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JOINT COMMITTEE ON HEALTH AND CHILDREN díospóireacht -
Thursday, 27 Nov 2003

Vol. 1 No. 19

Report of Commission on Financial Management and Control Systems in the Health Service: Presentation.

I welcome Professor Niamh Brennan of University College Dublin, Dr. Sean Barrett and Mr. Pat Farrell, chairperson and members of the Commission on Financial Management and Control Systems in the Health Service. I draw attention to the fact that the committee has absolute privilege but that this privilege does not apply to witnesses appearing before it. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the House, or an official, by name or in such a way as to make him or her identifiable.

I invite Professor Brennan to make the opening presentation which will be followed by questions and answers.

Professor Niamh Brennan

I thank the Chairman and the committee members for inviting us here today to tell them a little about the work of our commission and our report. I am accompanied by Dr. Sean Barrett and Mr. Pat Farrell. The three of us represent the 12 people who were members of the commission. Committee members will have a copy of my statement. I understand the protocol is that I should read it out.

We would be delighted if you could summarise it rather than read it.

Professor Brennan

I would like to read it and I understand that is the protocol.

When you present your paper, we can have it taken as read, but if you want to summarise it, that would be helpful to the committee.

Professor Brennan

I may skip some bits, but I would like to read the bulk of it as I would like the committee to be aware of our emphasis on the issues. It is quite a long report and this represents a summary.

The Minister for Finance in his Budget Statement of 5 December 2001 announced the establishment of the Commission on Financial Management and Control Systems in the Health Service. Due to its long title, it has become known as the Brennan commission after the chairman of the group. In his Budget Statement the Minister indicated that the commission would examine, evaluate and make recommendations on relevant financial systems, practices and procedures throughout the health service. The Minister stated: "We must focus on what we are achieving in terms of real outputs and outcomes. Such an approach will help deliver better public services. Increased expenditure is not always enough on its own." In the context of a 125% increase in gross health spending between 1997 and 2002 from €3.6 billion to over €8 billion, the Minister went on to point out the challenge of ensuring that the quality and quantity of services that people receive match this investment.

On 25 April 2002, in consultation with the Minister for Health and Children, DeputyMartin, the Minister for Finance formally established the commission. It was asked to report in a fairly short timeframe, by the end of 2002. The commission was comprised of 12 people. As it had a strong managerial remit, members tended to have a managerial or financial background. Notwithstanding media comment at that time, only four of us were accountants. Two members were former chief executives of hospitals, one was a journalist with personal experience of health services in several EU countries and another member was a medical card holder.

The commission met formally 18 times and held its final meeting on 31 January 2003. Submissions from a range of 46 interested parties that might reasonably be expected to have a substantive contribution to make to the commission's deliberations were invited. In all, written submissions were received on behalf of 20 groups. In addition, the commission met representatives of the chief executive officers of the health boards, a delegation from the Irish Hospital Consultants Association and the Comptroller and Auditor General.

The commission was given eight terms of reference. These could be described as narrow and focused on financial management issues only. However, when we interpreted these narrow terms of reference, we took a broader perspective than many people would have anticipated. Structural and organisational issues were addressed because we felt that if this were not done, we could not make recommendations that would bring about the improvement in the management of the public expenditure mentioned in the Minister for Finance's budget speech. These structural and organisational issues are absolutely central to value for money in the health service.

In making our recommendations, two groups were to the fore in our deliberations. First and foremost were patients. In making our recommendations we were careful not to compromise service to patients and other service users. Quite the reverse is the case. We are confident that our recommendations will be good for patients, for reasons I will outline.

The second group to the fore in our deliberations was taxpayers. The standard of accountability taxpayers are entitled to expect from a public service is the same as they are entitled to expect from a publicly quoted company, a plc. Both the public service and a plc do the same thing. They take other people's money, whether that belongs to shareholders, customers or taxpayers, and spend it. However, there is one significant difference between shareholders in a plc and taxpayers. If plc shareholders do not like the standards of accountability, they can sell their shares and buy into another plc. Taxpayers have no such option. Therefore, the State and its public servants owe taxpayers the highest standards of accountability and value for money. When it comes to the treatment of public patients, it is essential that we have the highest assurance that moneys earmarked for treating such patients are spent in that way and are not wasted.

Unfortunately, in many aspects of the health service the commission examined low standards of accountability were found. We were in no doubt that all concerned want to do the right thing and are very committed to the service. However, the old adage, what gets measured gets done, needs to be more to the fore in ensuring that the service delivers what the patient, taxpayer and Government expect from a modern 21st century health service.

It is, and always will be, a fact of life in the health service - no matter which country one examines - that there will never be sufficient financial resources to treat all the patients in the ideal way. Given that financial resources are a limiting factor, it is obvious that if these resources are managed to best effect, more patients can be treated for the same amount of money - to use a colloquialism, that we get "more bang for our buck".

The amounts being spent on our health services are enormous - as the following brief statistics reveal, based on 2002 figures. Health services cost over €2,000 for every person in the country; each income taxpayer at that time paid on average €6,800 for health services; expenditure on health as a percentage of national spending had increased from 19.2% in 1997 to 22.8% in 2002; gross expenditure on Ireland's public health system more than doubled - an increase of 125% - between 1997 and 2002, from €3.6 billion to €8.2 billion; gross expenditure by 2003 is over €9 billion and by 2004 will be more than €10 billion.

In our report, we examined increases in funding in a range of areas of the health service for the period 1997 to 2002. This shows that in areas such as hospitals and the GMS, funding had more than doubled with other areas recording even larger increases. This increased expenditure was accompanied by an increase in output, although we question whether the increase in output was commensurate with the increases in resources going into the health services in that five year period.

I have listed quite a number of statistics but I will only go through a few of them. For example in-patient discharges increased by 4% from 536,236 in 1997 to a projected 557,130 in 2002. In fairness, it should be pointed out that in-patient beds available to the system only increased by 3% from 11,861 to 12,200. The biggest area of increase was in day patient activity which was up by 65% from 249,472 in 1997 to a projected 410,481 in 2002. The rest of the list shows that there were other areas which had substantial increases.

Taxpayers do not necessarily resent paying on average €6,800 per annum of their money on treating patients. They do resent their money being wasted. Therefore, before taxpayers are asked to spend even more money on the health services, they are entitled to expect that the money is well spent. Given the importance of the health service in the life of the country and the sums of public money involved, it is imperative that health service organisations and agencies have financial processes that are efficient, modern, transparent, geared towards service provision and based on value for money principles. This is an issue not just for management and value for money cannot work in our health services unless medical decision makers, in addition to managers, embrace this as part of their responsibilities.

The Brennan report was published on 18 June 2003. I am proud of this so the committee will excuse me bringing this small detail to its attention: consistent with its value for money remit, the report generated a small profit for the State because the entire print run of 2,200 copies was sold out by the end of July 2003, a unique experience for Government reports.

It is next only to the report of the Flood tribunal.

Professor Brennan

Yes, but there were not such big queues. Hard copies are no longer available, but it may be accessed on the website http://www.finance.gov.ie/publications/otherpubs/brennan.pdf.

