisely what it does. Once it gets into the procurement process, this is where the role of the Department and the HSE diverges. That relates to operational responsibility and who is the contracting authority. It is the HSE. I know of the case but I assume the CEO of the HSE ensures the procurement process is operated fairly.

In fairness it is an operational matter for the HSE, although I have the same concerns. That is a question that the Deputy, if he is re-elected, can put to Mr. Cathal Magee, CEO, when he is here. There are certainly questions to be answered but they are for another day.

I appreciate that but it is a classic example of management at arm's length, that it is someone else's baby.

Another issue is that of laundry services. A number of months ago-----

Again, that is an operational matter.

I want to make the point that the Department must be able to influence the HSE towards securing best value. The laundry services in the HSE at present are not sufficient; they are more expensive than private arrangements. I know this because one of the largest laundries in the State is in Wexford and it provides services for Wexford General Hospital while not having a contract. It is done on a voluntary basis because laundry services in the south east are not sufficient. There cannot be arm's length management when issues are being brought to the attention of the Department and the Minister.

In relation to procurement in the HSE, until recently, the HSE did not report to the Department of Finance on its procurement practices. It reports now and the whole area has been tightened up considerably. We saw the final draft of a report today on legal expenses and procurement of legal services. We hope to publish that report on our website next week.

Mr. Michael Scanlan

I agree with the last point. The Department should have a role in influencing, and I am prepared to ask about contract cleaning. When it gets to the point of a contract being signed, it is appropriate for me to intervene. I will, however, take up the issue of laundry.

To finish that point, the company in question said it can purchase, form, quality control, wash and deliver all of the product required by hospitals for €7 million less than the HSE budget for washing.

The number of staff fell by 8% in 2009 but pay increased by 2%. How did that happen?

Mr. Michael Scanlan

I will have to check my figures. Does this come under the subhead breakdown?

Mr. Michael Scanlan

To be honest, I would have to check, I do not know. Mr. Breslin has reminded me that those were the days when some pay increases were still feeding through, increases that were granted late in 2008. That may have accounted for it, whereas the pension levy would not show up in our gross pay costs. I can check the position for the Deputy.

The appropriation accounts indicate that the 2008 outturn in respect of grants to research bodies was €39 million, while the figure for 2009 was €37 million. This represents a reduction of €2 million, which was even €1 million less than the estimate. Research and development is crucial to the smart economy. A large number of companies which produce medical devices and pharmaceuticals have operations in this country. Is there any reason the estimated outturn for 2009 was not reached?

Mr. Michael Scanlan

Most of that money actually goes to the Health Research Board, HRB. I can check the position but I presume that, for a variety of reasons, the HRB did not manage to draw down all of the money or make all of the potential awards in respect of the different programmes it runs.

One would certainly have envisaged that the position would have been oversubscribed, particularly if the projects were sufficiently-----

Mr. Michael Scanlan

I agree with the Deputy in respect of research. We have done a great deal of good work with the HRB in terms of setting out a research strategy for the health service. The HRB also developed its own research strategy. Here, as elsewhere, with Government financing, the way it works is that one avoids an overrun or overspend. The inevitability is that sometimes one comes in slightly under the original estimate, particularly when one is running an entire range of schemes. This does not mean that we are in any way not committed to it. On the contrary, I think the Deputy will find that we have been fully supportive of all that happens with the HRB.

In 2009, we were all required to make certain administrative savings in respect of advertising and consultancies. That applied in the Department and across its agencies and would have been reflected in some of the outturn figures, as opposed to in the actual programme spending.

Subhead D under Other Services relates to statutory and non-statutory inquiries. I presume these are the Murphy and Ryan inquiries.

Mr. Michael Scanlan

The subhead relates to the Leas Cross inquiry, a review of Barringtons Hospital in Limerick and a number of legal settlements. Much of the money under this subhead would have been spent in the area of public-private health insurance and on certain legal settlements, or more precisely, legal costs relating thereto.

All the international evidence shows that the money allocated in respect of the early childhood care and education, ECCE, scheme is money well spent. Has an analysis been carried out in respect of the operational effectiveness of the scheme? Some €166 million was allocated in respect of the scheme in 2009. Any money spent on preschool education is returned many times over. Has the Department analysed the position in other jurisdictions in the context of discovering whether we can improve the way in which this money is spent? Should the amount allocated be increased to a substantial degree in order that we might reap the benefits in ten or 12 years? Has any serious, long-term analysis been carried out in respect of this scheme?

Mr. Michael Scanlan

The scheme has only been in operation in this country for a limited period. It will take time for the benefits relating to it to become apparent. Prior to the introduction of the scheme, a great deal of analysis was carried by the Office of the Minister for Children and Youth Affairs, OMCYA, and the office which preceded it, namely, the National Children's Office. That analysis would have been based on international experience and would bear out precisely what the Deputy said, namely, that the payback, in terms of good outcomes for children, from early intervention and early education are huge. It was on that basis that we would have advanced the case for the scheme.

In the context of increasing the funding available, what is at issue here is just a single preschool year. I do not know that we ever envisaged bringing it back any further. Ms O'Mara who is accompanying me deals with the scheme. There is a high uptake in respect of the scheme, with some 94% to 95% of eligible children involved. Loath though I am to state that more money should not be allocated, the evidence indicates that the scheme is working in the context of achieving its targets. One must rely on the international evidence when it comes to the expected payback. The Deputy may have noticed that, under Vote 41, a longitudinal study in respect of children was carried out. It is under this that one would expect of see some evidence of payback in an Irish context. It is unusual that we are doing something of this nature in this country.

