Report on Resource Allocation and Financing in the Health Sector: Discussion with Expert Group

Today we have a presentation on the report of the expert group on resource allocation and financing in the health sector. I welcome Professor Frances Ruane, Professor Charles Normand, Ms Patricia Sullivan, Dr. Colin Doherty and Mr. Thomas Lynch, all members of the expert group to the meeting today.

I wish to advise that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Professor Ruane's documents have been circulated to members and they have had an opportunity to consider them. We will begin with her presentation and follow with a round of questions.

Professor Frances Ruane

I will just say a few words on the document that has been circulated and about the expert group. The group comprised a mix of economists, clinicians, managers, accountants and the whole set of people who have a role to play in the issues around resource allocation and financing and what we have here today is a representative of the different areas within that. The report covered a large area. We focused on and interpreted resource allocation issues as those concerning how we need to organise resources to underpin the stated objectives of health care. We took a whole system approach, which made it a very big project. It can be seen from the report that all the pieces are interconnected and some of the diagrams show the extent to which this is the case.

There were two key points with regard to our consideration of the system. First, we wished to recognise that we want the patient or client to be at the centre of the health care system and the other was to recognise, as is recognised internationally, that chronic diseases eat up the lion's share of countries' health budgets. Therefore, we wanted to design a system which would deal well with chronic disease. By definition then, it would follow that the system could also deal with diseases that were not chronic in nature. We took the view that we should try to work within the existing structures as far as possible. We felt a significant benefit could be gained through better planning, incentives, governance and processes within the existing framework of the health care system. That would be achieved by having greater integration within and across the sector.

We then focused on five areas covered by the 34 recommendations. A key issue was planning. When we looked at how planning currently takes place between the Department and the HSE, we found there was a distinct lack of clarity in the relationship between the two areas and that there was a serious need for this to be addressed and for the governance issues relating to health planning to be taken into account if we were to have a rational health care system. It was also essential to recognise that the incentives in the health care system needed to underpin the direction for action. Therefore, we wanted to ensure that within the structures that exist all the participants in the production of health care services had incentives to operate in the best interests of the patients and to make the most efficient use of resources. This requires developing particular types of payment systems for the funding of health care systems.

Governance issues also needed direction, between the HSE and the Department of Health and Children, but also within the HSE. We envisaged a corporate HSE that would design a system for delivery at a national level, but that this would be implemented at a local level, mirroring the structures at national level. At national level there would be recognition of three sectors which were integrated and interconnected, namely, the primary care sector, the hospital care sector and the continuing and community care sector. In other words, it would be recognised that these were three distinct sectors.

We also focused on the need for equity within the system. The issues in terms of equity of access have been much discussed and we dealt with them extensively in the report. We were concerned that user fees would be more closely related to ability to pay and that people would be admitted on the basis of need into the different services. We also felt transparency was extremely important in terms of being able to develop and manage the system. It is quite difficult to get data on many issues concerning health care, possibly because of the history of the health care system. It was difficult for us to get a full picture of how resources are currently allocated within the system and we feel it is important to develop transparency so that it will be possible in the future to see whether improvements are being made and how they are being achieved.

I welcome the delegation and commend it on the major work it has done, which will be useful for any Government or agency looking at our health service and how we might improve. It is generally agreed that the health service does not function to the level it could or should and that it is not focused on the areas Professor Ruane has outlined. I am sure she will agree that treating the patient at the lowest level of complexity that is safe, timely and efficient is an ambition that should underpin everything we try to do in health care. We are aware that there are many situations where people attend inappropriately over qualified individuals for the need with which they present. In other words, many people attend consultants for routine check-ups which could be carried out by their GPs. Nurses, for example, could often take blood rather than a phlebotomist or take blood pressure measurements rather than require a doctor to do so and doctors could read an ECG rather than require a consultant to do it. These are all areas that need to be addressed.

What are the key recommendations of the group? Has the Minister accepted the recommendations put forward? If so, has she indicated a timeline for their implementation? Has Professor Ruane any further thoughts to share on the lack of accurate, real time information within the health service? In other words, is there a need for proper information and communication technology so that we can accurately describe what is going on at any given time? For example, when I was in the North of Ireland, I could be told instantly how many were on Mr. Murray's waiting list in the Ulster hospital or on Mr. McHenry's in the Royal Victoria Hospital. They could instantly look at whose waiting list was being taken care of and check into any disparities. However, if we cannot access such information, it is difficult to assess what is going on.