The commission found problems in the financial management in many aspects of the health service. One of the most contentious aspects of our deliberations was that we decided to document these problems in Chapter 2 of the report, not for the purpose of causing offence to the many excellent people working in our health service but to highlight the problems in such a way as to create a compelling case for change. By documenting some of the areas where we found inadequacies we felt we would be creating a compelling case for change which would make the report's recommendations more likely to be implemented. Problems included poor planning, unauthorised expenditure, accounting deficiencies, inadequate records and vouching.

For example, under the heading "poor planning", the extension of medical cards to all people over 70 years of age is a stark example of totally inadequate planning and costing. The decision was made at very short notice. It was initially estimated that there were 39,000 over-70s and, based on this initial estimate, costs were projected at €19 million. The actual number turned out to be 77,000 - almost twice the initial number estimated - and the cost is now estimated at €51 million, over 2.5 times the original projected cost.

Other knock-on problems soon surfaced. The extension of medical cards to the over-70s was announced without the prior agreement of the Irish Medical Organisation and the Irish Pharmaceutical Union. The Department of Health and Children eventually had to agree a capitation rate with the Irish Medical Organisation for those covered by the new scheme. The rate for non-means tested medical card holders is a multiple of the fee paid for pre-existing means tested medical cardholders aged 70 and over. As of 31 December 2001, the annual capitation fee for medical card holders aged 70 and over varies from €95.43 to €160.58 for males and from €106.11 to €171.33 for females, and a number of factors affect that rate. The capitation rate for the newly eligible, non-means tested service users, aged 70 and over, is €462, and €669 for those in a private nursing home.

Another example of totally inadequate planning and costing is the child care workers pay deal in 2001. The original estimate of the cost was €4.7 million. The actual cost was €11.4 million. The knock-on effects to linked grades is expected to be an additional €34 million to €38 million per annum. The total eventual cost is in the range of €45 million to €50 million, with some arrears due to be paid on this deal as well.

Estimated spending overshoots in 2002 on the General Medical Services scheme, are €183 million on a budget of €739 million. That is a 25% overshoot. We acknowledge that this is a demand led scheme. For that reason it is difficult to forecast costs but the extent and systematic nature of the underestimation of costs surprised us. We analysed the five year period, 1997-2002 and found that the estimated average annual increase in the General Medical Services amounted to 6.8% in the Book of Estimates. However, the actual average increases in costs were in excess of 21% for the same period. The discrepancy between what was in the Book of Estimates and the actual result over the five year period was getting worse.

On unauthorised expenditure, we found contractual commitments of health boards in 2000-01, included approximately €115 million not approved by the Department of Health and Children. We found that charges for treating private patients in public hospitals were not properly imposed or collected. For example, in excess of €1 million in private patient charges recoverable from insurance companies were not billed by one hospital to the insurers because the hospital consultants had not supplied the necessary information. The patients of three consultants accounted for almost half of the outstanding €1 million. We examined the audit reports of eight health boards for the three year period 1998, 1999 and 2000, in other words, we examined 24 audit reports.

The Comptroller and Auditor General can raise concerns in two ways - less serious issues are set out in a management letter which is not made public and serious issues are identified in the audit report which is made public. The Comptroller and Auditor General reported serious accounting deficiencies in 11, or 46%, of the 24 audit reports. Examples of accounting deficiencies found by the Comptroller and Auditor General include audit backing documentation not being available to substantiate a debt to a health board of €356,541 and its related bad debt provision of €273,730. Another example is cheques totalling €273,732 drawn by a health board and recorded as expenditure in the board's financial statements had not been issued to payees. The Comptroller and Auditor General reported that there were serious inaccuracies in the financial statements of a health board for 2000. As a result of having to identify and correct these deficiencies, there was a significant delay in completing the audit of these accounts.

To those who are not involved with financial statements, this may not seem much, but timely reporting is an absolute sine qua non of good standards of accountability. The Comptroller and Auditor General is reporting that he could not prepare a timely audit as the financial statements were so poorly presented to him. He found evidence of overpayments in salaries and wages which I have documented. One overpayment was €115,429. The largest of these was an overpayment of €23,000 to an individual over a ten month period. These examples, on their own, may seem small to the members of the committee but they imply that the controls in the system are lacking if these kinds of errors are taking place.

Included in the accounts of another health board are county council - therefore State - debtors of €411,653.42. Of this balance, €383,320 relates to pre-1997, which raises the question whether the health board could collect the moneys from another State agency. There is something odd about that.

A health board purchased a site at Ballinamore for €350,000. A note from the board's solicitors dated 23 July 2001 stated that the purchase was still not complete because of problems over title. A cheque for this amount was still outstanding and had to be reissued to the vendors of the property. The Comptroller and Auditor General raised the question - think of this in terms of buying a house - why a cheque for €350,000 was issued prior to clearance of title.

The example that I give to many of my students in UCD is that a health board produced financial statements to the Comptroller and Auditor General which contained an error on the bank reconciliation. The bank reconciliation is one of the most basic and fundamental controls over cash in an organisation. The bank reconciliation error was over £6 million. That speaks volumes about the standards of accountability.

The members will also be aware that the Comptroller and Auditor General has also drawn our attention to the fact that in the General Medical Services scheme there were a potential 8,000 duplicate medical card registrations and a further 28,000 people with no pharmacy claims. The lack of pharmacy claims points to doubts about whether the person still exists. As the members know, this has been referred to as the problem of ghosts having medical cards.

Many of these problems arise, not because people have made mistakes but because of fundamental structural weakness in the system, including management and control of services and resources being too fragmented. How did this happen?

Recognising that its job was not to manage the health services on a day-to-day basis, the Department of Health and Children over the years established agencies for this purpose when the need arose. As a result, there are 65 different agencies managing health services. There was no head office in charge, in day-to-day management terms, of these 65 agencies. This proliferation of agencies leads to inefficiencies in that, inevitably with no head office, they do not all sing from the same hymn sheet.

There is no one person or agency with managerial accountability for how the executive system performs. We recommended a chief executive with overall responsibility for day-to-day management of the health service should be appointed. I sometimes refer to this, colloquially, as needing a conductor for the orchestra. Systems are currently not designed to develop cost consciousness among those who take the decisions to commit resources where systems provide no incentives to manage cost effectively. Currently those who make decisions to commit resources - mainly consultants and other medical practitioners - are not accountable for delivering the outputs. Currently the usefulness of data for resource management and for strategic planning purposes is limited because doctors treating the patients are not interpreting the data and patient cost information is not available. Such data are essential to any review of the system of allocating funds or in deciding where the most cost effective treatment can be obtained for various conditions.

We also made a substantial range of recommendations on governance, financial control, risk management and performance management. We found that the capacity of existing systems to provide relevant, timely and reliable information for linking resources to outputs or outcomes is severely limited. We found that there is insufficient evaluation of existing expenditure, with all the focus on obtaining funding for new developments. We also found there is inadequate investment in information systems and management development. Those were the problems we found and we bring them to the attention of the committee to create a compelling case for change.

In arriving at our recommendations, we applied four core principles: first, the health service should be managed as a national system; second, accountability should rest with those who have the authority to commit the expenditure; third, all costs incurred should be capable of being allocated to individual patients - in other words, we should know how much it costs to treat an individual patient; and, last but not least, good financial management and control should not be seen solely as a finance function.

