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.