Health Service Executive (Financial Matters) Bill 2013: Committee Stage

I thank the Minister and his officials for attending. Mr. David Smith is very welcome. I thank Deputy Ó Caoláin for attending also. The meeting has been convened to discuss Committee Stage of the Health Service Executive (Financial Matters) Bill 2013. Officials are not allowed to speak at the meeting but they are available to be of assistance to the Minister. If the Minister wishes to make an opening statement, he may do so. If not, I will move to section 1 of the Bill.

I will wait until we reach the amendment.

Does Deputy Ó Caoláin wish to make any opening remarks?

No, I am happy to proceed.

Sections 1 to 9, inclusive, agreed to.
SECTION 10

I move amendment No. 1:

In page 7, line 36, after “shall” to insert the following:

“, subject to the approval of the Minister given with the consent of the Minister for Public Expenditure and Reform,”.

As I indicated on Second Stage, I am bringing forward a technical amendment to section 10. This section amends section 33 of the 2004 Act which sets out the principles under which the HSE is obliged to deliver its service plan and gives the Minister the power to issue directions to the executive to take specific measures to implement the plan.

The Bill amends this section to achieve two objectives. The first is to require the executive to implement the plan and manage the services within the net determination notified to it by the Minister. The second objective is to reinforce the expenditure control mechanisms which will replace the system currently in place by virtue of the HSE having its own Vote.

This has been achieved through the first charge principle. Under this principle, if the HSE exceeds its budget in one year, that deficit is the first charge against the following year's approved budget. If the HSE has a surplus, it will be allowed to carry over the surplus into the following year. These changes are necessary because the HSE will no longer have its own Vote and therefore will not have the legal constraints that apply under the Comptroller and Auditor General Acts 1866 to 1998. The new provisions impose expenditure control mechanisms. Under section 34(a) of the Health Act 2004, as inserted by this Bill, the new provisions will also impose obligations on the director general to ensure the HSE operates within its budget.

I am bringing forward this amendment in the interests of proper governance and accountability. The amendment provides that the HSE will only be allowed to carry over a surplus with the agreement of the Minister for Health and the consent of the Minister for Public Expenditure and Reform. The purpose of the amendment is twofold. Its first purpose is to ensure that in managing its resources, the HSE has the incentive to balance its budget as far as is practicable. The amendment ensures there is no automatic impetus within the system for the HSE to build up surpluses. Given that the carryover of any surplus will require the agreement of two Ministers - the Minister for Health and the Minister for Public Expenditure and Reform - the dynamics of the system will encourage the HSE to aim to achieve small surpluses in order to meet its obligations to work within the budget set by the Minister and the obligations imposed on the director general under the provisions set out in section 34(a), which I mentioned earlier.

The second purpose of this amendment is to ensure the legislative framework governing the health sector is in line with Ireland's commitments under the Stability and Growth Pact, which was strengthened and reformed by means of the EU legislation commonly known as the six-pack as adopted in November 2011. One of the key additions to the pact was the introduction of the expenditure benchmark, which has the objective of limiting the growth in general Government expenditure to the medium-term potential growth rate of GDP. Additional Government expenditure above the expenditure benchmark is allowed if it is adequately financed through matching revenue measures. In order to ensure compliance with the benchmark process, the Government has set general Government expenditure ceilings and ministerial expenditure ceilings for the next three years. These ceilings are defined in terms of gross expenditure; that is, all moneys that are supplied out of supply grants and appropriations-in-aid plus money paid out of the Social Insurance Fund and the national training fund. The Government expenditure ceiling is calculated to be consistent with the expenditure benchmark. The Government decided to underpin the principle of ministerial expenditure ceilings by putting the mechanism on a statutory basis in the Ministers and Secretaries (Amendment) Act 2013.

The purpose of this amendment, therefore, is to ensure the Minister for Public Expenditure and Reform has to give his or her final consent to any carryover of savings. This will avoid any possible conflict with the 2013 Act and the Minister for Public Expenditure and Reform's responsibilities in respect of setting ministerial expenditure ceilings.

I have given careful consideration to this Bill. I indicated on Second Stage that I saw the question of whether we had two allocations - one to the Department and one to the HSE - as a technicality. This Bill seeks to create a single allocation and places the Minister in a pivotal role in relation to the subsequent reallocation across all the service needs.