We tend to tiptoe around the edges of issues on too many occasions. This money is probably the most well spent out of the State's entire budget. Rather than just stating that it is a success because the take-up rate is 94% or 95%, the Department should be carrying out a serious study in respect of the position in other jurisdictions and how Ireland compares to them. The next step would then be to broaden the scheme further in order that children might avail of it at an even earlier age. By the time many children throughout the country enter junior infants, it is already too late. I am of the view that it is never too early to intervene and encourage children to move in a particular direction. From the point of view of children and their parents, that the earlier we intervene the better.

Mr. Michael Scanlan

I will ask Ms O'Mara to comment further on the matter.

Ms Moira O’Mara

Those of us in the OMCYA are extremely fortunate that the early education policy unit of the Department of Education and Skills is co-located with us. That unit has some early years experts who carry out international research and comparisons. They are working on that at present. From September of this year, the inspectorate of the Department of Education and Skills is going to carry out a study on the ECCE scheme. This will be the first occasion on which we will be moving towards a merger of preschool and early education. The findings of the inspectorate's study will create a starting point from which we can work forward.

When are the results of the study expected?

Ms Moira O’Mara

It will be a one-year study and it will commence next September. The Deputy may be aware that September 2010 marked the end of the first full year of the scheme.

When something is successful, it is important not to merely leave it alone and congratulate ourselves on our good work. We must analyse the basis for and seek to extend such success. The information available to me indicates that the payback in the future will be a multiple of the initial cost of the scheme.

Mr. Michael Scanlan

I echo what the Deputy has stated and I take this opportunity to add an observation. The Department has not yet, perhaps, come to terms with the benefits of early intervention in the area of education and translated them into the area of health. All the evidence shows that if there is early intervention in respect of healthy behaviours, the payback can be huge. That is a matter we have not yet cracked but we have been involved in discussions with colleagues in respect of it.

With regard to the links between the Department and the HSE, the latter's service plan does not refer to the co-location programme. A spokesperson from the Department recently stated that agreements had been signed in respect of six co-location projects. Agreements were signed for Beaumont Hospital, CUH, Mid-Western Regional Hospital, Waterford Regional Hospital, St. James's Hospital and Sligo hospital. What is the exposure of the State? Has Mr. Scanlan asked that question of the HSE? Has the State an exposure to the preferred bidders for those projects if they do not proceed because they seem to have been dropped from the service plan?

Mr. Michael Scanlan

Yes, I know it is not mentioned specifically in the service plan but that does not mean it is not continuing to proceed. On the specific question of whether the State has an exposure if they do not proceed, "No" is the short answer and the contracts have been developed in that way. It is fair to say the preferred bidders, no less than many other people in the country, are faced with having to deal with a very different financial and investment climate and that is the real issue as we understand it. The HSE has had advice on the contracts. It is the case that the Department has watched that space carefully with its own legal advice to avoid any exposure to the State.

I do not understand Mr. Scanlan's response. He said it is not in the service plan but it is still there. If it is not in the plan, where is it?

Mr. Michael Scanlan

Sorry, my understanding, having seen a parliamentary question on this, is the fact that it is not referenced specifically in the service plan does not mean that the HSE is not continuing to engage with the preferred bidders; it is. Nothing should be read into the fact that it is not mentioned specifically.

What about the VHI's recent statement that there is adequate private medical capacity in the State and there is no requirement for further capacity? Has the Department a view on that? Have officials spoken to the VHI's administrators about their attitude to the provision of private beds?

Mr. Michael Scanlan

Yes. There was a policy decision to proceed with co-location and it was handed over the HSE to implement. The Minister and the Department were at pains then to step back a bit out of the actual procurement process, like I mentioned earlier.

In the same way with the VHI, we take the view normally that it is a commercial body and we have no right or remit to interfere in it but when it became clear that the line being taken by the VHI was impacting on the Minister's policy position on co-location, the Minister, myself and other officials met the VHI representatives and put this to them that in her view they needed to look at this.

Is Mr. Scanlan assuring the committee in a clear, unambiguous manner that the co-location programme is not stalled or has not been put on ice?

Mr. Michael Scanlan

Both from the Department's point of view and from the point of view of the policy position, it has not been stalled. There are two issues. One is the VHI's attitude and approach to this. It is not just the VHI. The other is the commerciality and bankability of the projects.

Is Mr. Scanlan telling us that there are problems?

Mr. Michael Scanlan

There are definitely issues about the changed financial market and the investment market. That is absolutely clear.

In other words, Mr. Scanlan is saying there is a doubt about the programme.

Mr. Michael Scanlan

This is getting into the commerciality of it. It is up to the preferred bidders to see whether they can get investors and where it can be banked. In that space, the Chairman is right about the VHI's role in committing to provide cover.

However, the bottom line is Mr. Scanlan is saying there is no financial exposure for the State in all of this.

Mr. Michael Scanlan

It is on that basis that all the contracts were drafted.

Deputy Michael D'Arcy took the Chair.

With regard to the National Treatment Purchase Fund, what are the most common procedures undertaken?

Mr. Pat O’Byrne

The most common are cataracts, joint replacements-----

Hips and knees?

Mr. Pat O’Byrne

Yes.

Did the recent controversy about the recall of products used for hip replacements have implications for the fund?

Mr. Pat O’Byrne

I do not think so in that the same number of people will require hip and other joint replacements. It is a feature probably as a result of the climate of this country that a high proportion of people, especially among the elderly, require them. From time to time, problems arise with the products used. It is difficult to get away from that absolutely but the last problem with hip problems did not affect the vast majority of people. I do not see it having long-term implications for the NTPF.