The third principle - allocating costs to individual patients - is worth further elaboration. It is fundamental to the clinical autonomy of doctors that they treat patients as they think best, consistent with best clinical practice. All taxpayers want their loved ones to be treated in the best way possible regardless of cost. This principle should never be compromised, even if it costs the taxpayer €1 million to treat a single patient - during our deliberations we heard that there was a patient in the health services whose treatment cost that amount, and that is as it should be.

Consultants conducting routine operations such as hip replacements should know what the treatment costs. They should know that the same routine operation costs consultant A twice as much as consultant B. The more cost effective consultant, consultant B, would then be entitled to demand more resources for his or her practice because he or she is so cost effective. Consultant A, the less cost effective consultant, would perhaps then look at his or her own medical practices to see could the procedure be done in a more cost effective way.

We made 136 recommendations, the main ones being the following: the establishment of an executive to manage the health service as a unitary national service; the implementation of a range of reforms to financial management, control and reporting systems to support the executive in the management of the system; a written code of governance for all agencies in the public health sector; the designation of clinical consultants and general practitioners as the main units of financial accountability in the system; substantial rationalisation of the 65 existing health agencies; all future consultant appointments should be on the basis of contracting the consultants to work exclusively in the public sector and the duties of consultants under the existing contract be made more explicit; a range of measures that would make the costs of treating private patients in public hospitals more transparent; greater involvement of consultants, the key decision makers, in hospital management; reform of the medical card - GMS - scheme to include a practice budget for all GPs, monitoring of activity, referral patterns, etc., and the process of evaluating not only the clinical but also the cost effectiveness for the publicly funded drug schemes.

Nearly all of these recommendations are relatively straightforward ordinary measures which are a normal feature of many private sector organisations. What is extraordinary is that they are not currently a feature of our health service.

In the case of companies in the private sector, the Director of Corporate Enforcement has the function of investigating and prosecuting breaches by companies of their statutory obligations. The Companies (Accounting and Auditing) Bill 2003, currently going through the Oireachtas, proposes that directors of companies be required to sign a compliance statement that the company complies with its statutory obligations. This begs the following question: if such a regime is appropriate for the private sector, surely legislators should consider applying similar, but appropriately adapted, arrangements in the public sector, particularly in the public health sector? We have recommended that consideration be given to establishing similar enforcement arrangements for corporate bodies in the health sector.

The chief executive of the new executive will carry considerable responsibilities. Taxpayers and, more importantly, patients are entitled to expect a first class health service. For this purpose, a first class chief executive is required. Accordingly, the commission recommended that recruitment of the chief executive officer of the new agency should be by means of an international search and select process. To attract first class managers we must be prepared to pay the market rate, following private sector norms. Pay and conditions for this position will need to be different to those traditionally applying in the public sector.

We were conscious of the evidence that reports for Government do not always get implemented and we tried to think of ways that would make our report as implementable as possible. One of our actions was to include an addendum to the final chapter, the implementation chapter, in which we summarised the 136 recommendations. For each of those 136 recommendations, we identified the information technology implications of the recommendation concerned, which was a crude proxy for cost of implementation. For every recommendation we provided a column which indicated the timeframe for implementation and we set out the timeframes for implementation.

On recommendations for immediate implementation, using Mr. Pat Farrell's term "quick wins", we identified that one could make immediate changes in 51 of the 136 recommendations, that it would take a year or less to implement 13 recommendations and that 72 of the recommendations were for the longer term.

Of the 136 recommendations, only 17 have IT implications. Of these, 13 can be begun without IT expenditure, but they cannot really be implemented in a first class way without having first class IT facilities. Four recommendations would have significant IT implications. Overall we felt that the recommendations could be implemented within a two year timeframe.

On the key to implementation, we heard evidence of other Government reports in the health sector not turning out as well as might have been expected. The reason for this was that a piecemeal selective approach was taken to implementation and what was implemented in the end was not what was recommended in the first place. We would be strongly of the view that cherry-picking will not solve the issues. Unless the substantive recommendations are addressed, cherry-picking will not really make the kind of difference we believe can be made.

Given our concerns and pending establishment of the executive, we recommended that a high level and well resourced implementation committee be established. Critical to implementation of substantial change in any organisation is one person to drive the change. For this reason we recommended that an independent person be nominated by Government to chair the high level, well resourced implementation committee. We had in mind somebody who was outside, and independent of, the health service because we felt that anybody currently working in the health service might have conflict of interest issues in implementing some of our recommendations. We also had in mind somebody who has experience, in their other life, of change management in large organisations, somebody of character, substance and backbone. Such a person would be very proactive, would drive the change and would be able to stand up to the natural resistance to change that is an inherent element of any change programme in any sector.

The scale of change, we feel, requires a full-time commitment from some outside person. We certainly heard plenty of evidence that those currently in the system are more than overworked and somebody in the system currently really would not have the time to be 100% devoted to driving the change. We recommended that the implementation committee would hand over to a board of the new health services executive within two years. Again we believe a two year timeframe is reasonable.

I thank the committee for listening to me and to the commission's views. In conclusion, I acknowledge there is no magic wand to solve all the complex problems of the health service but we believe that if our recommendations are implemented, they will bring about significant improvements which will lead to better delivery of services for patients and also better value for money for the taxpayers. Our recommendations will be good for patients because more of them could be treated for the same amount of money, which will always be in limited supply.

Thank you, Professor Brennan. May I open the questions by asking two pertinent questions? I note that in the report the commission talks of management structures, the inadequacy of the system itself to deliver a coherent and accountable service. Was it the view of the Brennan report that there was a real lack of management flair within the system itself and even under the new regime being put in place, can the commission be confident that the management structure already in place can deliver the type of accountability, good management principles and practices which the report wishes to deliver?

My second question relates to the level of IT expertise within the system itself. I happen to be a member of the Committee of Public Accounts and I have seen reports every Wednesday, many of which emanate from the various health boards. One striking aspect of such reports is that there is a massive difference between the level of compatibility between the Department of Health and Children and the health boards, and the level of expertise in, and availability of, IT within the health boards. Is massive investment what is envisaged by the commission overall in order to achieve that compatibility between the new executive to be set up, the new hospital structures and the organisation itself?

Professor Brennan

You asked was there a lack of management flair currently in the system. I suppose we would express it somewhat differently. There is a lack of integration of managerial activity in the system and many of the existing agencies are operating independently of one another. It does not follow that within each individual agency there is bad management per se but there is not enough integration to deliver a coherent managerial response, and that is really where we felt the biggest problem lay. On the changes we are recommending, in particular the establishment of the new head office, the main job of the new head office would be to bring about an integration of the existing managerial structure so that, in terms of delivering Government policy, the delivery and service to consumers is more consistent than is currently the case.

You asked if we are recommending a massive IT investment. We recommended that the IT investment be accelerated because it is already a feature of existing Government policy that the level of spending on information technology be increased substantially, and we have recommended that that increase be accelerated.

