Dáil Éireann Debate, Thursday - 13 July 2023
755. Deputy David Cullinane asked the Minister for Health to outline the projected budget overspend in health for 2023; if a financial control framework is in place for 2023, the nature of the framework; if cost-containment plans have been drawn up by his Department or the HSE; if he will list the areas or sections of the HSE in which cost-containment plans have been drawn up; and if he will make a statement on the matter. [35100/23]
View answerBudget 2023 saw a record allocation of €24.0 billion to the Health Vote for 2023, the highest level of funding ever allocated to the Health service and an increase of €1.8 billion (8.2%) above the 2022 allocation, and an increase of €8.0 billion (50%) on the allocation in 2018. This increase reflects Government’s ongoing commitment to resourcing the Health system to deal with a range of pressures and to includes a range of new investments to incrementally deliver on the Sláintecare reform agenda.
However, the system has continued to see significant pressures in 2023 which in turn are having an impact on the overall expenditure position of the HSE. These pressures highlight the need for ongoing structural reform of our Health system, which is a high priority for the Minister for Health and the Government.
Activity levels have remained high across the Acute hospital system through the early part of 2023 but at the same time waiting lists have remained a challenge given the significant impacts of the COVID pandemic over the past 3 years on the delivery of care. This points to a position where there is significant demand for Health services and which is ultimately resulting in increased pressure on and presentations to Acute hospitals as the Health provider of last resort. In this regard, a level of financial risk is acknowledged for 2023, following the need for a large supplementary estimate in 2022 which was allocated to the Health Vote on a non-recurring basis.
This risk, which is presenting mainly within the Acute hospital system, arises primarily because of the following factors:
• The significant service pressures on the Health system noted above have had an impact on the need to deploy a range of service responses (for example the ongoing requirement to procure additional private hospital beds to support access to urgent and time sensitive care) as well as high rates of Agency and Overtime.
• Agency and Overtime have also been impacted by the reduction in working hours as a result of the restoration of Haddington Road Hours to Health staff.
• There are significant price inflation pressures in relation to a range of clinical and non-clinical inputs within non-pay expenditure, such as electricity and fuel, drugs costs, transport costs, food costs, cleaning costs, etc. The HSE has the largest non pay budget (excluding Department of Social Protection) in the public service and is therefore especially exposed to non-pay price inflation factors in the wider economy. These inflationary pressures are causing a number of expenditure categories to run ahead the level of funding provided for 2023.
• In addition to price factors, HSE Acute hospitals expenditure is also driven by increasing activity levels including the level of presentations in 2023 to hospital emergency departments and increased service demands which are driving activity levels and impact on expenditure across a range of clinical non-pay lines including the cost associated with additional volumes of drug prescribing in Acute hospitals (including oncology drugs with a very high unit cost) and higher levels of diagnostic testing than in previous years.
• Finally, the system continues to incur significant expenditure in relation to a range of local measures which were stood up initially to respond to the COVID pandemic. Work is underway between the Department of Health and the HSE to review the continuing need for these measures and to consider the most appropriate funding mechanism for same.
It should be noted that the HSE has a statutory obligation under the Health Act 2004 (as amended) to plan its services in line with the funding determination allocate to it by the Minister. At the same time, it also has a requirement to respond to the Health needs of the population.
The latest recently published Fiscal Monitor figures (see gov.ie - Fiscal Monitor June 2023 (www.gov.ie) detail that Health Vote Current expenditure was €328m above profile at end-June 2023 while Health Vote capital expenditure was €77m behind profile, largely driven by an underspend on the New Children's hospital project.
The drivers of the additional current expenditure incurred this year beyond profile by the Health Vote comprising are all resulting within subheads for HSE current expenditure which collectively were €350m above profile to end June while the other current expenditure subheads in the Health Vote (for the Department of Health costs and a range of other Health funded agencies) were €22m below profile.
D/Health and HSE projections based on the expenditure data trends for the year to date indicate that there will continue to be financial risk for the remainder of 2023, and while this will likely see some offsets arising from the impact of the expenditure management actions detailed below, it is not expected that the savings arising from the measures currently underway will have a material effect on the "in year" overall position.
The projected level of financial risk for 2023 is being continually assessed and revised by the Department and the HSE as the year progresses.
An internal financial management framework within the HSE is in place for 2023 and is supported by a range of expenditure management initiatives which are jointly underway between the HSE and the Department (including but not limited to the expenditure management measures which are detailed in NSP 2023), the aim of which is to manage the overall position and to implement savings and efficiency programmes which will mitigate risks to the Exchequer. The HSE CEO has also recently instituted additional control measures in relation to the recruitment of management and administration workforce within the HSE and has also established a programme to reduce expenditure/dependency in relation to the use of external consultants.
These expenditure management programmes are an important area of focus for the Minister/Department of Health and the HSE Senior management team alike, and there is a clear agreement between the HSE and the Department that our joint efforts to control costs will not impact on patient access to service or waiting times.
The outputs/impacts of these initiatives are subject to external governance processes including the Health Budget Oversight Group where Health expenditure is reviewed on a monthly basis by both organisations along with the Department of Public Expenditure, National Development Plan Delivery and Reform.