I welcome the group and thank its members for the huge body of research it has carried out and produced in this and the extra documents, particularly those from the ESRI researchers. As Deputy Reilly said, this work is extremely useful for any of us working on health policy. I also commend Mr. Charles Normand on the work done by Trinity College and the Adelaide Hospital Society, which has served as a background to this report and is very useful. There is no doubt but that we need fundamental change in the way in which moneys are used within our health service. The work the group has done will be extremely useful to whoever is next in Government. It is a very thorough piece of work.

I support the tone of the document with regard to trying to achieve a system that is patient centred and which ensures that the system is driven by the needs of patients rather than their ability to pay. I also support the focus on trying to ensure that people seek care at the appropriate level and at the lowest appropriate level. This is something that is urgent for our health service because too many people attend acute hospitals when they should instead use the primary or community care service. The point was made in the document that patients who need ongoing monitoring of a condition they have had treated in hospital often return to the hospital rather than their GP for that monitoring because that is more cost effective for them. However, this is not a good use of health resources. The document has significant practical information of this nature which will be very useful for those drawing up policy.

I have a few questions. I welcome the focus on primary care and on reducing the cost of primary care for patients. Why was a graded payment recommended rather than free access to primary care? One of the terms of reference of the group was that such a policy would have to be funded from the current resources and perhaps this is the reason for the recommendation.

Is it correct to say a costing of €513 million for GP services is proposed in the document? With regard to the progress made on some of the group's recommendations, are there obstacles in the way of some of the practical recommendations made such as that everyone should be registered with a GP and have a unique health identification number? This has been talked about for years but has not yet happened. I am curious to know what the obstacles are in the way of those two recommendations as they do not seem to have cost implications, but they are crucial to ensure the most effective organisation of the service.

Professor Ruane has said it is difficult to obtain information in certain areas, particularly community care. I ask her to elaborate on what needs to be done to get a better insight into the costings of community care and whether there can be integration with the proposed primary care teams.

The timescale proposed is approximately five years. I ask the delegation to elaborate on how this can be achieved. It is suggested savings could be made if all hospitals operated to the level of the most effective. On a purely practical level, how can this be achieved? I think a cost saving of 10% was mentioned, but I may be wrong. This is a proposal that needs to be implemented in the health system because in some hospitals practices are very effective practices, while in others they are ineffective. It is a positive recommendation that incentives be shifted in order to reward good activity levels, rather than maintaining the current system of payment under which payments are based on the payments made to a hospital or unit in the previous year. I ask the delegation to explain further the thinking behind this proposal and how such a system might be introduced. The group recommends the allocation of funding based on the health needs of the population in an area.

This is a valuable document which suggests a way forward to achieve a fairer, more equitable and cost-effective system in the provision of health care. It fits in with the Labour Party's proposals for a universal health insurance system. When the Minister for Health and Children announced the report, she said it was not necessary to achieve the objectives through the social insurance or taxation systems. However, the roadmap provided in the report would be a way of ensuring the system was reorganised in order that it would deliver a service in which people would be treated on the basis of need rather than on the ability to pay. In that regard, this is a very fine document.

I thank the group for the report which represents a valuable contribution. The patient must be at the centre of all activity. In my lifetime I have seen phenomenal changes and one of the most significant has occurred in hospitals where wards were controlled by the ward sisters who were usually nuns when I was working in hospitals. They were in charge of everything and everybody was subject to them. This made for a co-ordinated, integrated service aimed directly at the patient because everybody had to do what was necessary, irrespective of whether one was a consultant or a houseman. Because of the number of new disciplines and new systems of governance, there has been a loss of integration. There is a need to look at how it can be returned to the service.