If you are a member of the Committee of Public Accounts, Chairman, you probably have seen examples of where it has gone wrong as opposed to right. In making recommendations on IT, we have recommended that a very rigorous and disciplined process be followed in spending on IT and that we get it right. Getting it right means that one plans very carefully beforehand. Prior to spending any money, one makes sure that one plans what one is going to do, that one has planned to have the experts in place to do what one wants to do, and that one plans to change the organisation in a manner that delivers the benefits which one would expect from an IT spend. We did see some evidence that where IT spend had taken place, the management structures had not been changed and one was running the kind of old managerial structure with this new IT system in parallel, and of course the IT system was not delivering the benefits in those circumstances.

Mr. Pat Farrell

Chairman, I worked in the public health service for over 12 years. My own view would be that the service - I do not confine this to management but across all of the professions - works extremely hard to deliver the very best services it can within a structure largely enabled by legislation dating from 1970. The health boards came into being in 1971, nearly 33 years ago, and that is a problem. Generally, the structures and the systems for management information need significant review and upgrade. If one thinks about the scale of change in Irish society over those years, one will see that the population has changed significantly, we live in a multi-ethnic society and there are changes in the demographics. All manner of significant developments have occurred which have serious implications for the health service and how it is delivered. It is about having a strategy. It is about investing in management development because the people and the talent are there. It is about giving them the management information systems to allow them to make informed decisions about how resources are allocated and it is also about ensuring that the people who actually make the decisions to allocate the resources understand the financial implications and that they are accountable for them.

Dr. Seán Barrett

On your question about management, Chairman, I refer members to page 97 of the commission's report where we recommended that the common recruitment pool at managerial level should be examined "having regard to its appropriateness to a modern public service environment, the inflexibilities it engenders and the capacity of the system to attract graduate, professional and other managers to the health service". That is an agreement which dates back to 1970. In the social partnership agreement and in benchmarking, it should be examined as a serious barrier to recruiting the kind of talent to which you referred in the question.

The other part of our report that refers to your question is where we state, on page 105, that the internal audit was "underdeveloped and generally regarded as a backwater operation" for the expenditure of €10 billion. Obviously safeguards need to be put in place there. As a brief comment, the Comptroller and Auditor General, at the Committee of Public Accounts, has been trying to make some of these points and they are very urgent in the case of the health service.

I thank Professor Brennan for her presentation, welcome the members of the commission to the committee and congratulate Professor Brennan on her appointment to the Health Service Executive. I am sure she is aware it has all the potential to be a poison chalice, but I do wish her well with the work.

Of my two questions, one relates to the structures recommended in the report. On the day the Brennan report was published, the Prospectus report was published and the Minister also published his distillation of the two reports in terms of the structures he proposed setting up. Some of the recommendations in Professor Brennan's report were taken on board but some were not; I am particularly thinking of those relating to the health boards, for instance. One of Professor Brennan's core principles is the issue of accountability. Does she think that the provisions in the structures which are proposed for accountability are sufficient and will they guarantee accountability, particularly at the point of delivery of the service at local level? I agree completely that there was a need to rationalise many of the agencies, but we are replacing the many health boards now with a single, central, monolithic health care provider. Does she necessarily think that this will be more efficient and cost effective given that it is against the run of play in what has been recommended in other areas like Aer Rianta and CIE?

My second question relates to an area where the Minister did not seem to endorse one of the Brennan report recommendations or at least has not articulated that he has, which has to do with the recommendation on "public only" work for consultants in any future contracts. Does the Minister intend to proceed that way?

In making that recommendation, I understand the value for money and equity arguments. Given that 45% of the population depend on private health care and private health care will effectively die in Ireland if there are no consultants available to it because the only way one can become a consultant in this country is by public appointment, under these new structures will the system be able to absorb all of these patients as public patients? Furthermore, does she think the hospitals, which depend greatly on the income from private health insurance, will be able to survive without that money? It is the only way the hospitals may earn additional funding and that is why they have facilitated private work to date. Does she think the public system will be able to provide that money which is now coming from private health insurance?

I will pool a number of other questions from Deputy Devins, Senator Henry and Deputy Cowley.

I also welcome Professor Brennan and her colleagues and thank them for the comprehensive report. The publication of the report was rather akin to the American expression used during the Iraq war, shock and awe, as there was a sense of shock among the general public at the terrible indictment of some of the existing management structures in the health service.

I want to make a few comments and ask one or two questions. In many ways it is interesting that the commission recommends that the main units of financial accountability in future will be the individual clinicians. Those of us who have passed through medical school, granted a number of years ago, received no financial training whatsoever. Has that changed or are there any courses available for medics or would be managers in health service areas?

On the report's recommendation about a practice budget for each general practitioner, I would be interested in the commission's opinion on the drug budgeting scheme as currently operated. Like the commission, everybody was shocked at the awful underestimation of the cost of the service for those over 70. Does Professor Brennan know of any reasons for this? From a cursory examination, it would appear that it would have been simple to calculate how many people were over 70.

Like Deputy Mitchell, I wonder how realistic it is to expect consultants to work solely in the public sector. It is a move which is badly needed but I would have grave doubts whether it would be successful ultimately.

There is a small point about the drug schemes which Professor Brennan might clarify. The commission worked out that the average cost was €371 in the GMS drug scheme and €890 in the DPS scheme. She might clarify something which has been raised with me - that the methodology for the calculation of either scheme was slightly different. In the GMS scheme the commission apparently calculated the figure as the total cost divided by the total number of patients eligible whereas in the DPS scheme it calculated the figure as the total cost divided by the number of actual applicants, not by the number of people eligible. Perhaps she might explain why that was so.

Having worked for 35 years in the health service, a great deal of this is not a surprise to me. The one point I would highlight is that Professor Brennan stated that Government reports frequently are not implemented. I can think of very few that I saw implemented.

My first point is about the ghosts. Yesterday I had lunch with a colleague who has a small GMS practice. Everyone was contacted during the summer and asked to go through their lists and be sure that those who were dead were removed from the list. My colleague replied sending in two names and last week she was asked to vaccinate them against the flu. Apart from going in and taking them off herself what is she supposed to do? This is a small list of only two patients, so one can imagine how general practitioners with bigger lists are managing. The criticism of general practitioners about the ghosts on the list has been very unfair because many of them do try to do something about that.

I am very interested in what was said about the pricing with consultant A and consultant B. This is very important but quite difficult to assess, and it would be wonderful if those who did have savings in the way they treated patients were allowed to use the resources saved. This has always been a terrible problem. If one did not spend one's budget by the end of the year it was considered a waste of money even though some of it may not have been well directed and could have been very useful for the following year. One must look at such things as the cost of readmission. We had trouble in one hospital here where one consultant was said to keep people in hospital longer than his colleagues, but his readmission rate was then found to be much lower. That is extremely important.

There is a huge increase in the money being spent on the health service but about 70% of that has been on well deserved wage increases. These have been agreed by the Cabinet, not just the Minister for Health and Children. Other things are pointed out in the report, like the fact that the cost of 76 oncologists is enormous. Around 20 years ago I do not think anyone with leukaemia survived. Nowadays 70% would, but at huge cost because chemotherapeutic drugs are enormously expensive. I know of an oncologist appointed in one area who had neither beds nor facilities made available to him for three years. It is an appalling waste of money and planning.

