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Opening Statement by Secretary General of the Department of Health and Children at Dáil Committee of Public Accounts

05 November 2009

Introduction:

I am pleased to meet with the Committee today to discuss Chapters 37 and 39 of the 2008 Report of the Comptroller and Auditor General on Vote 40 for the Health Service Executive, dealing with Management of Private Patient Income and Implementation of the Medical Consultants’ Contract.

Consultant Contract 2008:

Agreement on a new consultant contract was reached in January 2008 and accepted in IHCA and IMO ballots in May and June 2008. Final contract documentation, reflecting work done by Mr Mark Connaughton, issued to consultants in late July 2008 but certain difficulties then arose about the number, role, etc. of clinical directors who were seen as having a pivotal role in the implementation of the new contract.

It had been agreed that consultants who signed the new contract would receive a 5% increase in salary with effect from 14 September 2007 and a further increase, the level of which would depend upon the individual’s existing and new contract type: half of this remaining increase was to be paid from 1 June 2008 and the balance from 1 June 2009.

Although the Minister sought and received Oireachtas approval for a Supplementary Estimate to cover the 2008 costs of the new contract, it was ultimately decided not to proceed with the new salary rates in the absence of sufficient demonstrable progress in relation to implementation on the ground and, as a result, no payments were made in 2008 in respect of the new contract.

In February 2009, following a verification exercise undertaken by the HSE, the Minister decided that she would be prepared to commence payment of the new contract rates. It had also been confirmed by that stage that colonoscopies and endoscopies would be included within the definition of outpatient and ambulatory diagnostic services and would, therefore, be provided on the basis of a common waiting list. However, by that stage, the fiscal situation had deteriorated significantly and severe expenditure pressures had also emerged in relation to the HSE’s Vote.

Ultimately, the Minister announced on 24 April 2009, in the context of the Supplementary Budget, that she was prepared to sanction part payment of the new salary scales for consultants who signed up to the new contract. The previously agreed rates would apply from 1 January, but the final phase due from 1 June 2009 was not sanctioned and the Minister also decided not to sanction increased on-call and call-out payments. It was estimated that this would save approximately €75m in 2009, along with nearly €70m not paid in 2008.

The Minister has indicated that the deferred increase would be reviewed in September 2010 on the same basis as the deferred increase awarded to Ministerial and Parliamentary office-holders and for other senior public servants under the Review Body on Higher Remuneration in the Public Sector (Report 42). However, she also said this is without prejudice to any decisions that the Government might make in the interim in relation to the remuneration of senior public service grades generally arising from the review recently undertaken by the Review Body.

I understand that the new contract has been accepted by nearly 90% of consultants and that Professor Drumm will outline for you the steps taken to date by the HSE to audit and verify implementation.

Management of Private Patient Income

Chapter 37 of the Comptroller’s 2008 Report looks at the extent to which private patients are treated in public hospitals, whether all patients who had a private treatment relationship with their consultant are charged for accommodation by hospitals, and whether the full economic cost is being levied. The timeliness of debt recovery by public hospitals is also considered.

It is important to reiterate at the outset that all persons ordinarily resident in Ireland have full eligibility for hospital services and that although Irish public hospitals treat private patients, the core purpose of the public system is to provide services for public patients. Government policy has been to ensure there is equitable access for public patients and, accordingly, that the proportion of private activity is appropriately controlled.

Bed designation was introduced as part of the overall framework to control the level of private activity in publicly funded hospitals. Under the Health (In-Patient) Regulations 1991, beds in public hospitals are categorised as public, private or non-designated. Under these regulations, no private patient being admitted electively may be accommodated in a designated public bed. The regulations contain reciprocal provisions regarding the accommodation of public patients in beds designated as private. There is provision for some exceptions to cater for emergencies and an instruction has been issued which permits the accommodation of a public patient in a designated private bed where this is necessary to manage healthcare acquired infections.

Chapter 37 draws attention to the impact of the new consultant contract on private patient income and, in particular, the potential implications of the new Type A contract type. As indicated in the report, the intention is that the private practice provisions in the new contract will provide an additional lever, along with the bed designation system, to improve access by public patients. The Minister has also made her policy position in relation to Type A contracts clear, i.e. public hospitals may not raise a private accommodation charge where a patient is admitted under the care of a Type A consultant: nor may another consultant involved in the treatment of such a patient charge a fee.

It is against this background, and within the context of stated Government policy, that the analysis presented in Chapter 37, which indicates that 50% of private inpatients in 24 acute hospitals were not charged for their maintenance, must be viewed. Care is needed to ensure that a perceived need to generate income does not operate to the detriment of service provision to public patients. The primary objective must be to avoid an excessive ratio of private practice within public hospitals and, subject to that being achieved, to recover whatever income is due in respect of that level of private practice.

The public hospital system should, of course, have efficient and effective procedures for collecting income which is due. I understand Professor Drumm will outline for the Committee the steps that have been taken by the HSE in this regard. I would also mention that, following a meeting earlier this year between the Minister and the VHI, and as part of a package put in place to enable the HSE to continue to implement its National Service Plan, it was agreed that the VHI would make a one-off payment on account of €50m this year towards the outstanding amounts owed to the HSE.

Since the publication of the White Paper on Private Health Insurance in 1999, Government policy has been to move towards charging the full economic costs for the use of public facilities and services for private patients, while being sensitive to the need for continuing stability in the private health insurance market and wider inflation concerns. This policy has seen significant increases in private charges in recent years, e.g. a 20% increase was introduced in 2009.

The Department is currently undertaking a Value for Money and Policy Review of the Economic Cost of Private and Semi-Private Treatment Services in Public Hospitals. The purpose of the review is to carry out a detailed analysis of the costs and charges associated with providing private and semi-private treatment services in public hospitals and investigate the fee collection processes used to recoup the cost of these services from private health insurance companies. Appropriate recommendations will be formulated in each of the areas of cost, charge and fee collection. The review will also examine options in relation to changing the current costing methodology which is based on an average cost, to an alternative approach which more closely reflects the true economic cost. An interim report is currently being drafted and the final report is expected to be completed in December.

Thank you for your attention.