The best location for treatment is in a primary care centre. In that regard, it is good to see a shift to expenditure on primary care. It is interesting that the numbers attending hospitals and being discharged from them are increasing, despite improvements in the level of primary care. The issue that needs to be addressed is that of communication at medical level between consultants and non-consultant hospital doctors and particularly between hospital doctors and GPs. It would be interesting to know, for instance, how many patients were discharged twice or three times in 2009 having been referred by a GP twice or three times with the same illness. There appears to be a problem of communication between GPs and consultants which should be investigated.

Deputy Jan O'Sullivan asked an important question about a comparative analysis between disciplines in hospitals to see which are trying to adhere to best practice. In that context, smaller hospitals have a much larger role to play. For example, in my constituency the acute services were transferred from Monaghan hospital. I cannot understand the logic of requiring elderly people in their 70s and 80s who might be suffering from pneumonia or suffered a mild heart attack to be sent to an acute medical unit 40 miles away. I do not understand why, for instance, in the case of a person in his or her late 70s who might suffer an asthma attack three times a year, a way cannot be found to ensure he or she will be treated a small hospital which is well staffed. There is a role for GPs to play in providing such a service in such hospitals. This would save people travelling which, in its own way, has major resource implications, not least of which is that patients are occupying beds in more sophisticated acute hospitals which might not be the most appropriate location for them.

My final point is on health economics. The committee made a recommendation that this should form an integral part of the medical undergraduate curriculum. No country will be able to continue to provide the level and quality of health services into the future on the resources available. This is the case not just in Ireland but also the most developed countries. It creates a problem for Ministers and those delivering the service because there are competing priorities and someone must decide where the funding is to be directed. I refer to the cost of new drugs. I spoke recently to a consultant who had prescribed a drug which costs £750,000 per annum for a patient. New technology is also coming on stream. This is what we face. As people are living longer, we need to provide for better management for those who are chronically ill to improve their quality of live. This is a big issue for the medical profession and the caring professions in being aware of the costs involved in order that better value for money can be achieved.

I welcome the delegates. I was glad to hear Professor Ruane say the group had made a very clear decision to work within the confines of what was already in place. Someone should undertake a study to establish what should be done if we were putting a health service in place from scratch, which clearly would not be what we have done already. When one of our colleagues was Minister for Health and Children, it was estimated that he had commissioned 120 pieces of work on how to improve the health service. It is layer upon layer and when something new is added, what did not work previously never seems to be dismantled, which is a major problem. When funding is provided for the delivery of a health service, it must be considered in isolation, without taking into consideration what has gone before.

I agree with the stated aim. People are not fools and if we want them to use a primary care centre, we need to make it more accessible financially than the general hospital or the acute service available. They know that they will pay €60 to visit the GP once or perhaps twice a week, as opposed to €120 or €150 once a year. They can do the maths. We should, of course, all be treated at the lowest possible level.

I welcome the research, but it is like the saying, "If I were going to Killarney, I would not start from here." We all have our opinion on where we should start, but adding layer upon layer cannot continue. We will need to do something fundamentally different in the future. As Deputy O'Hanlon pointed out, people are living longer and are healthier for a longer period of time, but we are not doing the things that would give us a better quality of life. Later representatives of the Irish Heart Foundation will speak to the joint committee about stroke prevention. While enormous advances have been made in that respect, they have not been rolled out, even though the health and cost benefits are indisputable.

The group's eleventh recommendation suggests we need a visibly transparent process in the determination of the price of care. Did it consider what the NTPF had done, for example, regarding the fair deal nursing home scheme? In advocating a transparent system would the group consider the NTPF to be an appropriate agency to engage in that work?

Professor Frances Ruane

Let me try to take the questions from the top and refer some matters to my colleagues.

To respond to Deputy Reilly, the Minister indicated to us that she was taking our report to the Cabinet - I would have thought that would be done about now. She also indicated that she accepted most of the report's contents. I do not believe she accepted all of it, but she was very positive about the general direction and thought it was a significant contribution. Throughout the process she had emphasised our need to be independent in order that whatever we produced would be of value not just at the time the report was produced but would also produce information on the health system that would be helpful to anyone who was trying to improve it.