The range of different health agencies is a nightmare to try to work with because one is sent from one to the other without ever getting a satisfactory outcome. As others want to ask questions, I shall finish with a final point. Professor Brennan talks about poor planning with the over-70s medical card scheme, for example. This takes place on a daily basis. At the moment the personal injuries assessment board legislation is going through the Houses of the Oireachtas. It has just gone through the Seanad and I asked who was to write the medical reports. It had not been decided before the legislation came before the Houses who was to write the medical reports and had not been clarified whether it would just be general practitioners. In the end it appeared that general practitioners, other doctors, chiropractors, acupuncturists, herbalists or anybody could write the medical reports.

That sort of planning is terrible and nobody had contacted the Irish College of General Practitioners or the Irish Medical Organisation's general practitioners committee until I got onto them last week. Legislation published on a Tuesday that comes into the Seanad on a Thursday and then must be sorted out for Committee Stage on Monday and Report Stage on Tuesday is bound to contain flaws. This sort of thing goes on all the time.

Final questions on this module.

I too welcome Professor Brennan. It is a very serious report. I have often talked about the Heinz 57 varieties-like collection of agencies for health services. There are actually 65 so it even surpasses Heinz. What Professor Brennan says is very true. The report outlines financial transparency, better systems and better IT systems. I know this represents only 0.5% of expenditure whereas in other countries six times that is spent on IT. Canada spends €50 million on IT. Therefore, there is certainly a lot of material that is very important.

I would introduce a note of cynicism because we are always hearing about this black hole in health expenditure, particularly from the Department of Finance, but I question this. Professor Brennan maybe perpetuates this notion not directly but in talking about value for money. This is very important but let us put it in context. For all the talk of investment we only invest 6.8% of GDP in health. Compare that to an EU average of 9.3% and 12.9% in the US. It is only now that we are putting money into the health service and we are playing catch up. That is well recognised.

We have 14 hospitals per one million people compared to 25, 26, 27 or 28 in the UK, USA or wherever. We are really not there yet but we are talking about cutting back more beds, hospitals and so on. I ask how the Brennan report will address the crisis in the health service where we have all these trolleys in corridors. I know the professor is talking about better value for money but we need a lot more money. We do need value but this emphasis takes from the main point - that we do not have enough money in health. There is a lack of finance. How does one pay for the beds, the consultants we do not have or the lack of capacity? The problem has been a lack of finances in the health service. There certainly has not been value for money, as the professor clearly outlined, but the big problem is lack of money.

I was very interested in what Professor Brennan said about the budgets for GPs. Will this be a capped budget to decide what GPs will spend and that is it, or will budgets be provided for GPs to deal with chronic diseases and look after warfarin patients, for example, which is not possible at the moment? I am very interested in the proposal if the latter is the case. The professor also talked about ghosts; she would get on the wrong side of GPs by talking about that because it displayed an ignorance of the system, if I may say with respect. GPs do not know who they are getting paid for. The bill comes out at the end of the month but without the names of actual patients. GPs do not know that.

According to an audit that has been done, it takes 178 days to apply a new born to a GP's list. GPs are supposed to backdate this but they do not. It is the same with 16 year olds; it can take several weeks to find that a person of this age is off a GP's list. Thus, it works both ways, and what the professor said about ghosts put the spotlight on GPs in a very unfair manner.

I hope the professor will look at the way GPs are paid also. The expenses of GPs are enormous. Senator Henry mentioned the 70% of spending increases going on the wage bill, which is a massive cost to the health service. Why not think about allowing GPs to be paid on expenditure just like politicians? I discovered a whole new horizon in that regard when I entered politics. Doctors are given a sum to run the whole health and primary care service in their areas and people think they are getting an awful lot of money, which is ridiculous. Why not pay us expenses separately? We would be quite happy with that.

Regarding the waiting list initiative, I would love to hear Professor Brennan's opinion on this in terms of value for money. Some €246 million allocated to cut hospital waiting lists cannot be accounted for because of mismanagement and bad practice, according to a Government watchdog, the Comptroller and Auditor General, Mr. John Purcell. Would there not be much better value in giving that money to local hospitals to build up services?

In our area, where there are consultants there are virtually no waiting lists whereas people must go to Galway for urology, which means waiting five years for an operation that takes about 25 minutes, with people having to get up five times at night in the meantime. It would be a lot more rational and of greater value to put the money into local services instead of this gross centralisation.

That is a difficult one, we have gone from profitable ghost patients to renegotiating GPs' salaries. I will leave it with Professor Brennan.

Professor Brennan

I do not know where to start because I think I have been asked questions on the entire report in one go. I will just address a couple of points myself and allow my colleagues to add whatever commentary they would like.

We have a difficulty as a vote has been called and we will have to suspend for 15 minutes. In case of other votes I will try to arrange with the Chief Whip that a number of us can pair in order that there will not be further disruption.

Sitting suspended at 10.50 a.m. and resumed at 11.06 a.m.

Professor Brennan has had a lot of time to go through all those questions.

Professor Brennan

I am still left with the fundamental problem, which is that I have been asked so many questions, I do not know where to begin. I will deal with one of them being entirely motivated by self-interest. Deputy Devins said there is little formal training for medical students in the area of management. The faculty of commerce in UCD, of which I am a member, has a joint Master of Business Administration degree in health services management with the Royal College of Surgeons. Therefore, there is a good postgraduate qualification available to anybody working in the health service, specifically on health services management.

I refer to Deputy Olivia Mitchell's comment, because it is not the first time it has been made, on our recommendation being, in effect, a single and central monolithic health provider. I do not think that is the model we have in mind. The model we have in mind is a typical corporate model. If this model is appropriate——

As there is another vote in the House, we must suspend.

Sitting suspended at 11.10 a.m. and resumed at 11.40 a.m.

I hope Professor Brennan will not be interrupted this time.

Professor Brennan

I want to pick up on a couple of points. So many questions were asked that it would be difficult to cover them all. I would like to answer Deputy Mitchell's question on whether the new executive would be a single central monolithic health provider. This is not the model we had in mind. We looked at the most successful organisations in the world and decided that if their structure was good enough for them, it is good enough for our health service. We want a first class service, therefore, we want a first class structure from which to deliver that service. The model we recommended is a typical corporate model followed by the best organisations in the world, where there is a head office or parent company and then a number of subsidiaries. That is not a model of centralisation. It is a model where decisions are taken in the appropriate place. Some decisions are most appropriately taken in head office. These include decisions on matters such as information technology in order that we have the same system for the entire sector. These decisions should be taken centrally. Decisions on personnel issues would normally be taken centrally. Other decisions will and should be taken at local level, and are appropriate for local level. Decisions need to be made where the service is delivered locally. We are not recommending a centralised monolith. We are recommending a flexible structure where decisions are taken at the appropriate level.

The second point to which I would like to refer is the issue of general practitioners. Those who commented on what I said were not there when I said them, therefore, they do not know for certain what I said. They are basing their comments on what I was reported to have said. On the ghosts and general practitioners, I said that the problem had nothing to do with general practitioners. They did not cause the problem. They are not responsible for the problem. It was a management problem at record keeping level. The GPs are not responsible for this. My remarks became a bit more contentious when I said that if evidence was produced that they had been overpaid, then they owed back the money.