Mr. O'Byrne said the NTPF agrees a fee with various hospitals for procedures and it pays at the end of the procedure. How does what the fund pays compare with what the VHI pays for private customers in the same hospitals?

Mr. Pat O’Byrne

The reality on the ground is that private health insurers do not publish what they pay for particular procedures, mainly for commercial reasons.

Would Mr. Pat O'Byrne have an idea?

Mr. Pat O’Byrne

I do not. There is information around from time to time but it is difficult to make direct comparisons with the paucity of information available. In the past to get a benchmark, we compared our prices with prices under the casemix system in public hospitals. Generally, we do okay when one compares those prices. Overall we compare well with private health insurers.

But Mr. O'Byrne does not know that.

Mr. Pat O’Byrne

I do not know for definite.

I suspect the NTPF may have negotiated better rates for operations than the VHI. Mr. O'Byrne said there is no way of making a comparison. I am worried that if the VHI could secure the same rates the NTPF is charged by the same hospital for the same procedures, the fund might take over the VHI. My suspicion is that the fund is achieving better costs per procedure than the VHI. Customers are facing a 40% increase but the NTPF does not pay 40% more for procedures year on year. The VHI seems to be paying that. On the face of it, the fund should take over the VHI and do the job. Mr. O'Byrne cannot comment on my statement but both he and the departmental officials should seek information because I cannot accept that VHI or Aviva members can be admitted to hospital for a procedure, pay a set fee for that while the person in the bed beside them can be admitted through the NTPF and a much lower fee charged. This may have led to the high cost of insurance. Mr. Scanlan can empathise with my position.

Mr. Michael Scanlan

I can. To bear out what Mr. O'Byrne said, the VHI will not reveal the prices it pays in private hospitals. It correctly says they are commercially sensitive. One could ask the same question of Aviva and Quinn Insurance. It is a competitive market under Irish and European law and, therefore, we have to be careful not to step into that space.

I will make two comments on the 40% increase in VHI rates. The VHI would say it negotiated price reductions last year and this year. The other thing it would say, which is valid, is that it operates without a budget cap. It is in the nature of private health insurance that if I am a customer and opt for something-----

It is demand-led.

Mr. Michael Scanlan

Exactly. It is demand-led, whereas Mr. O'Byrne is given a budget cap and is required to adhere to it. I could easily allocate a 40% increase to the NTPF, and Mr. O'Byrne might be delighted to get it.

As Secretary General of the Department of Health and Children, Mr. Scanlan might be able to enlighten the committee on a further matter. Health insurance is an insurance product. Is it regulated by the Ombudsman for the insurance sector? Health insurers are financial services companies selling insurance policies. Is it Mr. Matthew Elderfield or some other regulator who regulates the insurance industry? I am not quite sure. Whoever is the regulator for the State health insurances should have this information. Can Mr. Scanlan enlighten us as to where this goes? Should the regulator not use the Department as a benchmark before he allows any increase in prices? Someone should have information on all private health insurance. We are talking about an insurance product.

Deputy Bernard Allen resumed the Chair.

Mr. Michael Scanlan

Deputy Fleming is right. Things are complicated by the fact that the VHI is currently not required to be authorised in the way the other two companies must, under law, be authorised to operate in the insurance market. When BUPA traded in Ireland it was regulated in the United Kingdom. Both the other two insurance providers currently operating in Ireland are now regulated by the Financial Regulator. The VHI is not yet so regulated.

Mr. Michael Scanlan

It is because it was exempt from that under EU and Irish law. Before last summer, it was announced that the Minister wanted the VHI to be authorised and regulated by the Financial Regulator. To achieve that - and this goes to Deputy Fleming's point - the VHI would have to be able to demonstrate to the regulator that it had a viable business plan, showing its costs and demands and how it was going to cope with all of that. In the absence of a risk equalisation scheme and given its current age structure, the VHI would not be able to be authorised. That is the view.

So we are back to light regulation and, in the case of health insurance, no regulation for the biggest player in the market. One can see how people would be concerned at that. Essentially, we are saying that because the VHI is so big and, without risk equalisation and given its member base, in such a difficult financial position we will leave it outside the regulatory system and pretend it does not exist, as far as regulation is concerned. I have heard of light regulation but exempting a company from regulation because it is so bad it would not fit a valid regulatory model is, from a departmental policy point of view, not a good way to allow the biggest health insurance company in the country to operate.

The company is out of the Department's remit. Given commercial sensitivity it will tell the Department nothing. It is so badly financially structured that no regulator would take it under a regulatory regime. Now, it is putting up its price by 45%.

Mr. Michael Scanlan

Deputy Fleming is right. It is not where we want to be. I can agree with the Deputy on that. Mr. Lynch is reminding me that we also have the Health Insurance Authority, which regulates the health insurance market, but not in the way a financial regulator would, as Deputy Fleming says. We are taking a variety of steps to achieve a situation where the VHI is regulated. This is not where we want to stay.

How many years will it be before the VHI is acceptable for inclusion in a regulatory regime?

Mr. Michael Scanlan

Following the Supreme Court judgment on the previous risk equalisation scheme, which was made in July 2008, the Government introduced an interim scheme. It was not quite risk equalisation. One could call it loss compensation. It was part of the tax code that kicked in from 2009. That, for the first time, involved transfers of payments to the net benefit of the VHI. That interim scheme will expire at the end of this year. In view of this there is an imperative to have in place what we will be calling a transitional risk equalisation scheme, on the basis that we must have a full one in place by 2013. The plan is to get the VHI authorised and sold, possibly before and perhaps afterwards. We are currently - this week - in the process of hiring financial advisers to advise us on the best timing for all of that. It has to be done in that short space of time.