If one was looking at what one might do at this juncture as first steps, as a group, we consider that increasing ability to pay for service delivery, for example, in the hospital system would be very appropriate. Therefore, moving to a larger share of the budget which was Casemix based would be appropriate in a certain way, but it would be small relative to the total. The roll-out of the protocols being developed by the HSE with the involvement of Dr. Barry White and Dr. Colin Doherty is crucial in trying to develop the link between hospital care and primary care and deal with chronic disease management. If we do not set the protocols before setting the efficiency drivers, safety could be compromised. The group believed it was very important to set the clinical protocols ahead of the new price drivers.

There have been some developments in the past six months since we started our work in adopting a more aggressive approach to getting good deals from the pharmaceutical companies and pharmacists and more could be done in that regard. We are aware that full economic costing is coming to the fore in public hospitals for private patients, which is important.

The Chairman asked about the role of the National Treatment Purchase Fund. The group was very concerned that, while it was originally set up to shorten waiting lists, as time passed there was a moral hazard issue if it was always there as a backstop. Our starting position was perhaps we should abolish it immediately, but then we agreed there was something to be learned because it had driven efficiencies in the way people were doing things, given that there was price-setting involved. We believe there is a model that could be derived, not necessarily the same as the NTPF, but in that general direction. In the report we stated that if there was not a separation of the commissioners from the providers, one would want to move it into the HSE, which would make sense. One would want to have an independent group overseeing the process, as mentioned in the report.

Deputy Reilly asked about accurate and real time data in the system. There is no doubt that the system is not good from a data point of view, but one could become obsessed by the big giant IT project in the sky that would answer everything. The use of data at the point of decision making and having them available and transparent to people within the system are very important.

Deputy Jan O'Sullivan rightly pointed out that we had proposed a graded payment system for primary care rather than having a single universal payment at this juncture. I ask Professor Normand to address the matter.

Professor Charles Normand

We were working within defined boundaries in terms of the overall resources available; therefore, the question was where one should start. We wanted to put in place a framework that would be adaptable to being more or less generous, depending on the resources available to it. It would start off by stating the most important things were the removal of barriers for people suffering from a chronic illness that needed regular monitoring and intervention and that for persons whose incomes were sufficiently low, there was a major disincentive for them to use the system. These would be the top priorities. I, personally, would be delighted if I did not have to pay at all, but I am less worried about me having to pay than I am about people who have either of these problems that make it unlikely they will go in a timely way or regularly to see their GP. In that sense, it was about addressing the most serious part of that problem in the first instance. It was suggested that a framework be put in place which could be recalibrated to the point where there would be zero payments for all people, as a logical end, if that were chosen. It would be unsatisfactory if we were to move instantly to such an outcome, without examining carefully whether the resources necessary for it could make a bigger difference elsewhere. Other major areas of the system are under-resourced. It is not argued that we should not end up with free primary care at the point of use - it is argued that we need to make sure that is the priority before we do it to the fullest extent.

Professor Frances Ruane

I wish to speak about community care. We encountered tremendous difficulties when we tried to get information from within the system. In this area, unlike other areas, it was possible to examine international evidence. We looked at the systems being used in eight countries. As community care and continuing care are delivered very differently elsewhere, the extent to which one can learn from other systems is limited. One can learn a little, rather than a huge amount. The nature of how our system developed is at the source of the problem. Historically, a great deal of care was institutionally focused. We now want it to be individually focused, rather than institutionally focused. In our report, we stressed the enormous challenge that will be faced in building up governance in that particular area.

Our model of the integrated service area for health clearly involves a primary care element, a hospital care element, and a community and continuing care element. We have provided for the different types of hospitals one would want within the system. Under our vision, decisions would be pulled together by directorates at the highest level in the HSE, which would be responsible for determining policy and implementation standards within the HSE. The same three groups would be represented at the table at local level. If one is discharging somebody from an acute hospital, one needs to be able to send them somewhere. The people at the other sides of that decision - those involved in primary and community care - need to be within the same budgetary setting.

We emphasise the need for funding to be provided on the basis of population health need, which has been mentioned. One could say the current locations of facilities - and by extension budgets - are accidents of history. It was not an accident at the time, when different influences existed. The HSE is working to see what a better configuration would look like. We are keen to stress that one does not need to have perfect data before one moves in a rational direction. One can operate on the basis of some of the socioeconomic and demographic data available. We believe that can be done. It is a question of matching those data with the HSE's primary care reimbursement service data, which are of good quality.

