JOINT COMMITTEE ON HEALTH AND CHILDREN debate -
Thursday, 26 Feb 2004

Health Board Budgets: Presentation.

Chairman

I welcome Mr. Stiofán de Búrca, CEO, Mr. John O'Brien, assistant CEO, Mr. Paddy McDonnell, director of finance, and Mr. Gerard Crowley, assistant CEO, of the Mid-Western Health Board, Mr. Pat McLoughlin, CEO of the South Eastern Health Board, Dr. Mary Hynes, deputy CEO, and Mr. Liam Minihan, director of finance at the Western Health Board.

I ask Mr. de Búrca to commence the presentation on the reasons that the three health boards did not spend all of their allocated budgets in 2000 and 2003. I draw witnesses' attention to the fact that members of the committee have absolute privilege. Unfortunately, the same privilege does not apply to witnesses appearing before the committee. I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable.

Mr. Stiofán de Búrca

I thank the Chairman and committee for inviting us to make this presentation on behalf of the Mid-Western Health Board, its management and staff. It gives us an opportunity to clarify any current uncertainties. As members know, we work within a financial regulatory context or legal framework under what is called the accountability legislation. Section 6 of the Health (Amendment) Act 1996 defines the parameters within which we prepare our service plans, and section 10 makes a clear statement about deficits and credits or surpluses, as people loosely call them, regarding sums carried over. That is also taken in the context of accounting standards issued by the Department of Health and Children.

As members will be aware, our annual financial statements, or AFS, are signed off by the board chairman and chief executive following a clear statement of satisfaction from the Comptroller and Auditor General's office. In our service plan, we also set out our monitoring arrangement, which is part and parcel of the continuing cycle of accountability within our own system to the board and the Department of Health and Children.

In essence, there is continuing monitoring of performance against set targets by our management, and that leads to the implementation of corrective action as appropriate. There are monthly reports to the Department of Health and Children in the form of integrated management accounts, and those are drawn up in a prescribed format. On our board, we also use that format for presentations to board members. We have dedicated quarterly reviews with the board in that format - in other words, our service plan reviews - and, at least three times a year, there is an intensive review with senior officials of the Department of Health and Children.

As I note in our document, the performance indicators are issued to the Department quarterly, so there is total transparency and full opportunity for people to raise questions and obtain clarification. In addition, there is an independent review through the audit system of the Comptroller and Auditor General under the Comptroller and Auditor General (Amendment) Act 1993. That takes the form of both financial audit and value-for-money evaluations. The report is subject to examination by the Committee of Public Accounts. Our internal audit function also accounts to an audit committee chaired by an external and independent chairman. Regarding the specific parameters, each year the letter of determination sets out the limitations or constraints under which we have to design our service plan for submission to the Department and the Minister.

On the current issue raised by the House concerning 2003, specific statements were made. Without exception, no consideration would be given to Supplementary Estimates. That has very serious implications on how we looked on our past, where Supplementary Estimates were usually available to deal with demand-led schemes, overspends, overruns in superannuation and so on. We were also required to have an appropriate contingency sum to cover unexpected issues and pressures such as the demand-led schemes, which I mentioned, during 2003.

In that year, there was a change in policy regarding service, which was described as the existing level of service. In other words, there was a very serious parameter that one could not go beyond the level of service volume - though not necessarily quality - which could be made available. A further parameter in the system in recent years was the restraining condition of the employment ceiling on numbers in the public service, and the health service in particular. That is imposed by the Department of Health and Children. It has the consequence that it cannot always be reconciled with one's finances. In other words, one may have funds available, but because of the ceiling of unemployment, one cannot deliver on it. We can clarify points on that if the Chairman wishes.

In the case of our board, €2.8 million was earmarked as one of our targets. That was taken from the level of funding available to the system. The review of our service plan performance for 2003 has been completed with the Department of Health and Children with our most recent service plan for 2004. We can state categorically that we complied fully with the legislative and regulatory obligations as already referred to in my reference to parameters and the letter of determination. We achieved our targets in line with the service plan on activity, financial management and employment numbers. This was achieved without cutbacks in services. There seems to be some kind of innuendo that we did it at the price of patient care or volume of care, so I wish to be emphatic about that.

The financial outturn for 2003 indicated an underspend of €13.3 million. That represents a variance of 2.4% on a total revenue budget of €557 million. As an illustration, that might buy eight days' service from the whole system in the mid-western region. We are clear about the causes of that position, the first being delays in the implementation of certain planned services. Members of the committee will recognise that new services or changes in service entail "process" in terms of getting clearance through Comhairle na n-Ospidéal, the Department of Health and Children and so forth. Key service dimensions are often led by consultant appointments. The leader of the team must first be put in place and that can be a long drawn-out process at times. We attribute it to buoyancy in our incomes.

Significant sums were allocated under benchmarking in the last year. That money came in only towards the end of the year. This in effect creates intrinsic opportunities in terms of financial management with regard to superannuation contributions, for example. Our end of year accounts will show a surplus in excess of €5 million. Additional pay creates additional revenue in this way related to superannuation.

At the end of the year unexpected additional revenues were allocated. In our case this was in excess of €5.5 million. This revenue came to us in December. In addition, towards the latter part of the year, savings accrued to us in our revenue account on the back of maintenance and safety work on equipment. We were lucky - I use the term in an honourable sense - to get an additional €15 million in minor capital in the latter part of the year which was unexpected in terms of the amount. Originally it was to be €10 million or €12 million. Based on our performance in spending this allocation, however, we were given extra money.

Deputy McManus

Was this by the Department?

Mr. de Búrca

It was given by the Department. This took the pressure off the tightly constrained revenue maintenance and equipment money within the system. In effect, all of these things add up to a surge in income, which was unanticipated and which no one could have expected at the time the service plan was being framed in the early part of the year. There is no divergence of view on this between the board and the Department. We were advised strongly that because of the nature of the Estimates campaign, as it was being experienced, people would have to take a stringent view of expenditure in preparation for 2004. It was expected that money would be tight and matters would be much more difficult. People were ready for restraint, to achieve savings and ensure that there was a cushion in place for the following year. That is the explanation for the €13.3 million underspend in our case during that year.

In general terms, the board is a statutory authority with responsibility for approval. Under the terms of the legislation, the Department signs off on that. Key issues, such as demographic changes, service gaps, deficits in information technology, inadequate bed capacity and chronic under-funding in several areas, create pressure within the system which must be taken into consideration. We can give the committee lists by way of illustration, if required. Primarily, demand-led schemes is a new element in terms of concern and anxiety. The committee will note from our published material that we expected that these schemes could over-run in the region of €2.5 million or €3 million. That exercises the mind in terms of making provision. Contingency has to be a dominant factor in terms of anticipating the situation. In any event, we obtained a €1.2 million allocation towards the end of the year which softened up the tight parameters that had existed from the outset.

With regard to what will happen with this money, let me say at the outset that in consultations with my senior managers I emphasise that this surplus has become a necessary element in the board's strategy of successfully maintaining the level of service in 2004. In effect it is now safe to say items such as the full-year cost of clinical services for vascular surgery and rheumatology, which commenced in 2003, can be accommodated in the current year. There are planned service enhancements, also, which we can now be assured of in the current year such as a consultant breast surgeon, in the context of symptomatic breast disease. Also, we can now move comfortably towards completing our four themes of child and adolescent psychiatry, which is important to us.