Is Mr. Scanlan saying a temporary arrangement is in place whereby Aviva, Quinn Group and any other private health insurance company are making payments to VHI under a loss compensation scheme, that scheme expires at the end of this year and we do not have a new scheme in place? It is clear that the VHI cannot continue financially unless some arrangement is in place for next year but as we speak, there is no system in place. That is very worrying.

Mr. Michael Scanlan

That is a fair point. However, may I make it clear that the other two companies are not making a payment to VHI because of the nature of the interim arrangement? It is operated through the income tax system. A tax credit is given to all companies for customers above a certain age. There is a stamp duty levy on all premiums. The net effect-----

By how much is the taxpayer subsidising the VHI, Aviva and the Quinn Group?

Mr. Michael Scanlan

It is done on a cost neutral basis. The levy that is imposed covers the cost of the tax relief.

What are the figures?

Mr. Michael Scanlan

I can get them for the Deputy, if he will bear with me for a minute.

I am sure Mr. Scanlan can understand my concerns.

Mr. Michael Scanlan

Yes. Deputy Fleming says it is a worry. I guess I saw it more as a useful imperative. We absolutely had to have something in place at the end of this year. It will require legislation and that is one of the must-do things in the Department this year. We must have legislation.

It will be for the new Government to legislate regarding the future of the VHI. That is a significant issue for people to be aware of in the coming weeks. The VHI cannot continue without this legislation or without a new arrangement being put in place within months of a new Government coming into office. Is that correct?

Mr. Michael Scanlan

Yes.

We will ask people to tell us what they think about that. I leave that outside this room for today.

Mr. Michael Scanlan

Although it is all being run through the tax system, we estimate the net value of the transfers to the VHI were €41 million in 2009 and €48 million in 2010. There is an estimate of €70 million for 2011.

Who pays the levy to finance that transfer?

Mr. Michael Scanlan

The levy is raised from a stamp duty charged on all health insurance premiums.

How much does that generate? How do we know it covers the €70 million?

Mr. Michael Scanlan

My colleagues in the Department of Finance were adamant that it had to.

Are they sure of that?

Mr. Michael Scanlan

Given the dynamic nature of the market, we believe there was a very slight benefit to the Exchequer last year.

Why is such a big increase expected this year, from €48 to €70? The VHI is still putting up prices by 45%. By how much would prices have gone up without that extra €22 million on top of last year's €48 million?

Mr. Michael Scanlan

The reason for the big jump is that the tax credit given for older people's policies in 2009 and 2010 was designed, effectively, to cover half of the estimated cost difference between an older person's policy and a younger person's. This year, that 50% figure was increased to 65%.

I may have missed that. I might not follow health issues intimately. Was that done by legislation or statutory instrument? Did we debate that change in ratio in the Dáil at any stage?

Mr. Michael Scanlan

I do not think there was a requirement. It was certainly announced. We would have had to advise Brussels also, and we did that.

I am talking about advising the Irish taxpayers, who are paying for it.

Mr. Michael Scanlan

It was said in the Dáil. I know that.

It has been referred to. It will probably come as news to many people that those ratios have changed. Are the other companies happy with that?

Mr. Michael Scanlan

The Deputy would have to ask the companies concerned.

The arrangements for the VHI appear to have been changed without any major public discourse on the issue. The information was officially published, which I understand the Department had to do. The net value of the levy to VHI has increased to €70 million this year.

Mr. Michael Scanlan

That is correct.

When was that done?

Mr. Michael Scanlan

It was provided for in last year's budget.

The budget in December?

Mr. Michael Scanlan

Yes.

The response by the VHI to it receiving an extra €70 billion this year is, "Thanks very much Mr. Irish taxpayer for the €70 billion and by the way our response is that we will be increasing our premiums by 45%". That is my view. I do not wish to put Mr. Scanlan on the spot but this is, perhaps, something which I and the people of Ireland should have been aware of all along.

What is the net levy to Aviva and the Quinn Group for 2011?

Mr. Michael Scanlan

The net impact on the two of them combined would essentially equate to the net benefit to the VHI.

Perhaps Mr. Scanlan will explain that further.

Mr. Michael Scanlan

Taking 2009, where-----

I would like the figures for 2011.

Mr. Michael Scanlan

Okay. I must emphasise that this not a payment from one company to another rather it is based around the customer. As such, every private health insurance customer pays-----

It is a way around the Supreme Court decision.

Mr. Michael Scanlan

I could not possibly agree with that.

It appears to me that the decision is to charge stamp duty, collect it and pay it out to the VHI and that there is no risk equalisation. It is a way around the Supreme Court decision.

Mr. Michael Scanlan

I could not possibly agree with that.

I suggest that is the case. Someone in there is very clever.

Mr. Michael Scanlan

We estimate that the net benefit this year will be €70 million. The net cost, if one wants to put it in those terms, to the other two companies combined would be €70 million. The actual breakdown as between the two would depend on their market share. I do not have those figures with me.

Does Mr. Scanlan have a ballpark figure? Is the ratio 50:50 or two-thirds:one-third?

Mr. Michael Scanlan

If the Deputy will bear with me, I have some figures which I can provide to him.

There is one other issue I would like to raise. Although I commenced asking questions about the National Treatment Purchase Fund I ended up asking questions about the VHI.

Mr. Michael Scanlan

The ratio is approximately 2:1, the larger applying to the Quinn Group. The ratio is dependent on market share and the number of customers each has.

This system, in respect of which the largest player is not regulated or fit to be regulated, is a financial shambles. I find it hard to reconcile the extra €22 million this year on top of the €48 million paid last year with the proposed increases by the VHI. I suspect that Mr. Pat O'Byrne has been getting much cheaper prices, although I have no evidence to support that.