The introduction of a unique patient identifier as part of the system of registration, which was also raised, is a fundamental issue. I can remember when it was discussed in the mid-1990s. It is extraordinary that it has not been introduced. It is not a financial matter. It is taking a long time to get there. The way patients are measured affects how they think about the system. As Deputy O'Hanlon said, we might know there have been five hospital discharges in a month, for example, but we do not know whether the same person was discharged five times or five separate people were discharged. That is a real limitation of the system. It is quite good in terms of productivity, which is one level of measurement, but it cannot distinguish between the different numbers of discharges. I ask my colleague, Mr. Doherty, to speak about the issue of the relationship between general practitioners and doctors in hospices, which was raised by Deputy O'Hanlon.

Dr. Colin Doherty

A couple of the points made by Deputy O'Hanlon are linked. I will deal with them in order. He referred to the "clinician in charge" or "nurse in charge" practice. That was still the case at the end of my training. We have lost the "clinician in charge" element of the complexity of the delivery of care. In the new national programme that has been prepared by the director of clinical quality and clinical care, there is an emphasis on restoring the role of the clinician in managing patients in the health care environment. We are aware that we need to redefine the "clinician in charge" role.

I would like to refer to the issue of communication. There is absolutely no question in my mind that every one of my patients is better off when I have spoken in person to the GP with whom he or she is registered. The challenge we face involves making sure that becomes the mainstream approach. We need to make sure systems are in place to make it a natural part of the discharge process, rather than the exception, which it probably is. I am addressing that fundamental challenge within my own programme, which is in the epilepsy area.

I wish to respond to the questions about the role of smaller hospitals. One tends to get precious about one's own specialty, which can be a problem. Reference was made to asthma, which is not my specialty. Asthma is a chronic condition that is largely best dealt with in general practice. We need to decide how we deal with its intermittent exacerbation, however. It is responsible for approximately 50 deaths a year in Ireland. We can learn from international experience in this area. Finland, for example, has a policy of not tolerating deaths from asthma. It has instituted an education policy that has reduced the annual number of deaths from asthma in Finland to zero. That is where we want to be. I will outline the simple process that is fundamental to that. A patient who gets an hour-long intervention at GP level - he or she is taught how to use his or her inhaler and how to use the acute systems to manage an acute exacerbation - does not end up going to hospital for his or her care. We would face a number of challenges if we were to try to create a model that allows us to provide an hour of educational intervention at primary care level. We have spoken about the system of graded access through the medical card system. GP contract issues may arise if those who manage primary care are paid for quality outcomes, rather than on a "fee per item" basis. That is another aspect of the matter. The key thing is to manage it at primary care level.

I wish to speak about the role of smaller hospitals. We are hoping that the patient with asthma will not have three admissions per annum. Under our plan, their asthma will be managed correctly at primary care level. The directorate's acute medicine programme envisages that a hospital like the one that was mentioned will become a model 2 hospital. Such hospitals will have acute medical admissions units. They will be able to deal with mild exacerbation of chronic illnesses like asthma. Most importantly, they will have the capacity for rapid access to the larger centre if it is needed. There will be a focus on providing safe and effective care, primarily in general practice; on avoiding hospital admissions, although they will be available when they are necessary; and on facilitating access to larger centres. That is the ideal situation. All of us face a challenge if we are to see it through and put it in place. I ask my colleague, Ms Sullivan, to comment on the interface between smaller and larger hospitals from her own perspective.

Ms Patricia Sullivan

I will preface my comments with some core principles. In the report, we set out to find a way of doing more with less. We knew that was necessary in the current economic climate. We were keen not only to increase our efficiencies, but also to assure patient safety. An independent view of whether patient safety is being assured can be received from the Health Information and Quality Authority, which oversees these matters independently. It was important that a joint clinical and managerial approach was taken. Mr. Doherty described how the clinicians have been setting out the standards. They are moving towards them under Dr. Barry White's programmes. The standards will guide us at local level as we decide what component of patient care should be provided in each of our local hospitals and what path patients should follow as they seek an appropriate level of care.

