I am delighted to be back at a meeting of the select committee and I very much look forward to taking the opportunity to address it on the Revised Estimates for my Department for 2019, Vote 38. The committee wishes to consider the Revised Estimate on a programme by programme basis but, as the Chairman will be well aware, the health Vote, unlike other Votes, is not configured along programme lines. My Department continues to work towards the development of programme budgeting and changing the structure of the health Vote to reflect this.
I welcome the fact that the committee wishes to focus in particular on the financial allocations for implementation of the provisions of the Sláintecare report and capital allocations for hospitals. In that context, 2019 has the highest investment ever in our services. It is also the first year that the Health Service Executive's national service plan is framed through the lens of the Sláintecare implementation strategy. The strategy provides the framework within which a system-wide reform programme for the health system will be advanced and focuses on establishing the building blocks for a significant shift in the way in which health services are delivered. It is a matter of considering what more can be done in the community. The idea of everything having to be channelled through the hospital structure no longer applies.
The national service plan sets out further details on how the totality of health service resources, including the significant additional provision being made available by the Government, will be used to advance Sláintecare objectives in 2019. In addition, the welcome increases in the health capital budget over the period to 2021 will allow progress on key developments such as the new national children's hospital, which I am sure we will discuss, the national forensic mental hospital and continued improvements in radiation oncology infrastructure in Dublin, Cork and Galway. This becomes all the more pressing in light of the National Cancer Registry of Ireland's report of this week. The programme of development of new and refurbished primary care units and community nursing units throughout the country will continue to be rolled out. Additional funding over the period will be utilised to deliver additional acute and residential care beds and progress work on key Sláintecare projects.
The gross provision for the health Vote in 2018 was €15.977 billion, comprising €15.464 billion in current expenditure and €513 million in capital expenditure. This represents the gross funding position for both the Department of Health and the HSE and includes additional finding of €645 million granted by means of a Supplementary Estimate. The additional gross funding requirement comprises €20 million towards capital works and €625 million towards current over-expenditure, which we have discussed before.
In framing the 2019 budget, the Oireachtas allocated significant further additional Exchequer funding for the health sector. In 2019, gross health funding is €17.032 billion, comprising €16.365 billion in current expenditure and €667 million in capital. This represents an increase of €901 million on the 2018 current expenditure budget and €154 million on capital expenditure and recognises our commitment to providing a health service that seeks to improve the health and well-being of the people. It is no surprise to any member of this committee or anybody in the country that the issue of health funding is a major policy challenge, not just in Ireland but also internationally. Despite welcome increases over recent years, the need for effective financial management remains crucial as the health service deals with a larger and older population, with more acute health and social care requirements, increased demand for new and existing drugs and the rising costs of health technology. The costs associated with these service pressures will increasingly need to be managed not solely through annual increased Exchequer allocations but also through doing things better, reforming our health service and improved efficiencies, productivity and value from within the funding base. Demographic pressures, including a rise in chronic diseases and ageing populations – an increase in life expectancy is good - are major challenges to health funding internationally. The additional funding secured over recent years provides a substantial basis for the health service to maximise the level and quality of service delivery while also implementing the Sláintecare programme.
I now wish to address a number of issues that I understand the committee, in its letter to me, identified as being of specific interest. On the new children's hospital, members will be aware that the independent comprehensive review of the escalation in cost of the hospital, the contributory factors and associated responsibilities has been completed, was discussed by the Government yesterday and has now been published. I very clearly welcome the report's finding that the Government decision in December 2018 to continue with this project, based on the advice available at the time, was the correct decision. It states that any alternative course of action would have resulted in significant delay, further increased costs and the possibility that the hospital would not be built. I received much advice and was subject to many political charges from around these Houses after the cost escalation became clear and I was told I should retender the project, pause it or move it. The report by PwC, an independent financial auditor, indicates the appropriate decision was to proceed with the project.
The report addresses in detail the flow of information on the cost escalation and confirms the information already in the public domain regarding communications with my Department. It is important that all the documentation that PwC had access to aligns with the published documents that I made available to the committee previously.