It is the job of the Department of Health and Children to work on that. I believe we should not give the VHI any more money until it tells us what it is paying for each of these procedures. We are routing money in and out through stamp duty and tax relief, thereby subsidising the VHI while at the same time the VHI will not say how much it charges for a hip operation against which information the Department could use to benchmark costs in the National Treatment Purchase Fund. I believe the time has come for the VHI to come clean with this information if it wants money from the Irish taxpayer. Does Mr. Scanlan follow my point?

Mr. Michael Scanlan

I do.

The Department needs to be tougher on the VHI. It cannot give the VHI €70 million without getting that information from it. If it offers up commercial sensitivity as an excuse then it should not get the €70 million or 45% increase in premiums. The VHI cannot have it both ways.

Mr. Michael Scanlan

I understand from where the Deputy is coming on this and in regard to the Supreme Court judgment. However, it is important that this is targeted at individual customers. Ideally, we want a health insurance market that is operating in a stable manner and it would be better to have a number of companies with a broadly equal market share including as regards age. By doing this way, Aviva and the Quinn Group are incentivised to take on, if they can, more older customers thus getting the net benefit from the Exchequer.

The Department has been concerned - this matter was the subject of some recent controversy - about the VHI's cost base, namely, what exactly is driving what is going on in the VHI. We accept that it has an older membership and is thus incurring higher costs. That is a fact. We have been concerned about what else might be driving its cost base and what other steps it could take to address that problem.

Its main cost is what it pays out for procedures in hospitals.

Mr. Michael Scanlan

As well as the numbers, frequency and price. I accept that. We commissioned Milliman to compile a report on that. The Deputy may have heard some references to this in the Dáil. We hope to release a redacted version of that report imminently. While the report contains many commercial figures which we cannot release we hope to release the redacted version of it soon.

I will move away from the VHI, for which I know the Department is not accountable, to issues relating to the office of the Minister of State with responsibility for children and youth affairs.

I understand that office is paid for by the Department of Health and Children. However, perhaps Mr. Scanlan would provide the committee with a breakdown in terms staff, grades and so on. How many people are employed in that section and what are their grades? In particular, how many are professional staff, for example, social workers, child care workers, child psychologists, counsellors, behavioural analysts, as opposed to administrative staff?

Mr. Michael Scanlan

There are 70 staff assigned to the office of the minister with responsibility for children and youth affairs. Of the 340 staff to whom I referred earlier, 70 are assigned to that office. The office commenced as the National Children's Office, it then took on the functions previously the responsibility of the Department of Justice, Equality and Law Reform and has since taken on the youth affairs functions of the Departments of Education and Skills and Community, Rural and Gaeltacht Affairs.

In terms of professionalism, the vast majority of staff are non-professional. They are general civil servants. There is one senior social worker on the child welfare and protection side, as recommended in the implementation plan of the Ryan report which suggested the Department lacked this type of professional expertise. There is also an early years expert in the education unit. The office had and continues to have access to professional research expertise, which has been useful to the office and to a professional - I am not sure what the person's profession is - with expertise in communicating with children.

This sounds like the Department of Finance having come through the recent crisis with little or no economists. There is only one senior social worker in the office of the Minister of State with responsibility for children and youth affairs. The overwhelming majority of the 70 staff in that office are clerical or executive officers who undertake administrative work.

Mr. Michael Scanlan

Yes.

I thought this office was established, not for administrative purposes because the Department could undertake that work, but to provide youth and social workers and child psychologists. I had hoped to be told that 50 of the 70 staff are people with child care and youth affairs professional qualifications. Mr. Scanlan has told me that not even five of the 70 staff are professionals.

Mr. Michael Scanlan

Yes.

That is shameful. I am disappointed at the manner in which the office is structured. This is an area which is so important we established a separate ministry for it yet the Department did not believe it necessary to appoint to it staff with expertise in the relevant area. This is akin to setting up a Department of Finance and saying that no economists or accountants are needed.

Mr. Michael Scanlan

I agree with the Deputy to some extent that the mix between the professional and the non-professional, a term not meant to be pejorative, is important. Looking at the broader Department, it is one of our strengths that we have a cadre of public health doctors in it. They make up a relatively small number, compared to the total number of staff in the Department and there are probably only four of them at this stage. We also have two pharmacists, a chief nurse, and a statistician or two. The few professionals we have add to the capacity of the Department. In fairness, this may all relate to the point alluded to by the Chairman in his opening remarks regarding reform of the Civil Service. Equally, to be fair to the people working in the office, much of the work of the office, for example this very successful scheme -----

The early child care scheme.

Mr. Michael Scanlan

It is unusual for the Department, which is largely a policy Department, to run what is essentially a practical scheme. It is not just me saying this, but from everything I hear the scheme is being run extremely well and efficiently, considering the money available for it and the number of children involved. It has a small number of administrative non-professional staff doing a really good job. The scheme is very ICT driven, payments are made by electronic fund transfer and it is supported by the ICT section of the Department.

I join with the general support of how great that scheme is and have no criticism in that regard. However, I am concerned about the broader policy issue.

Mr. Michael Scanlan

I agree.

I have one or two concerns about the scheme. The first is the issue of children with special needs in the preschool year. Special needs come to light when children are three, six or 12 months old, and by the time the children get to the preschool year the problems are already apparent. We have a very good system in mainstream primary schools now, with special resource teachers and special needs assistants. Who handles this issue for the preschool year? As a Deputy, I have found there is a gap in the system. If I go to the Department of Health and Children, I am told it is a matter for the Department of Education and Skills which refers me to child services in the HSE. Then I am sent to consult the special needs education officer in the Department of Education and Skills. I find I am passed on to different people. It is at this very early age the child needs help but I am told by each Department I am sent to the problem is the responsibility of somebody else. What is the situation in that regard?

