I thank the Chairman and apologise for being late, but I was delayed at a Cabinet meeting. The Cabinet is still meeting to discuss other items, among them the Estimates and the Appropriation Bill for next year.
Before I address the Supplementary Estimate, I will briefly outline the funding position for 2015. Since my appointment as Minister for Health, I have said on more than one occasion that my first priority is to achieve a realistic budget for the health service. I believe we have achieved this in budget 2015, with an increase in the Exchequer allocation of €305 million when compared to the allocation for 2014. We have also identified one-off increased projected revenues of some €330 million and savings and efficiencies of at least €130 million. Taken together, this means that the HSE will have over €750 million more to fund services in 2015 compared to over €300 million less in 2014 versus the allocation for the previous year. This is a significant turnaround.
The total additional funding being sought for the HSE for 2014 is €680 million. However, I intend to allocate savings of €4 million, expected in the Department of Health’s Vote, to meet the HSE's requirements, giving a net cost to the Exchequer of €676 million. While this is a significant amount, it should be viewed in the context of the challenging environment in which health services have operated this year and for several years. Increasing demand owing to demographic pressures, a growing and ageing population, the absolute need to prioritise patient safety, as well as demanding targets for savings and service delivery, has meant that the challenges facing the health service in 2014 were significant from the outset. The service has faced unprecedented challenges for several years as a direct consequence of the great recession. I am pleased that I was able to achieve an increase in the total financial resources available to the health service in 2015, the first increase in funding since 2008.
Daily demands on the health service are enormous and growing. Drivers of demand and cost include our rising and ageing population and the increase in chronic conditions. Advances in medical technology come at a high price. Our progress in the diagnosis of and screening for cancers and chronic diseases means that more people require treatment. Health services around the world are struggling with rising costs and Ireland is no exception. We must recognise the additional resource demands that arise as a result of these new pressures.
In 2015 we will have more control of resources in the health service, with the HSE continuing to develop and strengthen its accountability framework. The management of health spending within available resources next year will require an exceptional management focus, with strict adherence by all services and budget holders to their allocations. At my request, the 2015 service plan reflects a new and enhanced accountability framework which makes explicit the responsibilities of all managers to deliver on the targets set out in the service plan. A balanced score card will be in place against which managers will have their performance managed across the areas of access to services, the safety of these services, finance and the workforce. The new accountability framework describes in detail the means by which the HSE, in particular hospital groups and community health care organisations, will be held to account in 2015.
A key feature of the new accountability framework will be the introduction of formal performance agreements. These agreements will operate at lower levels to underpin and reflect the legislative framework, including the service plan, between the Minister and the HSE directorate. A feature of the accountability framework will be explicit arrangements for escalating actions to address areas of underperformance.
A new service arrangement and grant aid agreement will be put in place for 2015 and will continue to be the principal accountability agreement between the HSE and section 38 and 39 funded agencies.
As I indicated, we have achieved a more realistic budget for 2015. I will insist that, in return, those who hold budget responsibility must plan and deliver services within the resources available. This challenge has been taken up in the 2015 service plan and I welcome the very strong commitment from the director general and his management team to deliver services in line with the resources set out in the national service plan.
The Health Service Executive (Financial Matters) Act 2014 provides for the HSE to be funded through the Vote for the Office of the Minister for Health from January 2015. The return of the Vote will be realised in the context of the 2015 Revised Estimates. This reform requires the establishment and implementation of a new statutory financial governance framework to govern the funding of the HSE and ensure proper controls are in place on expenditure.
I will set out the items which make up this year's Supplementary Estimate, the first of which are the costs associated with increased service provision. Several factors have contributed to the total expenditure overrun of €510 million for service provision, primarily expenditure on acute hospital services, arising from factors such as the growth in emergency admissions, the treatment of more elderly and complex patients and an increase in bed days delivered.
Hospitals are projected to be almost €270 million in deficit by the end of the year. This is the biggest single element of the €510 million deficit. Last year's hospital deficit was €180 million and it was only possible to deal with €100 million of this in setting the budgets for 2014, leaving an ongoing underlying incoming problem of approximately €80 million in 2014. Hospital costs have grown by approximately €72 million in 2014; hospital workload has also grown, with the numbers of bed days and day cases up by 3%, emergency admissions up by 3% and very elderly patients, that is, those aged over 85 years, up by 4.5%. These overruns relate in the main to pay and salaries of front-line and clinical staff, medicines, equipment and devices for hospitals.
There is a projected deficit of some €95 million in the primary care reimbursement service, PCRS. This comprises a deficit of €50 million on schemes administered centrally, including the general medical service payments scheme and the long-term illness scheme, and a deficit of €45 million on locally administered schemes. Local schemes are demand driven and the growth year on year represents growth in key areas such as hepatitis C and HIV drugs administered in a hospital setting and aids and appliances to assist elderly and other individuals to stay at home longer or to enable their discharge from hospital.
In finalising the Revised Estimates Volume and national service plan for 2014 a number of variables, including the unspecified pay savings and decision by the Government to amend the probity target for medical cards, resulted in the amount provided in the subhead for the PCRS being understated by approximately €70 million.