Mr. Farrell

Deputy Mitchell asked whether the new structure will guarantee accountability. The proof of the pudding is in the eating. I believe it will guarantee accountability because the basic problem is the proliferation of agencies, 67 in all. They got bolted on over the years as various issues arose and problems developed which had to be dealt with by a specialist agency. The problem now is that there is an amalgam of agencies. Having one clear line of accountability, namely, the Health Service Executive Agency, I hope will mean that we will be guaranteed more accountability. There will be clear roles and responsibilities. A number of things need to happen. The system must provide the information to allow people to make informed decisions on what their actions will cost and the trade offs if they wish to prioritise one area against the other. That information support is not available to the level it should to allow these decisions to be made in an informed way.

On the question of practice budgets, we do not anticipate that everyone will become a rocket scientist in finance. However, it would require structural support to be put in place, with clinicians, either at general practice level or in hospitals, where the people who work to them would supply them with the quality of financial information they need to support them in taking responsibility for the financial expenditure generated as a result of their clinical practice. I agree with Senator Henry that if they save money, it should be put back into the system to treat more patients or improve the service.

Will Mr. Farrell comment on the drugs budgeting scheme?

Mr. Farrell

On what specifically?

That operates on the principle that one has a budget for drugs. If one were to spend less than the agreed budget, the money can be drawn down for practice development. This is already in existence. Did the commission look at this aspect?

Mr. Farrell

Not specifically. However, the principle is a good one. Deputy Devins asked about the calculation. I do not have the answer to this. One must supply one's own answer. It is a relatively straightforward calculation to decide how many people are over a particular age and then calculate the mathematical cost. Clearly that did not happen in this case. This signifies the nub of the issue which is that there needs to be a much sharper focus on accountability and how money is spent. We found no evidence of wilful malpractice or fraud. The system is not sharp enough to follow the money and ensure that we get value for it. That is the core of the issue.

Deputy Cowley asked how our report would solve the problem of patients on trolleys. He presumed that we want no more money to be spent on the health service. We did not say that. We did say that it was up to legislators, in the name of the people, to decide how much money is allocated.

Does Mr. Farrell recognise the black hole that his organisation is permitting?

Mr. Farrell

No, we believe that the system must change fundamentally in terms of being able to account for moneys spent. At present there is insufficient information on how it is being spent. On many occasions we have instanced, chapter and verse, the evidence to prove that. The Comptroller and Auditor General and a variety of sources provided the evidence.

Since he carried out an examination Mr. Farrell should be able to say whether the health service is underfunded. I maintain that it is. There is a lack of revenue. I agree that there needs to be value for money.

I must ask the Deputy to stop because we could have a Second Stage debate on the issue.

Dr. Barrett

After we finished our work an article by Colm McCarthy and John Lawlor was published in the Irish Banking Review. Felix O’Regan is the editor. I have asked the secretary to circulate the article.

Mr. McCarthy's statistics show that €2,304 was 35% above the EU average spend of €1,711per capita on the health service. The GNP share of 8.6% is the highest in the EU and 20% above the EU average of 7.1%. Research suggests that about 400,000 people, who are now in their eighties, left Ireland during the recession in the 1950s and live in England. Therefore, we should enjoy a demographic bonus of 2.9% of GNP because old Irish people are part of the UK’s NHS rather than here. There is money available and it is above the international and EU standard. I am concerned about how the money is being spent.

Dr. Devins mentioned that doctors try to do financial work and suggested they should undertake Dr. Brennan's course in UCD. In a country where 64% more people or 1.8 million people are working now compared with just 1.1 million back in 1987, the restrictive practice of preventing people with 580 points in their leaving certificate from joining medical schools in Ireland must be questioned. We tried very hard to get international comparisons from the Department of Health and Children. I did get figures from the OECD. Ireland has 2.3 doctors per 1,000 of population, in the US it is 2.7 doctors and the average for the OECD is three doctors. Not only have Irish medical schools been turning away highly qualified people who would like to study medicine, and would have been a great asset, they have left us short of doctors. That restrictive practice is no longer, if it ever was, in the national interest. Either the Competition Authority or the Higher Education Authority should examine why we keep doing it. Highly expensive medicine is the result. Appendix 9 of the Hanly report shows a comparison of medical costs between Ireland and Finland, which has about the same GNP per head as here, and we are substantially higher. The Hanly report was published after the commission's report. Members should examine the Hanly report because it shows evidence that in any profession where entry is restricted monopolistic earnings will be given to those inside the system.

Senator Henry made the point that the big increase in expenditure all went on well deserved pay increases. There were 47% more staff recruited in the five year period and that needs to be investigated. Table 4.9 of our report shows the salaries paid in the Irish health service. They are not low by any standards. The sector responded to questions as a group and it represented itself wrongly as underpaid and underfunded. It is very handsomely paid and funded. The problems raised by Professor Brennan and the rest of the committee are more urgent. The taxpayer did put money into the service and there is no Florence Nightingale situation of low pay. The service is handsomely paid by Irish and Finnish standards. The budget for the service has been greatly increased and a large number of staff have been recruited. The existence of waiting lists and patients being treated on trolleys means there has been a failure to use a very ample budget in the way patients want.

As two witnesses have appointments at 1 p.m., I ask members to be as brief as possible.

I welcome Professor Niamh Brennan and her colleagues and thank them for their work. I like the report for its directness and clarity. I want to take up the point mentioned at the start of the report, that is, the uncollected primary source data on patients. Does that surprise the commission? Does it happen in other countries? I would like comparative data on the subject. Earlier Dr. Barrett mentioned Finland and numerous other countries were mentioned.

The extension of the medical card scheme to the over-70s was mentioned and deemed to be poorly planned. Does the commission think it amounted to an incredible display of incompetence by the Government and is that why it went so badly wrong? Does it think the Government had its eye on the political and financial balls? That is why these things went awry. Will an executive mean that less politics will be involved in the decision making process?

We have spoken about accountability. The commission was at pains to state in its report that an executive will not be an additional layer of bureaucracy. That was my fear. The executive will also deal with issues such as industrial relations. In the Dáil Deputies can ask the Minister questions on industrial relations, nurses' strikes, public health doctors, etc. Does an executive mean that there will be less accountability in the Dáil? In fact, we could get less accountability. Will the Ceann Comhairle tell Deputies that their questions are disallowed and will be dealt with by the executive? That has always been a fear of mine.

In the health service most money is spent on the last few years of a person's life. We need to be aware of that. Dr. Barrett said that we get a demographic bonus. We will only get it for so long. We have an ageing population and regardless of how efficient we manage the health service we will still have to spend more money. That is a fact. More people will get cancer and, as has been said, we will need more oncologists. We will definitely have to spend more money and that means more funding.

The commission has not called for the abolition of health boards; they were to be part of the executive. Does it agree that Chapter 3 of the Health Act 1970 adequately covers the financial management of health boards? Was the commission surprised that the Government did not accept its suggestion that health boards should be incorporated into the structure?

Is the delegation confident that the two years it set for the implementation of reforms is realistic? Will they be delayed?

The commission recommended public only consultants. Why was it not done? It was a sensible suggestion.

Was the commission disappointed that the Government did not follow through?

I welcome the members of the commission and thank them for their work. To paraphrase a previous Taoiseach, they have indeed done the State some service and some considerable service for which we should all be grateful.