There is some cushion of safety around certain clinical-driven costs and the demand-led schemes, legal fees and energy, none of which has been adequately funded in our allocations over the years. We have had to use buoyancy in terms of cash-flow management to ensure these were dealt with. We will continue with the minor capital works commenced towards the end of last year.

There are significant infrastructure deficits. With regard to property, members would be aware that the building stock we possess for elderly care and mental health services is dated, early or mid-Victorian, and difficult to maintain, even though the mental health area has been run down significantly. For example, Our Lady's, Ennis, has been closed for two years, in Limerick the mental health patient population is down 82% on what it was when I went to the Mid-Western Health Board two years ago and a greenfield service is being developed in north Tipperary. The critical point is that we can take all the funds we get to try to restore the infrastructure deficits, health and safety issue and training needs.

I have referred to some of the significant milestones to show there is an ethos of achievement and value for money in the Mid-Western Health Board. Our waiting lists record put us among the top performers. Staffing has increased by 68% in ten years. We now have a first-class cardio-vascular service, that is consistent with national policy in this area. We have had the highest increase in bed capacity outside the eastern region, about 78 beds. All these beds are now fully functional. Given the residual legacy from the mid-1980s there is a major gap in bed capacity. Hence many of the strategic initiatives have focused around improving accident and emergency services and waiting list management. The list is available for members to consider rather than having me elaborate on them.

In the current year we must make provision for contingency. In general we are working with the same rules as heretofore and the task is to guarantee the people of the mid-west region a stable and consistent service throughout the coming year.

Chairman

What is the level of the contingency fund set aside by the board?

Mr. de Búrca

For this year it is about €8.5 million.

Deputy F. O’Malley

What percentage is it in terms of your total budget?

Mr. de Búrca

It is about 1.7%.

Mr. Pat McLoughlin

The net impact of the 1996 legislation is that any balance at year end, either positive or negative, is to be carried forward as a debit or a credit against the following year's funding. I have outlined our performance in terms of the allocations from 1999 to date, which show that at the end of 2003 there was a net surplus of €6 million. This, in effect, was the contingency fund originally set. As with other health boards, we were advised there would no longer be a Supplementary Estimates process. Therefore, we had to be prudent and had to set aside a fund to cover such issues as community medicines, influenza outbreak, minor pay awards, etc. We had experience of that in the south-east with the winter vomiting bug which in one year cost about €1 million. As required, we created a contingency fund. The contingency was €6 million comprising a closing balance of €3.4 million and €2.6 million from the 2003 allocation. That represents less than 1% of the board's allocation and in terms of spending approximately three days expenditure.

The contingency fund was using during the year - €1 million early on because of pressures as regards medicines and laboratory costs. We had other budgetary pressures during the year, amounting to €2 million. In effect, there was a balance of €3 million in the contingency fund. Issue were then clarified with the Department of Health and Children and some additional moneys we had been seeking, legitimately, as regards service pressures in other areas, minor pay awards, etc., were resolved. It meant the €3 million left in the contingency fund was boosted by a further €3 million from the Department, which meant that we had a net closing balance of €6 million at the end of 2003.

It was decided to maintain this contingency level for 2004. That was the management's recommendation to the board. The effect of the contingency was to ensure that no closures had to be made. We were able to deal with the service pressures that arose during the year. No services were reduced, no beds were closed and employment levels were maintained. Many significant developments were made in all service areas during 2003. These are given in an appendix for the purpose of illustration.

Developments that are approved for a particular year may not happen in that year. As with the Mid-Western Health Board, there is a lengthy process in recruiting consultants. They must be approved by the Department and Comhairle following which the posts have to be advertised by the Local Appointments Commission. Permanent consultants are generally employed in a permanent capacity elsewhere, such as in the UK or North America. We have also had difficulty in attracting applicants to some key posts. This would be the case especially in community services, occupational therapists and similar grades. There may be situations where infrastructure needs may be required before we can bring the revenue on board. For example, we are in the process of adding an additional ten beds to the district hospital in Carlow. We have the funding for that, but we have to ring-fence it so that it is available when the beds are built. That is being done at present.

The resources which are ring-fenced are reflected separately in the budget. We use them on a once-off basis, generally within the relevant care area for minor capital expenditure or such matters until the service developments are in place. This is done to protect the money in the revenue for the staff that we need to recruit.

Financial control is an issue that was commented on in the media. I have monthly meetings with the management team and each manager about their budgetary performance. That is my own internal means of reviewing performance. As a standard item, we also have on each agenda for the committees of the board, the financial performance of the board and that particular care area of the board. We have monthly reports to the board. These reports are debated in public and in each of the reports we would have identified the existence of a contingency fund, which the board would approve. The board takes its advice from the management on whether the contingency fund should be drawn down. In the early months of the year, I indicated to the board that while we did have contingency, we should try and deal with the pressures that were emerging and try to manage them better while maintaining the contingency fund. The board agreed to that.

Like other boards, we also report to the Department on this issue as part of an integrated report on finance, activity and human resources. We accurately reported our financial position to our board, to the committees, to the Department and in public, because our meetings are held in public at which the media are present.

Concerning 2004, we have provided in our service plan for any outstanding development funding coming forward and we will continue to monitor the implementation of the service plan with the board and the Department of Health and Children. We will keep the contingency funding under review. Already, there are pressures emerging from January on our acute hospitals. If I did not have a contingency fund established for that, I would now have to go to the board advising it may be necessary to close services or lay off staff. In view of this it is prudent and essential to have a contingency fund because health and social services are complex. We have an uneven and unexpected——

Deputy McManus

I will raise that at the next election.

Mr. McLoughlin

That would be good. I will be relieved of it. We can have unexpected demands in terms of services and we must remain prudent in the management of them. Often, November and December are our difficult months for pressures in our acute hospital system from respiratory problems. We need to protect our resources on that. I was charged, through the letter of determination, with personally ensuring that my board came in within its allocation. At a recent meeting the board expressed its satisfaction with the way the management has handled this issue.

Dr. Mary Hynes

I am conscious that the two previous speakers have covered many of the points that our board would also like to mention, so I will be as brief as possible. In recent years, the Western Health Board has overseen very significant capital expansion in at least two of our hospitals. They are bringing with them new services, particularly in areas such as cancer, cardiovascular disease, and radiotherapy. The planning for these kinds of services span many years and, as with other boards, it can be difficult to fine-tune matters with the result that some development funding can be carried over from one year to the next. However, we always try to ring-fence it for the service area for which it was intended.

On the issue of accountability legislation, a number of points have already been made. I wish to emphasise that any carryover is a double hit in the following year. If one overspends by one euro in one year, it has a double effect in the next year, and would mean looking at the curtailment of services.

The tone of the letters of determination changed significantly in 2002 and 2003 compared to previous years. There was reference to the changing economic climate, the critical importance of control on spending, no additions to the employment ceiling and to the importance of staying within the authorised ceiling. That is all part of the environment in which the boards plan their services.