I will give a practical example of what we have already done. Patients being treated under the national cancer control programme enjoy rapid access to the specialist opinion of consultants along a designated path. They are seen by multidisciplinary teams at centres of excellence, or centres that are striving for excellence. After they have received the acute component of their care at one of these centres, they can continue their care safely at local level. That is the general direction of travel. Management systems need to be improved considerably if they are to support adequately the journey of the patient. In that regard, I would like to refer to the HealthStat performance management system, which is already embedded for acute hospitals, including my hospital. As stated on page 69 of the report, one can do more with less. I had a budget deficit of €12 million to deal with in my hospital in 2009 and 2010 and had to figure out how I would deliver a full range of regional services, develop the cancer centre, comply with NCCP standards and have them validated by HIQA as part of the journey. We need to develop our systems and processes managerially guided by the clinical leadership by way of the Dr. Barry White programmes, which is ultimately the end game in improving the health of the nation. One must start with what will improve the health of the population. Using national standards, systems and processes and performance management tools will allow one to deliver on this objective locally.

Professor Ruane mentioned the governance structures. They must be led from the top - in terms of the integrated directorate's approach - and at local level given that a patient's journey starts in his or her home. He or she gains access to acute hospital services before moving to another level of care, either in a local hospital or a step-down facility such as a long-stay or rehabilitation bed or care in the community with supported home care packages and so forth. I am trying to emphasise that to have a truly patient-centred approach, patients must enter and leave the health care system along a designated pathway. Joined clinical, managerial and financial governance arrangements are required to allow this journey to take place. That is the thrust of our report.

Professor Frances Ruane

Deputy O'Hanlon indicated that health economics should be taught to all doctors. The range of skills involved is probably even wider. Economics is a major element but understanding the management aspect is also necessary, in other words, taking responsibility for what happens subsequently is very important. This has been part of the UK education system for a long time. Students in the United Kingdom have been given much more information on drugs, drug costs and generics - the content of drugs - in order that they are much more aware of what is involved from the word go.

Mr. Lynch will briefly discuss the pharmaceutical side, an area in which further progress can be made.

Mr. Thomas Lynch

If one examines any western health care budget, one will find that the cost of pharmaceutical medicines has grown exponentially in the past 30 years. The primary reason for this is positive, namely, better, much safer drugs are available to treat many more conditions than hithertofore. The question for the health service is: how does one manage this? One must maximise the use of generic equivalents which can be produced for a fraction of the price, in some cases at 10 cent to 20 cent on the euro compared with the price of the ethical medicine. It is a challenge for purchasers to ensure they do this.

Another issue poses significant challenges to society and health services. Until 15 or 20 years ago, most of the medicines doctors such as Deputies Reilly and O'Hanlon would have prescribed were tablets and capsules produced simply and cheaply and dispensed easily. In the past 20 years we have been very successful in developing much more complex protein peptide based drugs, monoclonal antibodies, to treat conditions that hithertofore were effectively untreatable. Cancer treatment, for example, has been revolutionised in the past 20 years, as have treatments for debilitating autoimmune conditions such as rheumatoid arthritis and multiple sclerosis which are much better managed than in the past. These drugs are challenging to develop because they are proteins and complex to manufacture. The regulatory hurdles are enormous. Given that Ireland is the world manufacturing centre for most of these medications, they form an important part of our inward investment activity and exports.

Fundamentally we have a choice to make. It will not be possible to give all drugs to everyone who may benefit from them. We must have treatment protocols and activities which do not quite ration but control the prescribing of these very high cost drugs. For example, if it costs €250,000 to allow someone with advanced stage 4 cancer to live for another month, one might ask if this would be a good use of the resources society makes available to medicine. This is a very difficult policy dilemma. Deputies will be asked in their constituencies why someone's granny cannot be given a new drug that has become available. These are the decisions we will have to make.