Mr. Farrell stated that it was not wilful neglect of public money. Hopefully the result of the report will be a sharper focus on accountability in the health service. The instance of the health board in Ballisodare or Ballaghadereen, whichever it was, where the cheque was paid for the property before title was issued, is wilful neglect of public money. Did any heads roll in that instance? Who is responsible for such a decision? Does it require a total change in work practices to ensure someone is held responsible? Is it a case of habits developing in the system which need to be changed? Will it require a total restructuring of roles in terms of accountability?

I am a little surprised that it is not known how much a hip replacement operation costs and that the cost varies so much. As a result of the investigation carried out by the commission, can we hope for a standard pricing on every medical procedure and is that desirable? Has the commission concluded that on the question of the greater involvement of key decision makers, the consultants and hospital management, they are willing to be more involved? Did the commission ask them if they are willing to do this? What will be the greatest obstacle to greater transparency in financial management in the health service?

I thank the commission for its report which should be called the Brennan forensic report on the health service. It is an excellent report and I welcome it.

Like Deputies Mitchell and Gormley, I am worried about the Health Service Executive. We already have the bureaucracy of the Department of Health and Children and the health boards. Will this be another layer that will be between the patient and the treatment?

Is the committee aware that health boards should not be called health boards but rather boards dealing with health, social welfare, housing and even education? Their remit is very wide and it goes beyond health.

Private companies try to keep their costs down. Anything that does not add to the bottom line is cut out, as is the case with Ryanair. That is a simple model as an example and I do not see anything wrong with it. However, health is not like that and I will give an example. Some years ago one of my patients injured his hand in an accident. He went to the accident and emergency department and was brought to theatre. The procedure lasted 12 hours; 15 years ago the hand would have been amputated. The theatre was in use for 12 hours and other procedures were delayed for that time.

Dr. Barrett raised a very good point which I did not notice in the report. He spoke of the restrictive practices in medical schools. Some years ago I attempted the primary fellowship in surgery. I noticed that each time I sat the examination, only 20% of candidates were successful. All the candidates were qualified doctors and many of them were experienced doctors. In my view, a restrictive practice was being applied. In my view the third level colleges such as the Royal College of Surgeons are restricting entry to the consultant grade and I ask Dr. Barrett to comment on that view.

I also welcome the report which is a very common sense approach to the problems regarding the management of the health services. I compliment Professor Brennan for the forthright manner in which she has defended the report, viciously at times, against very strong opposition. If someone who was not as strong as Professor Brennan had been chairperson, the whole project could have been dead in the water. Some of her recommendations are fairly radical and I hope she does not object to that opinion.

I am a member of a health board and the chief executive officer of the health board is a clinician. I would have thought that my health board might not have operated financially as well as it could have. In my experience, consultants will always seek as many resources as possible for their own discipline, to the extent that there can be a power struggle operating within many hospitals. The only thing keeping a cap on the situation is the presence of a general manager who is not a clinician and is an independent person keeping a balance on where the resources are being allocated. If it has not worked by putting a consultant or a clinician in charge of the health board, why does the commission think it will work now by giving consultants financial responsibilities?

My second question relates to the executive. I too am concerned about the executive. I think there is much merit in having many of the decisions made centrally, particularly with regard to negotiation of contracts and IT. Apart from the criteria that the commission sets down for the chief executive, who else will be on the new executive? Is it a case of the existing staff from the health boards and, if so, does the commission believe that we have the right people working in the health service but that the structure is wrong or do we have the right people working in the area of health service management?

My favourite recommendation in the commission's report is that consultants should work exclusively in the public sector. I like this because I believe there is a significant conflict of interest for consultants. Even this one recommendation would result in a significant improvement. In compiling the report the commission obviously found there was some form of abuse or problem in the treatment of private patients in public hospitals because one of the key recommendations is to bring about greater transparency. We are all aware of that situation and I would appreciate if Professor Brennan could expand on that point.

Professor Brennan

I do not know where to begin. I have marked a few points that I would like to pick up on. I will allow my colleagues to answer other points they may wish to emphasise because we all come to this project with our own individual points of interest and emphasis.

Deputy Gormley and Deputy O'Malley, in particular, asked about the accountability of the new executive to the Oireachtas. We were aware during our deliberations that it was a concern. We do not believe accountability to the Oireachtas will be compromised because the chief executive of the new executive will be personally accountable to the Dáil. The legislators will be entitled to summon that person to come before them and be accountable to them. That is a fairly strong level of accountability to the legislators by the chief executive of the new executive.

Deputy O'Malley spoke about the restructuring of roles to enhance accountability. We recommended that the roles should change a little in order that, for example, the chief executive of the local body, which we recommended should be a health board, would be personally accountable to the chief executive of the executive in order that there would be day-to-day managerial accountability in a way that does not exist at present. The chief executives of the health boards are accountable to the Oireachtas, I suppose, but additionally under our model, they will be accountable to the new chief executive of head office. That is not enough and we also had in mind accountability which is not only upwards but also downwards. They should be accountable to the local area for delivery of the service in the local area. That was one of the reasons we concluded the health board structure should be retained and the number of health boards should not be significantly reduced. Downwards accountability at local level is an important element of the governance structure in the health service. This combination of accountabilities would, we hoped, enhance those standards.

With regard to Deputy O'Malley's question on whether we would have standard pricing on every single patient procedure, clearly one would not because in many cases procedures are unique to the individual patient. Standard pricing would only be appropriate for routine operations. While I am not a medic, I understand there are many such routine procedures which would be appropriate for standard pricing of some form, although it would not be possible in every single case.

Will the removal of health boards from the system also remove downward accountability or does Professor Brennan envisage any structure which could bring about exactly what she wants to achieve?

Professor Brennan

I have to be honest and say I do not know if I am sufficiently on top of the recommendations of the Prospectus report, the recommendations of which the Government accepted on this point. As such, I do not want to talk about something with which I do not feel 100% comfortable and will not answer the question, if the Chairman does not mind.

In effect, Professor Brennan wanted to retain this accountability which is the reason she advocated retaining the health boards. Now that this is gone, it is fair to ask where this will fit into the overall system.

Mr. Farrell

Deputy Cooper-Flynn asked whether we have the right people but the wrong structure, an issue I addressed previously. The issue here is related more to structure and the ability to support the people in it with the correct level of information. I have had first hand experience of working in the health service. While staff are generally hard working committed people who want to do the right thing, the service needs to be directed and requires leadership, the correct structure and systems.

I return to the fact that the model was created in 1970. Since then, society and consumer expectations of health care have changed significantly, as have demographics. All of this behoves us to kick the tyres on the structure and ensure we have a health service that is right for the 21st century. While I am aware the service was created only 30 years ago, it was still the last century.

The point made by Deputy O'Malley on pricing is part of the issue we have been tackling in the report, namely, that we need better systems of generating information. Deputy Gormley made a point about primary data. Our data are not good enough and we should be able to collect better quality information more consistently to allow us to make comparisons. Dr. Barrett made the point that he had to consult an OECD report to try to benchmark some aspects of the health service internationally because he was not able to find the relevant information here. A major improvement is, therefore, required.