The change in the Supplementary Estimates process in 2002 and 2003 was very significant. In 2001, at the end of the year, there were a number of areas where a board could expect to get additional funding. That was curtailed in 2002 and the letter of determination in 2003 said that without exception, there would be no Supplementary Estimate. In that context, the boards had to be very prudent in the way in which they approached their financial management and control for the year. As with other boards, not alone did we achieve our service plan and the activity we had set out to do in those two years, but in contrast to the existing level of service stipulation under which we were operating, in some key areas we exceeded activity. We did this by achieving efficiencies in various measures.

While the letter of determination is a key point in planning our services for the following year, in the course of the year some additional funding becomes available. This may be in response to plans that we had submitted, ongoing discussions with the Department or areas that were flagged in the service plan on which we had been invited to make submissions, such as health and safety or clinicians and management. It means that adjustments are being made during the year. For example, in 2002, we ended the year with a credit balance of €9 million, which is 1% of our allocation. This was primarily due to recruitment delays in areas such as consultant staffing which is a lengthy process, as well as difficulties in getting grades such as the therapy grades, of which there is a great shortage.

At any time we would have a long list of minor capital areas with which we would like to deal. As we came into 2003, we engaged in lengthy discussions with the board and with staff through partnership and decided that a good use of that credit balance would be to deal with many of our minor capital priorities. However, as the year progressed, the Department made some funding available for minor capital issues, which addressed some of our more urgent priorities. There were other schemes that we would have liked to have been able to do, but, because of issues such as delays with planning permission or the need for detailed planning, we were unable to proceed with them. We would have had some delays in development in 2003 and would also have been curtailed by our employment ceiling. Our credit balance, coming into 2004 and relating to 2003 figures, was €7 million, less than 1% of our revenue budget for the year.

We acted on management's advice to the board and put aside the cumulative credit balance of €16 million for contingency in 2004. Normally, we would put aside a certain proportion - at least 1% and usually between 1% and 2% - of our allocation in the letter of determination, for contingency funding as we come into the year. This year, for the first time, we were in a position to disburse all of our allocation to the services to maintain them at their current level because we had a credit balance that we carried forward and which we can use as a contingency fund. As with other boards, if we had not been in that situation, we would be facing a very tight year.

In 2004 there are ongoing demands for services. Similar to other boards, we always have pressure in the acute sector, as we have an older population than many other boards. Nursing home subvention is a pressure for us. We are commissioning new services such as orthopaedic services in Mayo General Hospital. These are all very legitimate service pressures and we have to make provision for them. If we did not have the credit balance that we currently have we would be in a very difficult position in 2004, and we would be trying to identify services where we could cutback. In contrast, we are very much able to protect our services for older people and our acute sector level of activity, in particular our cancer services, and we will be able to deliver on our planned developments for next year

The issue of contingency is difficult for some people to understand, but we know that if an outbreak of winter vomiting or flu happens on 15 December, we have to be as well able to cater for it on that date as we would on 2 January. That means inevitably we are carrying a certain amount of contingency right through to the end of the year. We believe the best use of that money is to carry it forward as a credit balance into the next year and spend it in a very planned way to meet priority issues and identified patient need. It is not a matter of trying to achieve an artificial break-even position for the sake of optics. We have very similar accountability structures as in other boards, with regular monthly meeting and regular reporting and we will continue to manage our affairs with the probity we have shown in the past two years.

Chairman

I thank all of you for your opening statements. Is this pass the parcel day, to the extent that the three boards have come in with surpluses and the Act provides that the boards live within the budget and the budget statement issued at the beginning of the year? The Department of Health and Children indicated last year there would not be supplementary estimates towards the end of the year and so the boards had to put a contingency fund in place. Yet the three of you have indicated quite clearly that moneys were not made available by the Department of Health and Children.

Mr. de Búrca said he was unaware this was coming. I would have thought in the normal scope of communications between a health board and the Department, one would be aware of what was coming down the track. Is Mr. de Búrca saying that, given the makeup of the extra allocation that has been made by the Department, it is impossible for him to manage the finances of the board? If that is the case, what would he say of the other health boards, all of which came in at the break-even point, yet all in receipt of late allocations in the same way as his board? It is extraordinary that a contingency fund in one health board is €3.5 million, in another €6 million and in the Western Health Board it is €16 million, yet all have total budget allocations of €600 million to €700 million. Does that require an explanation?.

Mr. de Búrca

I find it interesting, Chairman, how you present a perspective on this. Let me hasten to refute emphatically any idea of passing the parcel. At the end of the day I can speak only for my accountability, as accounting officer of my authority. The buck stops with me. I take my full onus of responsibility in that regard. I cannot speak for anybody else.

Let me clearly and unequivocally say that the Department of Health and Children is not master of its own destiny very often. There are other controls imposed on it, the performance of the economy, the role of social and health investment in our economy and the extent to which it is aware of what it can or cannot do. I cannot speak for the Department and it would be grossly inappropriate for me to make any comment about how it manages its business, but I have to say that we are very much aligned with our conjoint management of the health system with the Department of Health and Children. That the Department has money available to it at a particular time of the year is a matter I cannot answer for. When one considers that the specifics of a letter of allocation are unambiguous about no supplementary budget and no exception, what can one say to the authors and those who prescribed that format of a letter of allocation?

The Chairman raised the question of the contingency fund. The variation in contingency clearly has to do with the board's sense of vulnerability at any time. Deputy Fiona O'Malley asked why our board had more money than others in the fund and what percentage of our budget is in the contingency fund. It is 1.5% of our total budget this year. I can tell the committee but I cannot make a public statement that there is a particular contingency liability which I have to be prepared for concerning certain incidents in the past. It would be very imprudent of me not to do so. I have legal and personal obligations in terms of how I deliver. I make no apology to anyone for coming in with a surplus of that order in the circumstances as it means we can secure the provision of certain services in Mr. Crowley's area and Mr. O'Brien's area during this year. It would have been irresponsible of me not to have taken a decision in that regard. It was enabled, supported and enhanced by a position adopted by the Department of Health and Children. I thought it was very responsible of them to alert us to the nature of the limitations on the allocations coming in the current year.

Mr. McLoughlin

In our situation, as in other boards, there were no guidelines issued as to what might be an appropriate percentage for contingency. I did have informal discussions with officials from the Department and I indicated that I planned to have approximately less than 1% of contingency. It was suggested to me that perhaps I should have allocated more towards contingency. I allocated less than 1% to contingency because I was satisfied from discussions with Mr. Eugene Hally, director of finance, that we had covered known pressure that we were expecting and that the 1% was appropriate.

Having said that in 2003, we did not have the same difficulties that we had in 2002 and did not have the winter vomiting bug but we had a serious incidence of Legionnaire's disease in one of our hospitals. I had to be able to authorise expenditure across the whole acute hospitals to have our hot water distribution system tested and updated and I could not await funds that might accrue subsequently from the Department. There was a known risk presented to me following that case and I had to take action on it. I had the supplementary funds to do it.