The report points out significant areas of weakness that need to be addressed and strengthened to support the project to successful completion, as well as significant lessons for capital projects in general. Now we are back in an era of investing in capital projects there will be many big projects, not only in the area of health. While it is important that we retain the experience and expertise gained over the last number of years by those involved in progressing the new children’s hospital project to this stage, based on the report findings we also need to strengthen the capability and capacity of this resource, where necessary, to further support the planning and execution of this phase of the project. This process has commenced with the appointment of a new chair of the National Paediatric Hospital Development Board, Mr. Fred Barry, a man with a great deal of experience in delivering capital projects. In line with yesterday’s Government decision, I intend to consider the report findings and recommendations in detail with the Minister for Public Expenditure and Reform, Deputy Donohoe, our respective Departments, the HSE and Mr. Barry and will revert to the Government next month setting out a considered response to the report and an implementation plan. The recommendations provide a firm basis to improve the management of project delivery. We will comprehensively address the recommendations of the PwC report and, in doing so, successfully meet the needs of the children of Ireland for many years to come. I do not intend to give the committee a knee-jerk response today. There is a reason the Government decided that it would take four weeks to come back with an implementation plan but I have no doubt that there is a role for the committee, to be determined by the Chairman, in setting out a comprehensive implementation plan. I look forward to working with the Chairman in that regard. We must take very seriously some of the clear indications in the report in relation to the professional information given to the national development board. Page 4 of the report is very clear on material errors and a peculiar way of doing business in terms of arriving at some figures. It will be significant cause for reflection. I intend to meet the new chair of the National Paediatric Hospital Development Board in the coming days to ask for his response and that of his board to those findings.
I reiterate a point I have made many times previously, namely, the children and young people of Ireland have been waiting far too long for a modern healthcare facility and a new children’s hospital. Some will say that everyone says that, but there are many people who thought we should pause the project, retender it or move the location at this late stage. We will not do that.
The outpatient and urgent care centre at Connolly Hospital is scheduled to open this summer. I will meet Children’s Health Ireland this afternoon. The Connolly part of this hospital project will be handed over to the State this month and will start delivering real service improvements for children this year.
There is no doubt that the children’s hospital overrun has implications. An additional €99 million is required for the project in 2019. The Government decided that €24 million of this additional funding will be provided from within the €667 million allocation, with the balance of €75 million to be met by rescheduling capital allocations in other Departments.
The Chairman’s letter asked that I deal with the Sláintecare implementation strategy. The strategy was published in August 2018. I accept that it has taken some time to get to this point but we now have a very clear implementation strategy. Budget 2019 included €206 million for specific new initiatives associated with the Sláintecare implementation strategy, including negotiating a new GP contract, which the Chairman and I discuss regularly. I am pleased to say that we have achieved significant progress, which has been welcomed by both the Irish Medical Organisation, IMO, and the National Association of General Practitioners, NAGP, in terms of investment in general practice. While there is more to do, and I am sure the committee will have views on that, we will have in place, for the first time, a large-scale structured chronic disease management programme to ensure patients with diabetes, asthma, COPD, and cardiovascular disease can be treated in their community. We will roll out that programme over the next four years starting in 2020. It will ultimately benefit 400,000 patients who today attend our hospitals and outpatient clinics.
We are extending free GP care to children under 12 years but on a phased and careful basis, having learned lessons from the extension of free GP care to children under six years. I propose that we extend free GP care to children under eight years next year. We need to negotiate a fee through the Irish Medical Organisation. In recent years, a bugbear of GPs, which I have heard them raise very clearly, has been their legitimate view that general practice is no longer sustainable and has been left in a difficult position as a result cuts introduced under the financial emergency measures in the public interest legislation and €120 million taken out of the service by successive Governments – that is forgotten. We have now worked out a way of moving beyond that and restoring the equivalent level of funding and more. In return, our GPs are helpfully offering to reform, modernise and work with us on important initiatives such as ehealth, medicines management, accurate waiting lists and virtual clinics. We have a fair and balanced deal which, crucially, will also help deliver Sláintecare.
We have also had the further roll-out of national strategies in maternity trauma, cancer and drugs and a €20 million Sláintecare integration fund. We are inviting the health service, voluntary organisations and individuals to pitch ideas as to how they can help deliver Sláintecare. I launched the integration fund on 22 March and it will be allocated in May. I expect to be back before the committee for a detailed discussion on geoalignment. I am determined to follow the recommendations, which the Chairman co-authored, on how to reform the structures of the health service. The Sláintecare report gave me clear advice on what are known as regional integrated care organisations, RICOs. I do not like the name but I know their purpose. The idea is to merge community health organisations and hospital groups over time, divide the country based on a population health approach rather than any other approach, reduce bureaucracy and establish regional oversight structures. I intend to move on that this summer. I will return to discuss it further with the committee at an appropriate time.
A significant increase in funding for the health services has been achieved in recent years. We are continuing to deal with a growing and ageing population, more acute health and social care requirements and increased demand for new and existing drugs. Sláintecare gives us a new roadmap to support the delivery of high-quality care to our citizens. This year is the first year in which the HSE’s national service plan has been developed based on the new Sláintecare implementation strategy.