If we had the right systems in place, we would be able to generate quality information consistently which would help enormously in allowing people to make informed decisions on where resources would be best deployed and to determine the outcomes one obtains in return for deploying those resources.

How do we compare to other countries in this regard? Do they collect this information routinely?

Mr. Farrell

A large number of member states of the European Union are more advanced than we are in the collection of data.

Dr. Barrett

I share the concern expressed by Deputy Gormley and several other members about the extra layer of bureaucracy. The number of people employed in management and administration has increased from 8,300 to nearly 15,000 in the five year period under scrutiny.

Does the figure refer to management?

Dr. Barrett

It refers to management and administration and can be found on page 88 of our report. Management now number nearly 15,000 compared to 6,285 people classified as medical or attentive staff. This is a problem and the executive will work to get resources out of the management category and into front line medical care. To answer Deputy Gormley's question, this is certainly our hope. We do not want to add more bureaucracy but to tackle what we have.

Deputy Cooper-Flynn mentioned consultants working solely in the public sector. This would be much less of a problem if we did not have restrictions on entry to medical schools. In the great Celtic tiger era I do not detect among graduates in general a reluctance to work in the public sector. In areas where entry is restricted, as is the case with medical schools which restrict the supply of doctors, people tend to be a little more choosy.

Professor Muiris Fitzgerald, the dean of medicine in UCD, has compared the current position to a person who reports a robbery being informed by a local Garda sergeant that he or she has arrived out of hours to find the sergeant stepping around the counter to say he happens to run a private security firm in his spare time and ask if he or she has crime insurance, before proceeding to investigate the robbery. If the dean of the medical school feels this way about the issue, he is right.

Deputy Gormley referred to the demographic bonus, which should be worth 2.9% of GDP but is not. Countries such as France and Germany are delivering a health service to an older population at a lower cost per head. When Colm McCarthy's figures are circulated by the secretary, members will be able to see this is the case. As part of the adjustment, we must not, however, add a further 2.9% of GDP to the current figure of 8.6% to increase expenditure to 11% or 12%.

This brings me to Deputy Fitzpatrick's question. It was around 1945 that Milton Friedman, who subsequently won a Nobel prize in economics, warned that the success of the American Medical Association in restricting immigration by foreign trained doctors and access to medical schools would result in the American health service becoming the high cost system we have now. Such practices amount to interference with investment in human capital and should not be allowed to happen.

I note the current edition of the Meath Chronicle features a report on a man who was brought before Judge Brophy because he was practising pharmacy without being a graduate of Trinity College Dublin. The health service is full of similar examples. Restricting investment by people who want to become dentists, pharmacists, doctors and so forth is not in the national interest. It will be very hard to solve the problem if the current insiders are allowed to continue to prevent talented 18 year olds from entering their professions.

Mr. Farrell

I wish to return to the point of clinicians in management. People may argue that I would say what I am about to say but, having been general manager of a hospital in the North-Western Health Board, my experience was that it has been a genuinely innovative, leading edge, progressive health board over the years.

Hear, hear.

Mr. Farrell

I knew Deputy Devins would cheerlead that statement. Between 1981 to 1986 when I was general manager - I can only speak from first hand experience - the practice was that two clinicians were nominated by the clinicians in the hospital collectively. These two nominees, with the matron, formed a group which pursued a form of collegiate decision making on major issues concerning resource allocation and priorities. To be fair to clinicians, they actively participated in this process and were prepared to take tough decisions. In a climate in which there was significant retrenchment in health and budgets generally, we managed to maintain levels of service, develop new services and generally run an efficient operation. The reason for this was that the clinicians participated in the decision making and we also had nurse management.

I was interested to revisit this model in the context of the report but we were only able to identify two or three hospitals that currently deploy this system, which I will call informal because it is not a formalised element of hospital management. Persuading hospitals to adopt best practice in involving clinicians, nurse managers and other professionals in decisions about resources would significantly improve the operation of hospitals and the manner in which resources are consumed. Clinicians have a role to play but the system needs to be organised to allow them to do this in a meaningful way. They will meet the challenge if asked to do so.

Professor Brennan mentioned payback. As an accountant, she will understand it is mostly to balance the books in terms of ghost payments. The books must be balanced - I mentioned earlier several instances of underpayment. Mr. Farrell was suggesting that patients become involved while at the same time advocating budgets for GPs. I did not understand this. Was he talking about a budget to allow GPs to do things that are being done in hospitals at the moment but which could be done by them quite easily?

I did not receive an answer to my question about waiting lists. I asked whether the hundreds of millions put into the waiting list initiative would not have been better spent locally to employ the consultants and specialists we need. The UK and the USA are returning to systems such as these. Hanly has gone full circle. I was glad to hear Dr. Barrett mention the issue of emigrants in the States - the people we should have been looking after and who have looked after us. The task force report identified the need to look after these people, which I welcome. Finally, if we ask the medical schools about students they will say it is the Government that does not give them adequate support and that is the reason there are not enough doctors.

We will need to revisit the issue of restrictive practices in the health service. That is one of the issues that has come out of the Brennan report - it was not stated overtly but it is one of the underlying themes. We will have to address this issue if we are to achieve a proper health service as envisaged in the report.

Mr. Farrell

In the matter of practice budgets, it is the view of the commission and the view running through the whole reform programme that in the case of procedures for which clinical practice can be deployed most efficiently and closest to the consumer, that is the best place to do them. I hope that answers Deputy Cowley's question about whether there is more that could be done in general practice. This probably has implications for the way general practice is organised; it may require bringing in other professionals to work within practices or it may require some practices to become more concentrated, with a number of practitioners as opposed to just one. Fundamentally, however, this is the right idea. I had occasion while on holiday in France last year to visit a general practitioner and there was a practice nurse, a physiotherapist and a whole array of professionals to complement the practice. Under this model many more procedures are undertaken in general practice than is the case here.

I do not agree with the Deputy's remarks about waiting lists. It was right to ring-fence resources to target specific areas of waiting lists with especially long waiting times. As the system is currently structured there are issues of value for money and how we can measure it. If the money was put into the system we could not say afterwards that we obtained X amount of additional procedures. Ring-fencing the funding was the right approach. Perhaps in the future when the system has fundamentally changed and the measures are in place to determine the value for money of the outcomes we obtain, the money would not have to be ring-fenced, but for now the right system for tackling the waiting lists was to allocate a certain amount of money and ring-fence it.

One of the things that has emerged from this meeting is the issue of restrictive practices. It might be of great benefit to us to invite the deans of various faculties and representatives of the Department of Education and Science to appear before the committee in order that we may seriously consider how restrictive these practices are. Perhaps the committee could agree to do this arising from this report.

We could invite the Higher Education Authority also. I was a member of the authority for a number of years. Dr. Thornhill is the chairman of that organisation.

I thank Professor Brennan, Dr.Barrett and Mr. Farrell for appearing before the committee. Their report, which has been described as radical and progressive, will be the launching pad for major structural reform within the health service. It should ensure a leaner, meaner service for patients. We are sorry about the interruptions, but that is democracy in action.

The next meeting of the joint committee is on 11 December, but we will be considering the Estimates on Thursday, 4 December.

The joint committee adjourned at 12.25 p.m. until 9.30 on Thursday, 11 December 2003.
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