The NTPF board was established in May 2004 as a mechanism to manage annual funding earmarked to respond to lengthy waiting lists for inpatient hospital treatment. The board’s original primary functions were to arrange with potential service providers for the provision of hospital in-patient treatment to patients who were a long time on public hospital waiting lists, and to collect, collate and validate information on persons waiting for inpatient treatment in public hospitals.
The board's functions were extended in 2009, when it was given responsibility for negotiating and agreeing pricing arrangements with private and voluntary nursing homes under the nursing homes support scheme, and extended again in 2012, when it was tasked with the collation and publication of information about outpatient waiting lists.
As is evident from the diagram, which can now be brought on screen, expenditure by the board has fluctuated significantly in recent years, mainly reflecting the level of resources made available to the board to purchase treatment for waiting list patients. The funding is provided in the form of a grant from the health Vote.
The board's overall expenditure in 2018 was €53.4 million. This comprised: payments to private hospitals totalling €31.4 million; payments to public hospitals of €17.4 million; and administration expenses of €4.6 million, covering all other functions. The board reported a surplus of €1.6 million in 2018, bringing the accumulated surplus to €7.6 million. At the end of the year, the board had cash balances of €23.3 million. Much of this was required to meet accrued expenses of €15.5 million in respect of treatments delivered to patients before the end of 2018 but not yet invoiced for collection by the treating hospitals.
The legislation provides for the Minister for Health to direct the format of the board's financial statements. As with a number of other health sector bodies, the Minister has directed that the statements should comply with generally accepted accounting practice, except in relation to pension liabilities. As a result of the direction, the board accounts for staff pensions as the payments arise instead of recognising the liabilities when they are incurred. In the circumstances, I am obliged by international auditing standards to give a qualified audit opinion. However, it is important to note that this qualification is only in relation to pensions accounting. In all other respects, the financial statements give a true and fair view of the board's transactions.
Turning now to Special Report No. 110. As mentioned previously, the board's role under the nursing homes support scheme is to manage the process for negotiation of weekly charge rates for care, and to enter into pricing agreements with the private and voluntary nursing homes. It is worth noting that the board is not itself involved in financial transactions with the nursing homes.
Each agreement is with an individual nursing home and is applicable for a specified period, which varies from home to home. For example, the average agreed duration of agreements put in place in 2017 was around two and a half years. Although the negotiation is for a maximum weekly charge rate, the reality is that the agreed rate is standard for all residents supported by the scheme.
In 2018, the agreed weekly charge rate for private and voluntary nursing homes ranged from €765 to €1,325. The average weekly charge rate was €968, which is equivalent to over €50,000 a year. The HSE paid an average of around two thirds of the weekly cost, with the residents paying around one third. In addition, residents incurred charges for supplementary goods and services provided by, or facilitated by, the nursing homes.
When the nursing homes support scheme commenced in 2009, the board offered each nursing home the average weekly price it had been charging on the open market. This was a short-term measure to prevent delays in commencement or capacity shortfalls but, in many cases, the initial prices have influenced subsequent negotiations. Prior to commencing negotiations, the board's negotiators review certain financial information provided by a nursing home. This typically includes the home's occupancy rate, weekly unit cost, annual turnover, profit and any finance costs.
The board has stated that it also considers criteria such as: the costs reasonably and prudently incurred by the nursing home and evidence of value for money; the price previously charged by the nursing home; and the local market price. It also takes account of any budgetary constraints on the scheme, along with the obligation of the State to use resources responsibly. While the average dependency levels of a nursing home's residents is not formally a criterion in the negotiation, the board informed us that the general dependency level does form part of the discussions during the price negotiation. However, we found that the board does not have a model that explains how these various criteria are weighed and combined, making it unclear as to how a final charge rate is arrived at for an individual home.
The examination found that the board did not have internal written procedures or a guidance manual for its negotiators, relying instead on on-the-job training. Examination of a sample of files found an absence of documentary evidence of the items discussed in some negotiations. It is important that the board maintains adequate records to enable evaluation of the key decisions made during a negotiation.
The negotiation process does not always result in an agreement. In this event, the board advises the nursing home of the proposed final offer in writing and that a review process is available. Where required, the CEO of the NTPF carries out these reviews. We found that since 2014, the CEO had completed an average of just two such reviews per year.
Pending the outcome of a review, the NTPF may offer the nursing home an extension to the deed of agreement at the current price for a period of up to three months, which may be repeated where the negotiation becomes protracted. The examination found that the board does not generate management information on the factors giving rise to protracted negotiations, or the number or frequency of contract extensions granted in these circumstances.
Finally, following a recommendation of a Department of Health review of the scheme in 2015, the board commissioned an independent review of the charge rate negotiation system. The review report was presented to the Minister in May 2019 but has not yet been published.