Some children are falling through the gap as the preschool providers are not being provided with adequate resources to deal with young children with special needs and cannot, therefore, accept them. These children are not able to participate. The new scheme is a great scheme, but now that it is up and running we have discovered that children with special needs have difficulty getting access to it. Many of us meet parents with issues in that regard. There is a lacuna in the system currently with regard to those children.

Mr. Michael Scanlan

I will ask Ms Moira O'Mara to deal with that question.

Ms Moira O’Mara

The preschool scheme has changed the landscape for the type of children accessing preschool. Before the scheme was introduced, children whose parents could afford to pay would send them to preschools. Many children with special needs would have attended specialist services and preschools, but many others would not have had any access or would not have needed that high level of intervention. The HSE traditionally provided special needs assistants to children with special needs. It assessed the situation and provided a number of hours of assistance per week, a bit like in primary schools, where the special needs assistant would give perhaps 12 hours a week to a particular child.

When we introduced the preschool scheme in January 2010, we were conscious that we were unearthing issues in a number of areas, in particular in the area of special needs. Therefore, we approached the office of disability and mental health, within the Department of Health and Children, and asked it to set up a working group that would bring the relevant people together. In view of this we involved the HSE, which makes significant provisions around the country and the Department of Education and Skills, which has interventions on which it spends approximately €9 million a year, particularly for children with autism, and ourselves. We wanted to explore what resources exist and come up with a better way of rationalising and standardising them and to put a system in place across the State. That group is due to report any time now and we then want to move with the HSE to standardise provision. We feel that if we work in a more clustered way, the existing resources, which amount to approximately €20 million per year, could be better used across the 4,000 services in the scheme.

In the meantime, we are trying to adapt the scheme we have. We allow for later entry into the scheme if a child has a developmental delay. Therefore, for instance, if such children are going to start school at five and a half or six years of age, they can join our scheme at four and a half or five years of age, if that makes them better able to avail of the preschool year then.

Is the age limit not rigid if a medical case can be made?

Ms Moira O’Mara

The upper age limit is relaxed if a child has special needs.

Is that widely known?

Ms Moira O’Mara

Yes, it is. Children with any developmental delay or immigrant children with no English are facilitated by allowing them avail of preschool at a later age. Also, if a parent wants to avail of a scheme on a pro rata basis, in other words over two years, because, possibly, the child is only able for that or only has access to a special needs assistant for 12 hours a week rather than the 15 hours under the scheme, the year can be split, with maybe two days the first year and three days the second year. That is what we are doing to cater for special needs in the immediate term, but we are trying to get such children as quick a response as possible from the HSE.

In other words, Ms O'Mara agrees with me. There is an issue, but the Department is working on it and has not solved it fully yet. The parents coming to me are right in what they say currently. We are waiting for the reports and we encourage the Department to ensure it is sorted out for next September.

Ms Moira O’Mara

I agree and we will try and sort it. One of the positives that will come from this is work is that it will hasten the mainstreaming of preschool services for children, many of whom do not need to be in a special setting.

My last question is for Mr. Scanlan. Is he satisfied that the new chief executive of the HSE, Mr. Magee, will give a higher priority to the issue of children in care than his predecessor did?

This is a loaded question and I will elaborate on it. Professor Drumm was here last year and we asked him how many children had died in the care of the HSE in recent years. He could not answer the question and nor could the lady beside him. They gave us wrong information, so wrong there that there was a big hullabaloo. Reports were published, unofficially, but Deputy Shatter did the State a great service by publishing them. This led to increased debate, with the result that the HSE, which had not provided proper information to the Minister with responsibility for children and had told him reports would be issued, eventually had to come back here and correct the record about the number of children who had died in care. I understand that from when the HSE was set up, until the time Professor Drumm retired, it had never issued a report on the death of a child in care. It certainly had issued none by the time he came to us last year.

I believe there is a fundamental change in the approach being taken by Mr. Magee in this regard. He seems more inclined to prioritise this issue. He has issued some reports and seems to be getting to grips with the situation. I was very complimentary of the former regime in the HSE on the excellent work it did, but not in this area. It did not even know how many children in its care had died. That said it all. Mr. Magee has a different approach. Mr. Scanlan may now wish to comment on my loaded question, but will he comment on the approach being taken by Mr. Magee?

We will send the transcript of this part of the session to Mr. Magee.

I am complimenting him.

I know that.

However, I am asking Mr. Scanlan, who is in charge of policy in this area since the Department sets policy, whether the Department has spoken to Mr. Magee about this issue? Mr. Scanlan might just give us a flavour. I feel there is an improvement and I am merely asking him for his view. This area has been neglected, to some extent, but we will talk about the future rather than the past.

Mr. Michael Scanlan

Yes, let us talk about the future. It would be invidious of me to comment on individuals. I have talked to Mr. Magee about it. He has raised with me the need to ensure that the social care side of the job should get appropriate focus from the management. That would include child welfare and protection, people with a disability and older people. Members do not need me to tell them that much of the public focus tends to be on hospitals, let alone health. Areas such as child care and mental health, which is sometimes referred to as the Cinderella service, can be neglected. Mr. Magee has, certainly, said that to me.