On the judgment call as to the level of contingency provision, the Department could hold a contingency fund from its own budget and have a system where we would bid for it. In some ways that was the system up until now. That was changed fundamentally in December 2002 by telling us that we needed to establish our own fund. We are advising large voluntary organisations with which we deal that they should have a contingency fund.

Having worked in a number of health boards, there are different pressures. We have developed our oncology services to quite an extent in the south east and any increase in demand in an area like that is high cost but it is a demand one has to meet. Some boards may not have services such as that and other boards may have services with a greater degree of sub-specialisation. It might have been helpful for every board were there guidelines on what is appropriate for contingency.

Dr. Hynes

Our contingency is just under 2%. As a board, we have had very significant developments in the past number of years, in particular in the acute services. Last year we doubled our complement of nephrologists and we went from two to three plastic surgeons and from two to three urologists. With the best will in the world, we may talk about maintaining the existing level of service but we know that when new specialists are appointed, the demand for the services increases and we take that into consideration when we put aside a higher proportion of money.

As I mentioned, we have a higher proportion of older people than in other parts of the country; more than 14% of our population comprises older people when the national average is closer to 12%. We currently have about 1,300 people in receipt of nursing home subventions and the figure has increased by about 147 over the past two years. We can talk about existing levels of service, but we realise that, at a minimum, we have to keep the current number of people in subvention while the cost of nursing homes is increasing. We also realise that there will be a demand for extra places during the year, which is a significant pressure on our budget.

We find it difficult to predict the cost of the drug refund scheme, which was covered in Supplementary Estimates until last year. It changes not only from year to year, but from month to month, and year on year, it tends to run ahead of the budgetary provision. Taking all those pressures into consideration, we feel it is prudent to have the level of contingency that we have set to try to ensure that we can respond to demands that might arise as well as deliver the planned activities in our service plan.

Deputy McManus

The presentation has been enlightening because it is difficult for me, as a public representative, to fathom why, at a time when there is such demand on our health services, so much money should be hoarded. The message I am getting is that the Department of Health and Children's regime has become tougher and the health boards have been told that they will not get supplementary estimates although they are still getting money unexpectedly, which seems to me to be a little contradictory. Perhaps that is something the committee should examine and we should have officials from the Department of Health and Children before us to find out how it could be managed better. Would it help to have multi-annual budget allocations?

Will the witnesses comment briefly on the employment ceiling? I do not know what the situation is in the three health boards that are before us, but it does not seem to have been applied in all cases.

There is surely a difference between a contingency sum and a surplus. A contingency sum should be the same for all health boards, whereas a surplus is something else. The witnesses from the Western Health Board talked about expanded demand, but the health board has managed to save a significant amount of money.

I have a question for the witnesses from the Western Health Board. We recently had oncology specialists before the committee who had concerns that beds would not be provided at the radiotherapy unit that is being developed in Galway. Can it be guaranteed that beds will be in place? It is a separate issue, but I cannot resist the opportunity to raise it.

Mr. de Búrca

We would appreciate any effort to have multi-annual planning. The fact that we do not know our budgets from one year to the next is a constant issue for us. It is a matter for the Department of Finance and it is not unique to the health services. It is an issue even with the national development plan. When it was first announced, there was great expectation that, six years on, there would be some level of certainty, but that ran into the sand somewhere along the line. There is a clear imperative: if we at least had what was described as a rolling plan over three years, it would be most welcome. That way, we could at least make certain anticipatory statements on the nature of the service that we provide. The report, Health Strategy: Quality and Fairness - A Health System for You, and other excellent documents set out a clear way of predicating what the people deserve.

On the employment ceiling, we can all account for ourselves. The Mid-Western Health Board lives within its ceiling, and I am sure that is the same in other health boards although there are severe tensions, as Deputy McManus can well imagine. We have an artificial limit on employment and then we get money for disability services, but we cannot deliver the extra service. There are some major differences between us and others regarding what is an appropriate ceiling. That has not yet been resolved, but a process has been initiated at human resources level between the Department of Health and Children and health boards to get a more rational formula. The employment ceiling was an artificial ceiling that was imposed to constrain and contain employment in the public sector. Deputy McManus will remember that we had an additional reduction last year, which was repeated again this year.

On contingency versus surplus, we take Deputy McManus's view about the two different concepts. One may be consistent with the other or contribute to the other, but they are two different ideas. Contingency sums are put aside in anticipation of certain events, which may give rise to a surplus if they are not called on. The Chairman and I both understand what that means.

Mr. McLoughlin

The South Eastern Health Board would support the idea of multi-annual budgeting. The Health (Amendment) (No. 3) Act 1996 goes some way towards that by allowing credits or debits to be carried forward. In some ways, an assessment at a particular point in time is artificial, given the role and nature of the services.

We have not had employment ceiling difficulties to date, but I agree with Mr. de Búrca's analysis. We get money for non-pay issues when we really should be employing care assistants or home assistants, particularly for persons with intellectual disabilities, so the ceiling clearly needs to be adjusted. The Department of Health and Children has indicated that we should make submissions on that and I think it intends to take up the issue with the Department of Finance.

The South Eastern Health Board did not have a surplus; we simply had a contingency fund of less than 1% that was replenished and maintained in 2004.

Dr. Hynes

I agree with everything that has been said on multi-annual budgeting. The Western Health Board's development happens multi-annually and it is difficult to match it to an artificial time period.

We have difficulties with our employment ceiling. We are just about living within it, but it is difficult for people to comprehend that we can have money but cannot take on the staff we might want to take on. The ceiling can be counterproductive because we can end up paying overtime to our existing staff, for example, when it would be better value for money to take on more people.

Deputy McManus asked a specific question about radiotherapy beds. The development of radiotherapy in the west not only for the Western Health Board, but for the Mid-Western Health Board and the North Western Health Board, is a huge advance for cancer services. I am confident that we will have the beds. Not only that, but we are working closely with a local voluntary organisation that will provide capital funding for hostel beds, which is also important.

Deputy O. Mitchell

I welcome the witnesses and I am pleased to see them. I did not ask for them to come before the committee, but I am pleased that they have had the opportunity to give their side of the story because a disturbing trend of trying to find whipping boys for everything is emerging. The whipping boy is never a Department or a Minister; it is always somebody else. I am sure it is not lost on the witnesses but it is ironic that, historically, health boards have been berated for overspending and they are now having to account for being prudent. I was struck by the irony of the fact that, within weeks of the news breaking that the three health boards had surplus budgets, some hospitals were being criticised and penalised for overspending.

I know the health boards have warts, but, in fairness to them, the explanations for the contingency budgets and the attempts to plan saving in order to plan spending, which are the late allocations, the cap on employment, the difficulties that are associated with maintaining the existing level of service and the need to cater for liabilities, the extent of which cannot be known, are all constraints that come from outside the health boards. None of them are circumstances within the health boards' control. It seems to me prudent for the three health boards to do what they have done and I do not think that there is any virtue in their coming in on budget if the spending has not been sensible, planned spending but simply spending for the sake of it.