On a positive note, Deputy Lynch made a very good point. There is a fantastic role for the primary care practitioner community in the management of stroke patients. This can be done every time one visits a general practitioner. Changes in blood pressure, essentially hypertension, are very good biomarkers for assessing the risk of having a stroke and the medications to treat the condition are inexpensive and mainly generic. Managing and monitoring hypertension and cholesterol levels have a dramatic effect on the incidence of stroke. This would produce dramatic shifts in health care costs which the current system does not effectively manage because the drugs and hospital budgets are increasing every year. In some respects, we must almost make a judgment that, ultimately, the health system should be about managing health consistently, year in, year out, rather than the episodic treatment of illnesses in our acute hospitals.

Professor Frances Ruane

One issue that is always under discussion is the evaluation of new drugs, particularly high-tech drugs, because they are costly. If a drug delivers significant benefits, the benefit-cost ratio is positive and one makes a decision at that point. Many extant drugs are probably not giving good value for money but have not been delisted. We could make progress by examining these drugs.

Deputy Lynch referred to the overall governance of the health system, an important issue which the group spent considerable time discussing. If one is considering moving to a chronic care model, this will require a patient-centred model and patient pathways. The concept of governance required is much different from the one we followed, which was institution based and focused on hospitals and certain elements of community care. It also has a general practitioner floating outside the system, as it were, or linked with the system in ways that vary, depending on the general practitioner and where he or she is located.

We stressed the need for a new suite of contracts to manage both community and continuing care settings and for general practice which includes not only doctors but also others working in the sector. The system in place was born out of a different model, one in which people visited their doctor to be fixed occasionally and did not have a continuing relationship with general practice. As Deputy Reilly noted, one can use nurses and others in the system to deliver care more effectively.

I ask Professor Ruane to indicate which recommendations have been accepted and which have been rejected.

Professor Frances Ruane

I am not aware of what has been accepted and rejected at this juncture. We were informed by the Minister when we met her-----

I accept that. Does the expert group have views on the role of child care in the Health Service Executive? The general consensus is that child care would be best addressed in a different realm.

Professor Frances Ruane

We did not specifically consider that issue.

Reference was made to moving more towards Casemix. If the service is to become more patient-centred, money should follow the patient. This should take place both in the hospital and community sectors. I fully concur with the expert group that, in general, the correct location for providing chronic illness care is in the primary care sector. While this care can be provided much more cheaply and cost effectively than at present, the word "cheaper" does not mean free. If resources do not flow from hospitals into primary care settings, this change will not occur. The Fine Gael Party's fair care policy extends far beyond what the expert group was asked to examine. In that sense, the delegation is somewhat constrained.

Value for money is a major issue which extends beyond the matters raised by Mr. Lynch. We have a scenario to which I alluded last week where hydrocortisone tablets, which have been on the market for 40 years or possibly longer, have gone from costing 96 cent for a month's supply to €22 because a single company now has the licence, as the other companies have given it up. That sort of issue must be addressed. I would like a comment on how one might go about that.

I am interested in the full economic costing of treating a private patient in a public hospital. I fully agree that issue must be addressed. The issue of money following the patient is the one question that sticks out. The case mix only goes some of the way towards that. It does not go the whole way. There is reference to perversities within the hospital budgeting system but they are not described. It costs €1,400 to keep a patient in a private nursing home for a week but it costs the same to keep a patient in a hospital bed for one day, yet there is a perverse incentive for a hospital to leave a patient there because although he or she is costing €1,400 a day and the acute phase of treatment is over, if he or she moves out and a new patient moves in it could cost up to €5,000 a day to treat him or her. In a fixed budget scenario such as we currently have, that clearly mitigates against the hospital being productive.

I just want to follow up on what Mr. Doherty said about the GP who spends an hour telling patients how to use their inhalers. In effect, that hour can be extremely cost-effective from the patient's point of view but also in terms of saving money in the acute system in particular. The fundamental question is how one incentivises a GP to spend an hour with the patient. Chronic illness is one of the major cost drivers in the health service. To which country did Mr. Doherty refer?

Dr. Colin Doherty

Finland.

As far as I am aware the local authorities have a big responsibility in Finland in terms of the health of the population. How does one change the system so that it can reward a GP for spending an hour with a patient and in so doing save money further down the line?