I wish to set out the backdrop against which we are working. I have calculated that by the end of this year, the amount of money that will be available for our health services will be €4 billion less than the amount of money that was available in 2008. That is a phenomenal figure. Others might argue that the shortfall will be even greater. My calculation is based on the most reasonable outworking. The Minister has signalled that a further 2,600 staff will be removed from the health service during the course of this year. That reduction will be on top of the reduction of 12,500 that has taken place since 2007. That will make a total of 15,100. I accept that I am open to correction with regard to some of the smaller numbers contained within the greater numbers. That is the figure that has been cited time and time again when people have been talking about the reduced size of our health services by the end of the year. The cuts in the amount of money available to deliver on people's health care needs and the number of staff available to ensure that delivery is safe and effective are phenomenal.

Under the HSE divisional plans for this year, it seems that hospitals are being expected to function as they did last year even though their budgets will have been reduced by €200 million across the board. I am particularly, but not solely, concerned about the impact this will have in the hospital context. I am very worried about what we are witnessing. The hospital issue is at the heart of the amendment proposed by the Minister. The many struggling hospital sites in this country are already facing an average reduction of 4% in funding this year. That is not small change on top of everything they have had to contend with. I refer, for example, to the front-line care figures that have been indicated by the Minister. The HSE has confirmed a projected decrease of 25,000 in the number of day cases this year. It has said that the number of inpatient treatments will decrease by 3,000 during 2014. These reductions will have a deleterious impact on access to health care over the course of the year.

I would like to give a little example of how unrealistic the national service plan and the divisional plans are. One of the targets set in the plans involves reducing by 4% the delayed discharge of patients from acute hospitals, even though the allocation for nursing home beds has been reduced. I contend that this will mean many more older people will have to remain in acute hospital settings for longer periods of time. This will add to the significant problems that exist currently. We cannot function without adequate nursing home provision and adequate numbers of step-down and rehab beds. They are simply not available in sufficient numbers. It has been signalled that the situation will get worse over the course of this year.

I have described this Bill as primarily a technical one. Nevertheless, I am very concerned about section 10 of this Bill, as set out on page 7 and to which the Minister's amendment relates. The clause that this amendment would immediately follow, which proposes the insertion of a new section 33B(a) in the Health Act 2004, would mean that an overspend in any one year would be carried over to the following year as a charge on the budget of that entity, facility or hospital. I think that is an horrific situation. If Supplementary Estimates had not come on stream over the last few years, I cannot for the life of me imagine what it would have been like to try to sustain services at hospital sites where those involved have not been able to work within the very restrictive budgets that have been allocated.

If, despite the best efforts of all concerned, an overspend is to be carried on into the next year’s allocation, it will put hardship on top of hardship for front-line service providers and hospital managers, as well as having a serious impact on patient care and safety. It is an absolutely horrific proposition and nightmare scenario that cannot be faced. There are many other facts I could share.

It is a fantasy to suggest there could be a scenario of an underspend. I cannot for the life of me imagine that could present at any of our hospital sites. The Minister’s amendment seeks to write in the Minister for Public Expenditure and Reform into this process. He or she, depending on who is in office at the time, will have a say-----

The Deputy is watching certain people’s aspirations.

I am. I always do, including the Minister's. Why should that Minister have the final say before giving the Minister for Health the green light to carry forward an underspend so as to have additional funding in the year to follow?

I am more grievously upset at what section 10 represents than I fully appreciated when we addressed it on Second Stage. I have taken the time to go through it and, as always, try to find a way of improving it. I cannot with this section and, accordingly, I oppose it and the Minister’s amendment. We are building a nightmare scenario if we allow overspends to pile up year on year, adding to the serious problems our hospital sites are already experiencing as a result of underprovision over recent years. Will the Minister recognise that what is being provided for in this section will result in serious crises in the future?

While I will not be opposing the Bill, it is important that the committee looks at the overall health budget allocation and how it is arrived at. I believe the Department of Health has taken a disproportionate number of cuts over the past six years when compared with other Departments. It is important we examine how we can renew staff in the health system and the allocation of resources. We are at a point in the health system where staff are not being renewed and a generation of health workers, such as speech therapists, occupational therapists and physiotherapists, are opting to go abroad. I accept there was a need for a recruitment moratorium but health is a demand-led system. Unlike Deputy Ó Caoláin, I do not mind if we overspend on health. To me it is about a service for those who require access to treatment and facilities.

Why did we need a Supplementary Estimate for the Health Vote? It was because people needed access to treatment and facilities. I am concerned at how we can sustain services and, more important, how we can develop and grow resources with the patient at the centre. I believe members of this committee will be up to examining the budget allocation for the health services. The committee can examine how it can work this into its work programme. It is time to recognise that health took a significant cut in its allocations for pay bills and funding.

On a point of clarification, I have never opposed a Supplementary Estimate for the Health Vote.

I did not say that.

I would never oppose one for all the right reasons.