It highlights the difficulty of not having multi-annual budgeting and the relationship between the Department and the health boards. Even when the health boards are abolished, unless the new body, the health service executive, is given the flexibility and the freedom, between one year and the next, to make choices within its budget and to make mistakes and be accountable for such mistakes, there will be no change. It is short-sighted to find whipping boys all the time.

Chairman

The Deputy's Second Stage speech is over.

Deputy O. Mitchell

I am coming to my question. Dr. Hynes said the existing level of service requirement has run into 2004. How is that working out in terms of new developments? Does it mean that other services have to be curtailed? If a new consultant is appointed, does it also explain the position of the new hospital in Blanchardstown? Does it explain why those wards and accident and emergency units are not open? Is it that the existing level of service has to be maintained? Is that the type of difficulty that is being experienced?

Dr. Hynes

I can only answer for my own board where we are talking about two specific new services, such as radiotherapy or orthopaedics, which we never had previously. They would be outside the existing level of service framework. If we want to do more elective surgery in one place, by right it needs to be balanced by a reduction elsewhere unless it can be achieved through efficiencies. We have taken steps in regard to contracting, bulk buying and so on. Sometimes one can make savings. Perhaps something can be done as an out-patient which used to be done as day care. Perhaps something can be done on a day basis that used to be done on an in-patient basis. One is talking about re-engineering services in order to do more for the same amount of money.

Deputy O. Mitchell

I can understand doing that for one year or even two years. Is this the second year of it?

Dr. Hynes

Yes. It is a valid point that each year we have value for money targets.

Deputy O. Mitchell

Dr. Hynes will have to keep repeating that point.

Dr. Hynes

It gets harder every year.

Mr. de Búrca

Some data suggests that between November 2002 and November 2003 the activity related to discharges in acute services increased in the State by 4.7%. In my own case, the increase was 4.6%, which is very close to the average. There is a range of variations. In my instance, as Dr. Hynes said, that reflects productivity in the system. On the face of it, it looks like it is contravening the existing level of service. In essence, what it means is that we are getting more value out of the existing money. Often, we differentiate between core services and enhancement of services.

Dr. Hynes

It might help to illustrate the point if we look at the average length of stay in our largest hospital. In 2001, it was 5.8 days; in 2002, it was 5.6 days; in 2003, it was 5.4 days. Therefore, one is squeezing more out of the same resource.

Deputy O. Mitchell

The point I have been trying to make is that at some point one closes the hospital.

Dr. Hynes

A stage is reached where it is not possible to squeeze it any more.

Deputy Gormley

I have always been supportive of the health board structure and I support the retention of the health boards. Over the years, an impression has been created that the health boards have been misspending money. Two reports have been commissioned - from Deloitte & Touche and Brennan - and that has not been established. No smoking gun has been found. If anything, they are guilty of being over-prudent. This arises from the pressure applied down the line, from the Department of Finance to the Department of Health and Children which, in turn, is applies to the health boards. How pressurised is it and is there a climate of fear? Are health boards being forced to put economic prudence ahead of everything else? Dr. Hynes referred to recruitment delays in implementing some service developments. What did she mean specifically?

Deputy Devins

I thank the representatives for coming before the committee. Like everybody else I was surprised when I heard of the accumulated surplus at the end of the year. Having listened to the representatives, my surprise has turned to amazement. I shall direct my questions to the CEO of the Mid-Western Health Board, but in effect they are to all three CEOs. On the issue of delays in the implementation of certain services, such as the development of a service based on the appointment of a consultant, is it the policy of the Department to pay out money prior to the appointment being approved?

How much buoyancy in income is one talking about on a percentage basis in respect of the €13.3 million? Unanticipated additional revenues was mentioned. Is there a man in red cloth called Santa Claus wandering around the mid-western area, handing out money that is not anticipated? What precisely does that mean? On the question of savings in safety works and equipment purchases, do I understand the Department of Health and Children is invoiced for a piece of equipment and that the CEO manages to resource it at a lower price? How does that money come about?

What will happen the contingency fund in the coming year or years as the health boards are amalgamated? There are three health boards which have a pot of money in their hands and there are five other health boards that do not have money. Will there be a marriage between health boards which have assets and those which have none or will the asset-rich health boards go for other asset-rich health boards?

Deputy F. O’Malley

I thank the representatives for coming before the committee. We are worried when we hear about cutbacks in services and then discover there is money left in the pot. To whom are the CEOs responsible? Is it to the boards, the Department or the patients? I would like more detail on the value for money targets. Are CEOs specifically asked to try to obtain value for money? I would have thought that we were looking for value for money across the board. I found that phrase very curious and, given the budgets, that the targets should be so low. I echo the point made by the Chairman and Deputy Devins about surpluses. Have the CEOs spoken to their colleagues who did not have surpluses? What did they do? It is important for us to find out how some managed it and others did not.

Deputy Twomey

Many issues apply to all heath boards. I shall make a few general statements and then ask Mr. McLoughlin a specific question. In her submission, Dr. Hynes referred to the increased costs and loss of income from an outbreak of winter vomiting disease. How much of her income is dependent on private income, outside that allocated by the Government?

The total budget for aids and appliances was 99% greater in 2003, which is a dramatic increase in regard to one service. How difficult is it to recruit scarce grades, which obviously is a manpower problem? We are quite cocooned here in terms of what is happening in the real world. We discuss issues like the primary care strategy and the Hanly report. Yesterday, the Minister for Finance, Deputy McCreevy, and myself had a discussion on the public private mix in the health services, but Deputy O'Keeffe brought us back to reality when he told us that €10 billion is spent on the health service. The three representatives are responsible for a quarter of that budget, if we add up their sums. There is something seriously wrong because the representatives appear to be working at the cutting edge in terms of trying to keep the whole system going.

The comment was made that capital stock is in poor shape in some of the health boards. Does that also apply in some respects to the South Eastern Health Board and do the representatives have ring-fenced funding to examine capital stock such as health, hospitals and to whatever else it may apply? How much of a problem is that currently and will it be in the future?

On the appointment of consultants, I want to focus specifically on an issue which is very topical, namely, the funding available for accident and emergency consultants. Are they now approved by Comhairle or are the representatives waiting for them to be appointed?

Will the representatives give us some idea of the type of demand-led schemes that are under pressure? Every Deputy experiences problems towards the end of the year trying to get disability grants for patients, which I understand are the responsibility of the health boards. Are other schemes discontinued towards the end of the year simply because the health boards start to run out of money? Perhaps we could have some discussion on that issue.

Chairman

Who will deal, in trepidation, with the threat?

Mr. de Búrca

The threat of——

Chairman

The trepidation question from Deputy Gormley.

Mr. de Búrca

You can see, Chairman, how we are fazed by all of these matters. We live with pressure, as do the members. We have spent many years in the typical fishbowl syndrome but we survive.

Clearly, there are high expectations among the public which are partly supported by the nature of democracy itself and how that is articulated in the media and through the House. Our concern is that, without being too prejudicial in terms of our own position, we tell the facts as we have them and give the information as we know it according to the policy parameters within which we function. The change agenda currently is clearly initiated on the basis of perhaps 30 years of a system that is creaking in terms of its own structures, etc. I hasten to add that we have not been sitting idly by. In our area we have been retuning and redesigning our structures for the past ten to 15 years. People in the mid-west, and I see some people from the mid-west here, would recognise and appreciate that point. It is a matter of public reconciliation of expectations and demands.