Therefore, while the overrun on PCRS is €95 million, the adjustment required in subhead C1 is €165 million, but this is purely a technical issue. Pension costs, including lump sums, will have a deficit in the region of €30 million. The scale and number of retirements in any financial period is difficult to predict with certainty, and in line with some other Departments with large numbers of staff, additional funding is required to meet the pension entitlements of those retiring. Expenditure on social care services arising from the demand for a range of community supports and services gives rise to a net requirement of €40 million additional funding. This includes, for example, home helps, home care packages, disability services and nursing homes.
Payments are made by the HSE to the State Claims Agency for clinical indemnity, public liability and other awards and settlements. An additional requirement of €54 million is estimated. The estimated cost of the clinical indemnity scheme in 2014 was €98 million. That estimate was based on the reasonable assumption that the High Court, as had been its practice since 2010, would continue to rule settlements for catastrophic injuries on a periodic payment order basis, in anticipation of proposed legislation. However, in the absence of this legislation, the High Court, in a number of catastrophic birth injury cases, did not make settlements on a periodic payment basis and converted previous settlements back to traditional lump sum settlements. This has resulted in an additional €52 million being required in 2014. Legislation on the introduction of periodic payment orders is being drafted by the Department of Justice and Equality. I am informed this legislation will be progressed in early 2015.
In addition to this legislation, health service providers are working to minimise risk and to support an open, timely and consistent approach to communicating with service users and their families when things go wrong in health care. This is called open disclosure. The HSE has developed, in conjunction with the State Claims Agency, a national policy and national guidelines on open disclosure, with supporting documents that include a patient information leaflet, a staff support booklet and a staff briefing guide. The HSE and the State Claims Agency launched these documents in November 2013.
The timing of income collection and working capital requirements associated with prior years results in a further €108 million cash requirement in 2014. During the course of 2014, the potential to achieve significantly accelerated payments from health insurers has been pursued, and this is now likely to take place in 2015. In addition, while the UK receipts are short by €9 million in 2014, an increase from this source is expected in 2015. There are accumulated prior year deficits in the voluntary sector which, although they have no effect on the 2014 income and expenditure position, have an impact on overall cash requirements to the extent that they cannot be fully managed through working capital.
The Supplementary Estimate also seeks an additional €5 million for the early access programme that has been put in place for patients with hepatitis C who require immediate access to new direct-acting antiviral drugs. In layman’s terms, these are oral medicines that eliminate hepatitis C in 90% of patients treated. The early access programme will apply to a group of patients identified by medical specialists in hepatology. Currently, it is expected that 108 patients will be approved for inclusion in the early access programme. It is being implemented now and the HSE is communicating directly with the relevant hospitals and clinicians about reimbursement arrangements. Some €30 million has been provided in 2015 for these new medicines, and the funding sought in the Supplementary Estimate will allow us to prioritise the most urgent cases this year. In fact, the first patients were treated last week. A number of powerful new direct-acting antiviral therapies are being licensed in Europe for people with hepatitis C. As with other countries, Ireland must ensure that access to high-quality treatments such as these is managed in order to prioritise access for patients who can benefit most, while ensuring that the financing model is sustainable and affordable. The aim is to provide access for as many patients as possible as soon as possible.
There has been a continuing upward trend in delayed discharges since the beginning of the year, with approximately 850 delayed discharges reported nationally - the equivalent of a large hospital. There are people, mainly elderly, who have been medically discharged but remain in hospital while they wait placement in a nursing home, or appropriate supports to get home. Clearly this is having a knock-on effect on both hospital emergency department overcrowding and levels of elective admissions, and, by extension, waiting lists. In response to these concerns, the 2015 service plan includes an additional €25 million to help address this.
It includes €10 million to support an additional 300 long-stay care places under the nursing home support-fair deal scheme, which will reduce waiting times under this scheme to 11 weeks. Some €8 million is being provided for 115 short-stay beds, including the opening in the Spring of Mount Carmel as a community hospital for Dublin. An additional €5 million is being provided to support an additional 400 home care packages and €2 million is being provided for expansion of the community intervention teams to deal with 2,000 referrals each year. This involves reducing the need to admit patients to hospital from nursing homes and enabling them to get home sooner by sending nurses to their homes to administer intravenous medicines and carry out check-ups, etc.
Addressing delayed discharges is not a matter that can wait until the new year given, as I speak, the level of overcrowding in our emergency departments. For this reason, I am seeking an additional €3 million for the early commencement of this initiative from December 2014. With the approval of the sub-committee and a little luck we will start to see pressures ease as early as next week.
Given the extent of changes faced by our health services in 2014 the additional funding being requested through this Supplementary Estimate is necessary. Our health service has been through a challenging year. My intention in bringing this Supplementary Estimate is to eliminate the incoming deficit for the HSE as it faces into 2015. This combined with the 2015 budget provision will provide us with a realistic basis on which to deliver existing levels of service next year and to introduce enhancements in some priority areas.
I seek the sub-committee's approval for this Supplementary Estimate for Vote 39.