I thank the Minister for his presentation. Is there still scope for cutting back on the administrative side in health or is that a fallacious view? I support the Chairman on the provision of front-line services. Clearly, we need as many of them as possible. We need to be concerned if we are losing front-line health professionals to other countries.

Deputy Ó Caoláin referred to the nursing home support scheme and the reduction in the budget for long-term inpatient care. It is true we took €23 million out of that budget but it was to create new and more innovative home care packages which will benefit a far greater number of people and keep them at home, which is where most people wish to be.

I am hugely grateful to the tremendous work done which has led to the remarkable progress in our health services. That is down to the men and women who work in our health services. It is one of the few services that is 24-7 and is demand-led. No health professional worth her or his salt would turn away a patient in need or acute distress.

While we have had an 8% growth in population over the past six years, there has been a 20% reduction in the health budget and a 10% reduction in health staff. It has been said elsewhere that the only place that has had greater cuts than this country has been Greece. Our health service has not fallen over but, in fact, has improved. It has not improved to where we would all like it to be but it has improved as evidenced by a 34% reduction in the number of people who had to endure long stays on hospital trolleys. Up to 99% of inpatient treatments are carried out within eight months, which I accept is still too long.

That 95% of outpatient appointments are now within a year is still far too long, but given that up to last year they were not even measured we can certainly thank the men and women working in our health service for extraordinary progress.

I have spoken about reforming our health service and we all know about the black hole which is supposed to be in health. In opposition, I stated not another bob would be given until we found the black hole, and we have done so. A total of €4 billion is gone and there is no more black hole. I would love somebody to show me where it is because it is not there, and the men and women who work in our health service also know it is not there. We can only go so far and we stated that our reform plan has a number of stages. We must make what we have as efficient as we can, after which we will continue the reform to break up the HSE from being a provider and procurer and create a split between procurer and provider.

An integral part of ensuring we get the right outcomes is to have a national pricing office for health. I met the German Minister in Greece last week to organise help from our German colleagues and we are very fortunate that a gentleman from there, who has Irish connections, is willing to come over because we need someone independent to set the price for procedures. Otherwise, hospitals will accuse the Department of paying too little, the Department will accuse the hospitals of charging too much, the professionals will accuse both and each will accuse the other. We need an honest broker and evidence-based pricing. There is no doubt or question in my mind that we pay far too much for certain procedures. Committee members will have heard me state this previously and I will not go into it all over again.

I am inclined to state enough is enough and that the health service can take no more. It now needs time to continue its reform so it can become more efficient. We have achieved a huge amount despite all of the challenges we faced and it is not fair to our staff to ask them to take even more cuts. I stated in the HSE service plan that the priority of all priorities is patient safety and I will not preside over an unsafe system or health service as a Minister for Health, as a doctor or as a parent, and nobody in this room would either.

The moratorium was necessary to make certain achievements and it is not being implemented in an inflexible way. It is being implemented in a manner which allows us to get the skill mix right. Committee members will have heard me ask why in one hospital there are nine nurses per health care assistant and in another similar sized hospital there are 2.8 nurses per health care assistant. There is clear room for change. Other reforms which need to be introduced include expanding the roles of the various people who work in the health service. In the Chairman's constituency of Cork, physiotherapists screen all of the orthopaedic referrals and can deal with 50% of the cases without the patient having to see the surgeon. There is a host of measures we can take and we are taking them.

Deputy Dowds mentioned the scope to cut back on administration but I believe we are very near the end of this and there is not much scope left. To be quite frank, we have cut approximately 16% centrally. When people speak about administrators, they must remember it includes those who work on wards. If there is no ward clerk, it will be far more expensive to pay nurses and doctors and it will not be cost-effective. We will keep examining the model of care and refining it, which is what any good system should do as it should be dynamic. The clinical programmes have led the way in this, supported by the special delivery unit. The problem with the HSE in the past was that we never managed to transpose excellence from one part of the system throughout the entire system. The new hospital groups will be a huge part of addressing this because instead of dealing with 49 different hospitals, we will have six hospital groups for adults and the paediatric hospital group. It will be much easier to get a message across and exchange information. There is only so far we can go before we start to compromise patient safety and we are coming to this point. I send a loud warning to those who would have us go further.

Last year, the Supplementary Estimate was relatively small at €200 million out of a budget of €13 billion. To put this in context, and Mr. Smith will correct me if I am wrong, the daily spend is €35 million so it was only four or five days' expenditure. This is in a demand-led scheme. This year alone, we have had a 33% rise in attendances with a huge rise in admissions. These are sick people who need to be admitted. Everybody knows how hard it is to get into hospital and those who are in hospital are ill. We want to reduce the average length of stay and we have much more work to do in this regard. We can certainly make much more progress.