Public surveys indicate that people are no longer prepared to invest in health systems more than what they are currently prepared to put into the Exchequer in tax income, etc. If we are regarded as one of the lower tax investing health systems, how do we reconcile that aspect? If we look at our opposition in OECD terms, we have to take a national position on that issue. It is a question of reconciling the fact that we want it, but we will not pay for it. For example, where is the €12 billion which was indicated for equality and fairness? I am not making anything other than a general statement in that regard. As a society and a community we have to reconcile these differences. That is part of the story we live within. These are paradoxes and so on.

The delays in implementation issue and recruitment delays generally come back to Deputy McManus's observation about multi-annual planning. When we are caught in stop-go cycles without ready movement from one year to the next, serious issues arise, particularly with processes which entail the Department indicating, on the basis of submissions, that there will be an expansion of one's cancer services or certain specialties which are urgently needed, as has recently emerged in our own case with neurology and rheumatology. How long does it take to recruit a consultant to lead the team? There is often an infrastructural question involved as would be the case with cardiovascular and cancer care. The pay-out occurs in anticipation of systems moving and that helps us in cash flow management terms from time to time. Very often we get the money before the system can respond and move rapidly in its delivery. That is an issue——

Deputy Devins

Is Mr. de Búrca saying that the Department gives the money, but the consultant and the subsequent staff are not appointed?

Mr. de Búrca

We are notified on 6 December for the coming year in the letter of determination. Sometimes there is a delay in notification and that will be signalled in the letter of determination. It may not come until early in the new year. There is a signal and money is provided, but the process does not actually catch up with the spend in certain instances.

Deputy Devins

A situation could arise where money would be paid by the Department to the health board but the consultant would not be appointed for three, six or nine months.

Mr. de Búrca

That can happen. I would suggest it takes at least nine months to get through the process.

Deputy Devins

How can we justify money being allocated, for example, for a consultant cardiologist when one is not appointed?

Mr. de Búrca

Is the Deputy asking me that question?

Deputy Devins

I am asking Mr. de Búrca.

Mr. de Búrca

I cannot give the Deputy an adequate response to that because I am a receiver of the goods.

Deputy Devins

Should Mr. de Búrca, in all honesty, give the money back to the Department?

Mr. de Búrca

I have never yet heard of anyone giving money back. The Deputy talked about buoyancy. Some part of our survival mechanism has to do at times with delays occurring in the system. We have this paradox of coming in on budget or filling jobs to the extent that the budget is blown. We can illustrate that point. For example, the fact that we were slow in moving our four child adolescent psychiatry teams meant, on the one hand, that we were moving the process but, on the other, that the process was going at a pace. Sometimes we control the pace and at other times it is controlled for us by its unresponsiveness. I have to be honest and say that is the way it is and it helps.

My colleague has reminded me of something else. I am sure the Oireachtas Members would be familiar with all the metabolic diseases currently emerging, particularly the new treatments and the innovations of the pharmacological industry. We could get €250,000 per person to treat Fabry's disease - there is a family suffering from Fabry's in our area. That is not provided for in terms of funding. That is another side of it. We have issues about how we manage our cash and that creates opportunities for us to occasionally do "once-offs". This is where prudence comes into play because we make economic judgments about people's lives where there is not a nationally stated position on the way these people should be treated. We have to be responsive. Sometimes people are heroic enough to make the difficult decisions. In saying that, I am not making a judgement with regard to those who do not do so.

The point about the buoyancy is closely connected to what we have just said. The buoyancy I was referring to was that which was delivered by reason of a bulk of benchmarking money coming our way late in the year. Therefore, we got 5% or 6.5% depending on the arrangement with the individual being contributed to our finances. As I mentioned at the outset, members will see in our accounts a surplus in income, in other words, we over-achieved our income generation by something like €5.5 million and that is not a bad thing.

On the unanticipated allocation question, that is what it is - unanticipated. Some €41 million or thereabouts was given to us during the year by way of additional funding for specific purposes. What came towards the end of the year was remarkably unanticipated because it appears to be counter to the letter of determination. There is a rational explanation for everything but having contingency funds, as most of the members would have said, is a mark of prudence. The fact that they vary depends on local circumstances.

I cannot answer for other colleagues but over years of managing service plans we have always come in at above break even, except for one year when, because of a Comptroller and Auditor General ruling on an accountancy issue, we came in with a deficit.

Our responsibility is to the board. It is the employer and the statutory authority. That is where the legitimacy of its authority in decision making rests. We are officers of the board. We are not accountable to the Department other than on matters which relate directly to the Minister and matters on which the Minister, by law, is entitled to direct us. We are also, in our commitment and our vocation, committed to people. That is and has to be our primary commitment. However, in terms of legality and governance, there is a clear line of command.

Deputy Fiona O'Malley asked some questions about the VFM targets. These are arbitrarily indicated. Sometimes we might interpret it as a balancing figure. It is not scientifically determined, it is simply stated. It is usually related to the general revenue allocation in each board. In our case, it is €2.8 million. Another time it might have been €1.6 million. That is an adjusting figure or something that is not always available. Nevertheless, one has to find ways of making it up. I can give an example.

Deputy F. O’Malley

They are not imposed. The board applies them to itself.

Mr. de Búrca

It is, in essence, a cut. It is a reduction in funding that was expected. It is described as VFM, to the value of X. That is taken from the determination. In order to maintain that value level, one must find ways of saving it. I will explain it to the Deputy from my notes. The Deputy might be familiar with the procurement arrangements nationally. People refer to bulk buying and taking advantage of mass orders and so forth. This is now managed through the health board executive as a national procurement initiative. However, only about 40% of our commodities come through that system because the clinical driven costs, such as surgical appliances and drugs, do not come through it. We are working on making that more inclusive because there is a professional dimension involved.

One of our initiatives to try to deal with that would be in our aids and appliances, generating a unit cost saving of €325,000. We have a system in operation of tracking, recovering, maintaining and re-using rather than simply dishing things out and forgetting about them. There is a tremendous opportunity to generate value for money in that. There is also something as basic as incontinence wear. We have adopted a new contract arrangement which gives us savings of approximately €250,000. In our accommodation arrangement we have been able to reduce lease costs, in terms of use of certain rentals in Limerick city, by €120,000 by purchasing additional accommodation. This was generated through some savings which were then capitalised with the approval of the Department. In other words, we moved away from this permanently occurring cost which is not yielding any value for money.

Over the past number of years, through our regional procurement, we have effected approximately €3.1 million recurring savings on various purchases. While it might be arbitrarily determined at some level, and that is my way of describing it rather than suggesting that it is the reality, to maintain that quantum of services associated with that money, we have to do things that actually reflect it.

I cannot comment on the other point. I cannot speak for a man in Cork or a man in Donegal. They can speak for themselves. If some people achieve break even or deficits, it is up to them to answer for it. In our case, over the past five years we have been above break even except for one year when, as a result of a Comptroller and Auditor General ruling on an accountancy issue, we were on the other side of the line. It is true that we work on the fine edge; we work on margins and fine edges.

