There has been significant focus recently on the challenging resource constraints within which the HSE is operating. While the budgetary targets this year are particularly constrained, it is important to recognise that similar financial and resource constraints have applied in each of the past number of years as a direct consequence of the emergency financial situation the State has had to address since 2008.
The cumulative impact of this unprecedented period of financial and resource restraint has resulted in reductions in the health service budget of the order of €3.3 billion, that is, over 20%, with the numbers employed reduced by over 14,000 in the same period. On a comparative basis the OECD report, Health at a Glance 2013, shows that recent reductions in public health expenditure per capita in Ireland are the highest experienced in any OECD country with the exception of Greece.
These challenges come at a time when the demand for health services is increasing each year which, in turn, is driving costs upwards. However, despite these resource reductions and increasing service demands, the HSE has managed to support growing demand for its services arising from such factors as population growth, increased levels of chronic disease, increased demand for prescription drugs, and new cost intensive medical technologies and treatments. The HSE is to be commended on meeting these increased demands on its services.
That said, 2014 is proving to be a particularly challenging year for the health services. Cumulative net expenditure to the end of March is €114 million lower than in the same period last year, but given the extent and the phasing of the targeted budget reductions, the cumulative deficit of €80 million is higher than last year's €27 million. The Vote for the HSE is reporting a net deficit of €158 million at the end of May.
As the Deputy will be aware, the expenditure ceiling for the HSE is decided by Government, among other things, against a backdrop of national budgetary objectives and the prevailing macroeconomic conditions.
Additional information not given on the floor of the House
Very difficult decisions were taken by Government in the context of the overall budgetary arithmetic. Certain savings targets required of the HSE at the time of the budget were considered so challenging that it was agreed that a separate validation exercise to assess their achievability would be undertaken by the Departments of Health, Public Expenditure and Reform, and the Taoiseach. While work continues on the maximisation of the savings achievable under the Haddington Road agreement, the initial savings targets under medical card probity were reduced by €110 million in the context of the Revised Estimates Volume, REV. Along with pay savings targets, and taking account of the reliance on agency workers which is further compounded by the European working time directive, it is clear that the challenges facing the HSE in 2014 were extraordinary from the outset.
There is ongoing and intensive engagement each month between officials of my Department, Department of Public Expenditure and Reform, DPER, and the HSE in the context of regular monitoring of expenditure. The HSE is proactively engaged in internal efforts to maximise savings and cost containment plans and to ensure that additional measures are identified and safely implemented to mitigate any projected deficits which are within HSE direct control, while engaging on an ongoing basis with my Department. I assure the Deputy that the national director for acute hospitals has written to all hospital groups-hospitals setting out clear key messages around the need to reduce costs safely and to submit additional cost containment plans. Additionally, a full round of high level performance assurance meetings has been completed and another round is starting. The director general has met the board chairs, CEOs and clinical directors of the ten hospital groups-hospitals with the greatest financial challenges to ensure the messaging is explicit right up to board level in terms of the hierarchy of performance management priorities, that is, service safety and quality first, financial management next and then all other priorities, including elective access for non-clinically urgent cases.
Work is ongoing between the HSE and my Department on finalising projections to year end based on data for the first four months of 2014, in tandem with assessment of performance in the same period and risk to year end within its cost containment plans. It would be premature for me to comment further at this stage, pending the outcome of this work, but as the HSE has indicated, the scale of the risk and challenge in achieving financial break-even by year end remains extremely significant as predicted in the national service plan 2014.