Deputy Ó Caoláin was concerned about the section itself. Section 10 is a critical control mechanism to replace the vote control in place at present. There will be a charge against the HSE budget and it will be a matter for the HSE to allocate resources according to priorities. I set the priorities in terms of the broad outline of the HSE service plan, but I am not involved in the day to day workings of the system or in operational matters as these must be left to those on the coalface. I am very pleased the special delivery unit has managed to give a voice to those at the coalface and takes on board some of what they have to say. They do not agree with all of them but what they do agree with, which make sense and is priced appropriately, is done. Many more incentives will come into the system to help people on the front line shape the way they work because they deal with the problems day in day out and have the best understanding of them.

I accept much of what the Minister had to say and I welcome the fact he stated very clearly we can go no further as it is beyond any serious contemplation that the health services could take further cuts. My concern is that section 10(b)(3)(a) provides that if the amount of net expenditure incurred by the executive in a financial year is greater than the amount determined by the Minister for that year, the executive shall charge the amount of such excess to its income and expenditure account for the next financial year. The entities which have, by some language, overspent will be required, and there is no other way of doing this, to carry forward the burden. We will pile up a problem year on year. I can only imagine what the case would have been if we did not have the rescue packages of Supplementary Estimates over this past series of years and the burden was laid on each individual hospital site year on year, with the consequent reduction in its capacity to spend over a 12-month period. What would the story be like at this point in time in May 2014? It would be very serious. We must examine how this will work its way out in practice beyond the adoption of this legislation. I fear it will have serious implications in the short and medium term, and beyond, without correction and address.

With regard to the Minister's amendment, the idea that entities in the health services would underspend is fantastical.

It is fantastical, the idea that entities within the health services would underspend. I cannot identify where that might present in the current year. A Minister for Health, of whatever hue, at Cabinet has enough of a battle to fight to try to protect the health services in the determination of its share of the overall Exchequer funding without having subsequently to allow the Minister for Public Expenditure and Reform have a further say on where there might be, in the most remote prospects, an underspend. That is too much. My real concern is with the section and what it is doing in terms of building up a big problem for us all in the future.

In fairness, one must always allow for underspends and overspends within a system and attempts are made to balance them out. One cannot have a situation where those who do not make the effort to control their budgets are rewarded while those who make Herculean efforts get no reward, that is, the latter get no increase because they kept to their budget while those who did not bother to keep to their budgets get more money the following year and their base keeps rising. We cannot have that situation. Equally, there are better times ahead and we can see that. Employment is going up, unemployment is falling and confidence is returning to the economy. That will mean there will be less call on health, which is demand-led, in terms of the Primary Care Reimbursement Service, PCRS, into the future. The ongoing reforms, particularly through the new GP contract - which is a whole new kettle of fish - place more emphasis on prevention and chronic-illness care in the community and should mean fewer hospital attendances and admissions.

To give the committee some startling facts, 2,000 beds in our hospital system out of a total of 11,500 beds are occupied every night by people suffering from an alcohol-related illness or injury. Countless tens of thousands of beds are occupied every year by people with cardiovascular, lung and other diseases caused by smoking. I do not think it is unreasonable to look to the day when, if we can get the public health message across and educate our people on the dangers of alcohol and smoking and prevent our children from taking up smoking or abusing alcohol, there will be less need for major budgets for our health system. I know that day may be some time off but it is coming.

Finally, decisions regarding the Supplementary Estimates are made by the Government as a whole; they are not made by the Minister. Section 10 does not preclude the Government from making those decisions. It is a standard provision which gives the Department of Finance the final say and that has always been the way. I would prefer to have the final say but if each Minister had the final say the books might look a bit funny at the end of the year. We all have to operate within budgets and the fight, as Deputy Ó Caoláin has said, is to make sure we get a proper budget that reflects the need to provide a safe service.

Amendment put and declared carried.
Question proposed: "That section 10, as amended, stand part of the Bill."

I am sorry but I will have to seek a vote on that question. I cannot accept section 10, as I have already explained.

Does the Deputy want a voice vote among those present or does he want to call a vote of the full committee?

I will be satisfied with members present voting because they are the only ones who have participated in the debate.

Sections 11 to 16, inclusive, agreed to.

Question put and declared carried.
Title agreed to.

I thank the committee members for their courtesy.

We will have the opportunity to revisit some of what we have said here today on Report Stage. Whatever about the outcome of the engagement, some of what was said was very important and I have already indicated my welcome for some of what the Minister has said. If we are to ensure that the situation does not get worse, we need to be working at this together.

Bill reported with amendment.