Mr. McLoughlin

Deputy Twomey raised a number of issues. The capital stock in the south east, particularly for services for older people and mental health, is in a poor state. We have, for example, only one purpose-built unit for the elderly and that is a hospital in Carlow. In every other case we are basically operating out of Hammond buildings. I put a proposal to the board for the sale of assets as a way of trying to do something about the capital stock and the board has approved that. It will obviously take time. We do not have decent capital allocations, particularly in those areas. We are also awaiting a 19 bed extension to Wexford general hospital. It is absolutely necessary if we are to deal with the winter pressures. It is the only hospital in our region that has patients on trolleys. There is a good reason. It has not had a sufficient level of investment. We have been able to deal with that situation in Kilkenny through the additional beds we have provided.

With regard to the point about getting funding for a consultant, there is a good example in Wexford. We got approval for a post of a geriatrician but we did not have the appointment on board. We used the money saved on that in that year to build a purpose-built day hospital for the elderly which the consultant could use. The money for the accident and emergency consultant is approved and is in the base. It has gone through Comhairle na nOspidéal so everything should be in order to proceed with making the appointment.

The demand-led schemes are mainly confined to the refund of drugs and the long-term illness schemes. It does not apply to other schemes. If we get an allocation for the housing aid for the elderly scheme, that is the extent of what we can use. It is an excellent scheme. It is not funded by the Department of Health and Children but by the Department of the Environment, Heritage and Local Government. It would certainly benefit from further investment. Overall, our private income is €24 million out of €57 million.

Deputy Twomey

What is that?

Mr. McLoughlin

A total of €24 million for private beds in our hospitals. The total income other than income from the Department of Health and Children is €57 million.

I could have taken a calculated risk and directed that the budget be run to the limit on the chance that the Department might bail us out. If it did not, however, I would probably be brought before this committee to explain why there was a deficit. How one deals with the situation is a judgment call. Economic prudence, however, has never been a consideration above patient care for me.

The VFM issue tends to be looked at selectively, in terms of the amount one can cut from a service. The developments I have outlined in the appendix show the range of additional productivity which was produced in the system. Nobody from the Government gave me additional money to provide for a 12% increase in population in Wexford or Carlow, which is more than the national average. We must try to manage within an allocation and that requires the type of buoyancy Mr. de Búrca outlined. In many of the services the further productivity is from the existing staff. I believe managers are as good advocates for patients as any other professional group.

Dr. Hynes

The phrase "climate of fear" was used. We do not operate in a climate of fear. The word "pressure" was used and I agree that people are working hard. They are conscious of the accountability legislation and the personal responsibility it imposes on the chief executive officer. It is taken seriously so there is a pressure in that regard. Health care is expensive and the demands are limitless. We will never be able to meet the demands made of us.

There was a specific question about scarce grades. We are referring to people such as physiotherapists and occupational therapists. They simply are not available. In the case of County Roscommon, for example, we did not have an occupational therapist. We would like to have four in the county but we have managed to recruit only two. If we could find the other two, they would be put in place. Radiotherapy has been mentioned. We were seeking a principal physicist and a radiotherapy services manager. There are few of them available and it can take some time to locate them.

We have experienced delays in the recruitment of consultants on many occasions. We have one consultant in post and it took approximately six months. That is the fastest I can remember it happening. We were recruiting four orthopaedic surgeons at the end of last year and into this year. A number of them were taking up their first consultant appointment. I will not pressurise a person who has commenced a one-year fellowship in Boston to take up a position here now because when he or she does so eventually, he or she will have acquired extra skills. We feel it is worth waiting for them.

Deputy Devins

It is also financially worthwhile for the board if he or she does not to take up a position here and that is fundamentally dishonest. I do not dispute that the board is spending that money well but it is quite amazing that this is happening.

Dr. Hynes

I will try to give an example.

Deputy O. Mitchell

What is amazing is that Deputy Devins is blaming the health board for obtaining money from the Department. One can hardly blame the health board for the Department sending money prior to the appointment of a consultant.

Mr. de Búrca

I am rather taken aback by this observation. The Deputy appears to be suggesting that I now take a risk of allowing three children to die because of money available to me to support them.

Deputy Devins

No, I am not saying that.

Mr. de Búrca

That is my interpretation of what the Deputy said.

Deputy Devins

Mr. de Búrca's interpretation of what I said is wrong. I said I find it amazing that the Department is allocating money for a specific purpose and that purpose is not being fulfilled. I did not say there is anything wrong with the manner in which the board spends the money. It is amazing this is happening.

Deputy Callanan

I must confess to having been a member of the Western Health Board for 18 years up to September last. As a member of that health board, we found it very difficult to reach break even with returns for one month being up and returns for another being down.

In my view, health boards are now more efficient than before. We would not ask, for example, the Western Health Board, with which I am familiar, to come before us today if it, in order to break even, decided at the end of the year to buy unnecessary equipment and to fill up its stores with medication and so on. I am delighted the Department has seen fit to allow health boards to carry over funds and that they are not penalised for doing so. Previously, health boards were penalised in that regard and often did not receive adequate funding the following year. The Western Health Board signed up to a service plan in the past two years. Has it been carried out within the funds allocated? If so, I congratulate the board.

Senator Daly

I apologise for my earlier absence. I am not a member of this committee but I welcome the delegation and in particular Mr. de Búrca and Mr. O'Brien from the mid-west. The Mid-Western Health Board, which will soon wind up in its current form, has since its establishment transformed the health service in the mid-west region. I would like to put that on record because sometimes such things become distorted among other issues.

I would like to discuss the health board's forecasting methods and to take the example of nurses. Why was it not possible for the executive and board to forecast the crisis regarding the training of skilled personnel in this area, an issue dear to the heart of the Chairman?

The bulk of funding for health boards comes by way of direct Government financing. The opportunity to avail of private funding is increasing. How does the executive feel it can utilise such funding? I congratulate the Mid-Western Health Board on its success in attracting €6 million for the radiotherapy unit from private sources in Limerick.

Mr. de Búrca

May I comment on that point?

Chairman

Mr. de Búrca may do so later.

Senator Daly

I want to emphasise how important it is that private funding is utilised. That has not been done in the past.

Senator Coonan

I, too, welcome the delegation and in particular the CEO and assistant CEO of the Mid-Western Health Board. I was hoping the CEO would receive a harder time than we gave him when we were members of the health board. Obviously, he is getting away softly this afternoon.

I was a member of the Mid-Western Health Board when the 2003 plan was formulated. On the determination of funding the board received in 2003, the board was told there would be no additional funding later that year and it was forewarned that 2004 was likely to be a difficult year. In that regard, the board was asked to make appropriate savings as a damage limitation exercise. Perhaps the delegation will confirm if that is the case.

For what was the funding of €13.3 million intended? Will the board confirm that some of that money was received approximately one week before Christmas. The general understanding is that the board received approximately €6 million one week before Christmas although I do not understand what the board was supposed to do in the time available to it. I suppose the board finds itself in the position that it is damned if it does something and damned if it does not do something. For years, members of the health boards lambasted officials for not over-spending and for running too tight a ship. While health boards not represented here today were over-spending the Mid-Western Health Board was running a tight and effective ship. The board took hard decisions backed by members from all sides.