Looking to the future, is the Deputy aware that the HSE recently engaged a man from Scotland for a two year period? The Minister of State with responsibility for children announced a new approach, last August or September. When one looks at what Professor Tom Keane achieved for cancer, one sees what that sort of leadership, focus and drive can achieve. The Minister of State felt something similar was required for child care. In recent months a recruitment process has been under way and a man has very recently appeared. I am hopeful of that sort of focus, but much depends on getting information and putting a focus on an area.

I welcome that new focus on a very important area.

In my opening address I mentioned our investigation of the SKILL programme and our disappointment that we will not be able to bring it to a conclusion. Have you been able to track the origin of that fund, which went through the HSE to an unofficial SIPTU account? Have you identified anyone in your Department where it could have originated? What have you done in your Department about this issue since we last spoke? Our efforts have been frustrated by delays on the part of SIPTU. The Turlough O'Sullivan report was issued. I read in the press that the HSE is being asked to withdraw that report. Exactly what is happening within the Department of Health and Children, which is where the money could have originated?

Mr. Michael Scanlan

I have seen the press references to the SIPTU and Turlough O'Sullivan reports. You suggested Chairman, as did Deputy O'Keeffe when he chaired the last meeting, that a joint overall assessment of all that went on would be very useful. We have started on that in the Department and we have been in contact with the committee secretariat. We are all agreed that the assessment can only be completed when we see the SIPTU report.

With regard to origins, if one tracks back into the Department rather than forward to SIPTU-----

The SIPTU report is being stalled by the two SIPTU officials who have commissioned their own report, which is the Thornton report. Everything is on hold. Who is paying for the Thornton report, which I am told with cost approximately €70,000? Has your Department been asked to-----

Mr. Michael Scanlan

No. I am relying on media reports, but it is my understanding that the SIPTU trustees have gained access to the Thornton report. The Department will not pay anything for it.

As of now, do you have any hard information as to the origin of the funding?

Mr. Michael Scanlan

No.

That is incredible.

My next question relates to the national treatment purchase fund. Mr. O'Byrne, Table 1.70 on page 477 of the Comptroller and Auditor General's report shows hospitals with allocated slots unused in 2009. Limerick Regional Hospital had 500 slots allocated to it but only 320 were used. Have you established why 180 slots were not taken up?

Mr. Pat O’Byrne

The slots were made available. We had numerous meetings with Limerick when we said the slots were available. Those figures were agreed at the start of the year. The patients were there. I cannot answer for Limerick Regional Hospital as to why it did not take them up.

Mayo General Hospital did not use any slots at all. What is the problem there?

Mr. Pat O’Byrne

Mayo General Hospital came into the scheme only last year. Before that, much of the Mayo waiting list was held centrally in Galway.

Last year, in your evidence to the committee you were very critical of Our Lady's Children's Hospital, Crumlin, for not making better use of the funding. Has the situation improved? In a footnote to the table on page 477, the Comptroller and Auditor General says the patient register for May 2010 showed 23 patients waiting more than 12 months for surgery at that hospital. Did the hospital not take up any slots? Were children who needed surgery and were waiting for long periods not being referred?

Mr. Pat O’Byrne

I am delighted to say there have been big improvements in Crumlin this year. Virtually all the slots available in 2010 were used. For instance, in Crumlin hospital there has been a 30% decrease on this time last year in the number of patients waiting more than six months. There has been a good improvement in Crumlin.

I am being parochial. How is Cork University Hospital performing? It does not feature in the table.

Mr. Pat O’Byrne

Cork University Hospital never had large numbers of patients in the NTPF. The hospital does not have huge numbers on its inpatient waiting list. Outpatient waiting lists are a bigger problem in Cork.

I still have evidence of people who have been referred by their GPs to orthopaedic surgeons in Cork University Hospital and who cannot even get on a waiting list for an outpatient appointment. They are being told they are being put on a general list. I raised this matter last year but things have not changed. There are three lists. There is the inpatient list, an outpatient list and a list of people waiting to go on the outpatient list. I said the figures were being massaged artificially by the use of the third list. The last time I raised this matter, people, including the former HSE chief, seemed to plead ignorance of this third waiting list. There is a third waiting list. It consists of people who cannot get on the outpatient waiting list at all.

Who will take control of a situation when a hospital has three waiting lists and is not participating in the national treatment purchase fund to any great degree? Can you tell us exactly how many procedures were done in Cork University Hospital under the NTPF? Would someone take control of an issue that is affecting, mainly elderly, people, who are in severe pain and immobilised? The work prospects of some people are being damaged because of their conditions yet they are unable to get answers. We heard a rosy report earlier in regard to what is happening. It was stated that waiting times are down to 2.3 months and 2.8 months. However, people are having to wait 16 to 18 months to get on an outpatient waiting list and could have to wait a further 12 months for an inpatient appointment for surgery. That is the reality of life on the ground. What is the Department's attitude to this? I accept Mr. O'Byrne can only operate a scheme as in the manner set down. However, I have reservations in regard to the NTPF paying consultants who are employed to do a particular job being paid double the amount to do so.

Mr. Pat O’Byrne

I would have a problem with that. In terms of orthopaedics, there is a shortage of orthopaedic consultants in Cork. That is the bigger problem.

Mr. Michael Scanlan

As I stated the last day, I regard that as entirely unacceptable. Following this issue being raised at our last meeting, the Minister raised the matter in writing with the Chairman of the HSE board at the time. If the Chairman can provide me with details of specific cases I will raise the matter with the CEO.

Without being rude or impolite, nothing has changed since I raised this issue 12 months ago. Only last week, another person raised this issue with me. I wrote this week to Mr. McNamara, manager of the hospital, outlining the position of a person who cannot get on a waiting list for an outpatient appointment. This is totally unacceptable. I ask Mr. Scanlan to find out why there has been no real improvement since we last spoke about this.