Dr. Colin Doherty

It is not an easy issue to consider. It is easy to say that we have to reward outcomes and quality of care but one has to take practical steps. There are issues around eligibility that we think we have somewhat addressed in the graded medical card scheme. There are also issues around the contractual payment system in place for primary care. I will set aside for the moment the difficulty of advocating a whole new raft of contractual talks. If we had a system whereby in a population model one had a zero tolerance for very severe admissions for asthma within a population region, then one could fund primary care outcomes based on that. In other words, the number of admissions in a particular region for severe asthma attack ending up in the intensive care unit would impact negatively on the outcomes of funding in primary care. It is exactly as Deputy Reilly has said. If one has shifted the payment out of the hospital to primary care then the opposite is also true, if one's patients are ending up predominantly in intensive care and in the high-tech hospitals then one is losing in primary care. It is a very simple sum.

Again, I am setting aside the difficulty of creating the contractual arrangements to make that happen. I am just saying that on an incentive level, if one has a regional and population-based funding model whereby a manager is saying he or she is funding a disease and he or she discovers because it is not being done at primary care level that it is being funded at a very high level, it is up to that person and the clinicians in charge to create an opposite flow towards primary care. I accept that there is a level of glibness to the answer.

Professor Charles Normand

On the question of incentives, there are some interesting examples around the world of ways in which people have managed complex incentives. Going back to Deputy Reilly's points about people being in the right place, in Sweden when someone is ready to leave hospital if the local authority that is meant to take over the care does not have a place for them then it gets the bill for each hospital day that the person remains in hospital. That concentrates the mind pretty well. There are good examples of ways in which incentives have been used to try to get people in the right place.

Similarly, where one has a combination of capitation and fees for particular activities, one can design it with appropriate incentives in place. Incentives are not only positive, there can also be penalties. What is being described in the Finnish example is that essentially one loses out badly due to zero tolerance if one has a bad outcome as well as getting a reward for good outcomes. The only warning I would make is that providers of health services are very good at managing incentives. We must constantly look at the ways in which they are sensitive to the objectives we have.

Professor Frances Ruane

I will hand over to Mr. Thomas Lynch.

Mr. Thomas Lynch

Just to deal very briefly with the point raised by Deputy Reilly, which was a good one, about how a drug that has been generic for years is suddenly re-priced back up to an unethical level. That is a quirk that can happen in practically any system. I am aware of examples from around the world. It should not happen. It comes down to the purchasing authority ensuring that there is strategic sourcing of pharmaceutical medicine because the last position one wants to be in with a drug such as that is where there is a single source of supplier because the drug may be complex to make and the volumes are low. Many of the drugs that were developed 30 years or 40 years ago have difficult validation and regulatory issues because of the nature of the development so it is a question of looking at and managing the sourcing of those compounds to ensure that there is always more than one licence holder in the system.

Professor Frances Ruane

The issue of perverse incentives comes up in the report on numerous occasions. The reality is that designing a system of incentives for the health care system is an enormous challenge. Mr. Normand has just referred to it. It is a challenge everywhere. The only way one is likely to do that is when the people who are sitting at the table designing the system represent the various relevant groups at the table. For example, will not work, if in deciding on budgets there is nobody responsible for the hospital and the step-down or community care facilities or what happens if the patient is released back into the primary care system. One will always have issues and problems with that.

What we did may have been different to the Minister's expectations but we took a systems-based approach. Irish people do not necessarily like to take such an approach. They get a bit of distance from everything. The reality is that if one does not take the system as a totality then one comes up with the problem to which Deputy Lynch referred, namely, the layer upon layer upon layer. Any marginal change looks good in its own terms but as soon as one puts it in to a context, all of a sudden one gets these perverse incentives and difficulties. We felt the most important contribution we could make was to try to see the system as a rational one with the patient at the centre. We could talk forever about a patient-centred system but if the system a patient is trying to deal with is not rationally constructed and the governance structure is not rational then the patient will be bald by the time they get to where they want to be because they will have pulled their hair out trying to deal with all of the difficulties that exist.

I thank the delegates for dealing with all the questions and for the overview of the report. On behalf of the committee I congratulate them on the substantive body of work represented by the report. We all agree that they have done the State some considerable service.

Sitting suspended at 3.20 p.m. and resumed at 3.32 p.m.