Following the introduction of the service plan last year, members expressed concern about its effect on people in the mid-west. They raised certain issues and sought to meet a deputation from the Department and the Minister for Health and Children. Did such a meeting ever take place? It had not taken place up to the time I resigned from the board in September. There was a great deal of concern in that regard. The public finds it hard to understand why the Department mismanages its funds to the extent that it has money to throw around at the end of the year while at the same time communities are crying out for physiotherapists, speech and language therapists and housing aid for the elderly, applications for which are three years behind in terms of being addressed. There are no mental health services in north Tipperary. I compliment the board on going ahead with the radiotherapy unit despite the Department and Minister's efforts in that regard. I understand the Minister has seen the light and will allow the project to go ahead.

Why is money for which people are crying out becoming available at the end of the year? I compliment Mr. O'Brien on his initiative regarding waiting lists. The Mid-Western Health Board has turned that crisis around and is now seeking to become a provider under the treatment purchase fund. That is a major change. I would like to comment on the irony of the situation in which the board finds itself in terms of it being before this committee today. It is ironic that the Mid-Western Health Board is accounting for savings at a time when the Department and Minister should be here accounting for their mismanagement of the health services.

Deputy Twomey

I compliment Mr. McLoughlin on the many good things he has done. A large number of patients previously treated by the Eastern Regional Health Authority have, for the past four or five years, been treated in the south eastern region because of initiatives undertaken by the South Eastern Health Board. Does Mr. McLoughlin believe the increase in his budget reflects this transfer of work?

Mr. McLoughlin

We have 11% of the population of the State and 8% of the consultant manpower. We are way out of line and we do not have the degree of tertiary services. When we introduce services such as cancer services, they have a disproportionate effect on our budget because there is a much higher start up cost when a service is not established. We are trying to establish a CAT laboratory in Waterford to cover the whole region but that will have significant start up costs relative to the costs of an expansion of services in Dublin. It is critical, however, that there is development in the south-east. We have a population of 423,000 and we have as much entitlement to services in the region as any part of the State.

Dr. Hynes

Deputy Fiona O'Malley referred to cut backs and it is important to make clear we have not had cut backs. Our services are not expanding as quickly as we would like but we are doing more complex work than ever before.

Mr. de Búrca

We do not have a crisis in our area. We have 600 students on campus in the University of Limerick. There have been other pressures from time to time in certain disciplines or nursing specialties but we have ten agency nurses out of a total of 2,500 and we have no vacancies at present. We do not have a crisis.

Chairman

We have increased capacity to train nurses but we now cannot offer them employment this year or next. Is that why there is a fair to entice these young people abroad?

Mr. de Búrca

That may be the Chairman's view but it is not mine.

Chairman

There are no vacancies at present. Will there be vacancies for the increased numbers arranged by the Minister and the Department? We have set up schools in many areas. There was a crisis but now we are being told that there are no vacancies for nurses. Is that across the board? Will the young nursing graduates be unable to get places in Ireland?

Mr. de Búrca

I am giving a snap shot of the position today but there is a high rate of attrition in nursing. It has become a very pressurised service for people who are in a direct line of caring. I do not have the data but there is a high turnover.

Chairman

It would be good if that data could be sent to us.

Mr. de Búrca

I will do that.

Deputy O. Mitchell

Nurses will be needed for the 3,000 extra beds.

Mr. de Búrca

We have got them.

Senator Daly

The availability of private funding is also important.

Mr. McLoughlin

That is the kernel of it. Unless there are multi-annual plans and budgets, the tap cannot be turned on and off to get professionals. It takes a certain number of years to train people. Depending on Hanly, we have been told we will need many additional consultants but we do know how many we will need so we can plan intakes.

There is a world market for many of these professions and it depends on the economic situation in other countries. We are in a world market for some skills but much of the investment in health in the past five years was not predicted two or three years before that. Had I gone to the Department and said we must train additional nurses in 1996, I would have been told there were no plans to do that. The economy improved substantially and additional money came into health. We had not been investing in manpower because there were no indications such resources would be made available.

Equally, if we now face a downturn, we may have a situation that in some areas people may have gone into professions where there may not be immediate vacancies. That is the nature of the business we are in. Unless we have multi-annual plans and funding commitments, we cannot just turn the tap on and off in training.

Chairman

What is the experience in the Western Health Board area?

Dr. Hynes

On nursing, we have had many efforts to grow our own specialists because the areas of scarcity are specialist areas such as oncology, orthopaedics and accident and emergency. We worked closely with the local university to provide diploma courses so that nurses, instead of going to Dublin to train in these areas, could do it locally. I would not want to be complacent but we have not experienced the difficulties that we hear about in the eastern region.

Mr. de Búrca

My board has authorised me to provide a licence to the Mid-West Hospitals Development Trust to provide a facility for the delivery of radiotherapy services for private and public patients. It is not restricted to people from the area; any public patient who might present in future will be fully funded by that trust. There will be capital costs of €6.5 million and annual running costs of €1.5 million.

Chairman

Will that revenue come out of the accounts?

Mr. de Búrca

That is entirely from private funding.

Chairman

If it is fully private, will public patients be paid for by the health board through that system?

Mr. de Búrca

The trust has stated that it will not differentiate between public and private and will provide the funding for whatever deficit occurs in the running costs to meet public patient demand.

Deputy Devins

If a public patient in the mid-western area needs radiotherapy, will he or she be treated in this unit?

Mr. de Búrca

Yes.

Deputy Devins

Who will fund that?

Mr. de Búrca

The Mid-West Hospital Development Trust.

Deputy Devins

What is that?

Mr. de Búrca

A charitable organisation.

Deputy Devins

A private organisation?

Mr. de Búrca

Yes.

Deputy Devins

That is wonderful news.

Deputy O. Mitchell

Can we all go? This is extraordinary. Is it just for the Mid-Western Health Board? Is it permanent?

Mr. de Búrca

People who are recognised as being honourable in our community have made a statement to the effect that not only will they provide the capital, they will also provide the revenue and there will not be any bar on any public patient attending. The Minister and his officials are aware of this.

Deputy Devins

This is absolutely ground breaking. In Sligo a private organisation is in discussions with the health board. We do not need money if we can use that model.

Chairman

Charity knows no bounds.

Senator Daly

Will the Limerick facility fit into the overall national strategy for radiotherapy?

Mr. de Búrca

Yes. Senator Coonan may have missed the presentation where we outlined our plans. We will give him a copy of the presentation. We are continuing certain initiatives, such as vascular surgery, rheumatology, child and adolescent psychiatry and infrastructural developments to enhance buildings at the end of their lives. I cannot comment on why the Department gave us money at the end of the year. I am delighted it did, but I cannot explain it.

Chairman

The Department certainly will be asked that question. I thank all the witnesses for attending. The dose was not as bad as anticipated. We thank them for their outline of activities and wish them well in delivering patient care.

The joint committee adjourned at 2.20 p.m. sine die