Mr. Michael Scanlan

Perhaps the Chairman will send me a copy of that letter.

I will. However, that is only one of many examples.

Mr. Michael Scanlan

I know. It helps to have specifics.

Is Mr. O'Byrne satisfied that no conflict arises in respect of contracting consultants to do private work in a hospital by which they are paid a salary to do public work?

Mr. Pat O’Byrne

I do not contract consultants. I do not deal with them at all. I deal with hospitals. Who a hospital assigns to do work is the hospital's prerogative. That said, and on the basis that this issue has been raised by the committee on several occasions, it is something about which we are concerned and in respect of which we have put in place checks and balances. As there are only a small number of consultants with particular specialisms, the reality is that if we are not to disadvantage patients it will always be necessary to send some patients to the same consultant for treatment. This is the independent medical advice I have received. To do otherwise, would either disadvantage the patient in terms of best outcome or quality, or result in patients not being treated. In 2010, 225 out of 20,000 patients in the private system were treated by the same consultant. All of these cases were pre-approved by the NTPF. There were in all cases good and sound medical reasons for doing so. They are the decisions we must make every day.

How many procedures were carried out at Cork University Hospital under the NTPF?

Mr. Pat O’Byrne

The figure for 2010 is 440. Approximately 200 diagnostic procedures were also referred out.

The Offaly County Coroner's comment that suicide in Offaly is rampant raises questions. What has been the Department's response with regard to the increase in suicides in recent times and has it adapted its suicide prevention programme to deal with the alarming comments by people who are aware of the reality and extent of the problem? Is A Vision for Change adequately resourced to meet the challenges of the current suicide epidemic?

Mr. Michael Scanlan

I acknowledge that there has been an increase in suicide. The best advice available to me suggests that with economic downturn comes that risk. The office for disability and mental health has continued to work closely with the national suicide prevention office in the HSE. Some extra funding has been provided for that office. I am sure the Chairman will be aware that suicide prevention is a difficult issue to deal with. Much of the extra funding appears to revolve around the ASIST programme which seeks to identify dangers. This is followed by what can be done in respect of preventative measures. Policy has not changed and I am not sure it needs to. We are redoubling our efforts to tackle the problem.

The CMO of the Department has articulated that alcohol is a factor in many cases. Returning to our earlier discussion in regard to child welfare and protection, the evidence clearly shows a close link between alcohol and suicide, child abuse and other health or social care issues. For this reason, we have been working with colleagues in other Departments to come up with a new alcohol strategy.

My final question relates to the proposed location of the children's hospital. Perhaps Mr. Scanlan will give an update on that and give the projected cost of the project. What funding is available to allow the project to proceed and has the Department assessed the recommendations on its location? As far as I am aware the projected cost is €650 million, of which €400 million is available. From where will the remainder of the money come? Have reservations been expressed on building it on a ground field as against a greenfield site? I accept all these issues have been raised before but it would be good to have an update on the matter. It is time to look at this project before it runs out of control. I have my views on it. There is not an ounce of logic in terms of what has happened. However, I would like to hear what the Department is doing and if it has its hand firmly on the cost factors.

Mr. Michael Scanlan

In terms of location, the Department is not engaged in any review of that decision. In terms of cost, I understand that €450 million is available from Exchequer sources and indented in our multi-annual capital plan and that it was always intended that the gap between that and the final cost of the project would be met by philanthropic sources such as commercial and car parking revenues. The costs have not changed in the recent past. As I understand it the project development board has had some engagement with An Bord Pleanála but has not yet lodged its formal application, although that is imminent.

This is my swan song today. I am concerned that firm control is taken of this before it spirals out of control again at enormous cost to the taxpayer. There is already a gap of €250 million, but we have been told that gap will be bridged by philanthropic funds or through car park fees. In these times it is wishful thinking to expect to receive philanthropic funds and it would take a significant amount of car park fees to bridge a gap of €250 million. The minimum cost for the project is €650 million, but when people get on site the costs could escalate dramatically. Therefore, the Department of Health and Children has a responsibility, on behalf of the taxpayer, to take firm control of this. I smell trouble.

Mr. Michael Scanlan

Without getting into policy decisions, it is fair to say that given the scale of the capital project, there is an onus on us, as part of our management of major capital projects, to ensure the project is managed properly and that there is no question of cost escalation.

I will not get into policy, but alarm bells started ringing for me when I saw the chairman of the board raise issues and then, suddenly, he was gone from the board. For the sake of the taxpayer, the Department must keep a firm hold on the project and project costs.

Mr. Michael Scanlan

I accept that. One of the difficulties we face is that these are all estimated costs. I understand, however, that the estimated costs have come down because construction costs have decreased. The key issue - this is provided for in the capital appraisal guidelines - relates to when it goes to tender. We must ensure that any escalation in the contract made then is not borne by the taxpayer.

Does Mr. Buckley wish to make any further comment?

Mr. John Buckley

I have nothing more to say in this regard. On behalf of my office, I wish the Chairman a long and healthy retirement.

I wish everybody the very best, those who are running and those not running in the election. I thank the witnesses here for their co-operation. Some good work has been done in recent years by this committee and its members, some of whom have interests elsewhere today. I thank the Comptroller and Auditor General, his staff and all the staff here. The work they are doing on limited resources is incredible. My only wish for the future, taking into consideration the peer review carried out, is that the resources of this committee and the Office of the Comptroller and Auditor General will be beefed up to protect the taxpayer.

Is it agreed that we note Votes 39 and 41 and dispose of chapter 36? Agreed.

The witnesses withdrew.

The committee adjourned at 12.55 p.m. sine die.
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