Seanad Éireann - Volume 131 - 25 March, 1992

Adjournment Matter. - Health Boards Financing.

[1807] Mr. O'Keeffe: Health boards all over the country are over spent by approximately £100 million. Given the stringent constraints on them can the Government pick up the tab or, would it be appropriate to look within the system itself, at the resources, expertise and manpower in hospitals, to see if there is any way we could introduce an element of self-financing, rationalisation or cost effectiveness to the health board system?

I realise that I could be accused of looking for privatisation of the service, but that is the furthest thought from my mind. The time has come, however, when we must address the administration of health board hospitals to see how they can become enterprise conscious and, by doing so, introduce an element of self-financing into their operations.

I have been a member of the Southern Health Board since last June. Faced with deficits of £3.7 million in the Southern Health Board budget we are all looking for a way out of the dilemma. I called recently for a feasibility study into ways of generating additional finance for the health board. As a result of that call and the publicity it generated, it was made known to me through various sources that in a major hospital within the health board service work was being carried out in laboratories of this hospital for a private operation and that no moneys were accruing to the health board from this. I understand that the money generated could be as much as £100,000 per year. I asked for an investigation into the matter and this investigation is currently under way. A report is to be made available at the next meeting of the Southern Health Board. This raises questions as to the level of control that exists in hospitals, and particularly in the laboratories.

Subsequently, I received further information relating to a major hospital in [1808] Dublin where it was said laboratory work was being carried out and that the private work, the VHI work was being dealt with separately from public authority work and that such information was being transmitted by modum to a private office from which bills were being sent out to patients. I understand that the level of this work could range from £3 million to £6 million per year. That is a significant sum of money. This raises the question: are the board of this hospital aware that a private company exists within the hospital itself to handle information on private patients, to transfer that information to a private clinic from whence invoices are sent directly to patients? Do the Department of Health know that equipment and staff are used for private investigations? Is a reasonable sum being paid back into the system? These questions deserve answers.

I am asking the Minister to carry out a major investigation into the operation of laboratories in hospitals throughout the country. The Minister can imagine the morale of those who are working within the system. They are highly qualified and highly efficient, and it is their perception that the equipment, resources and personnel of the hospitals are being used, with no pay back to the hospital itself. If this practice exists, then it makes the whole operation highly questionable: who authorised the carrying out of this private work and why is adequate recompense not being made?

It has been suggested to me that if a private investigation was carried out into all these operations significant sums of money would be made available to health boards all over the country. I would ask the Minister to introduce a system of control which would ensure that a reasonable return is made to each health board and hospital for resources, personnel and equipment being used. Putting it at its lowest in this major hospital in Dublin, if we say the figure is £3 million surely it is fair to suggest that for the personnel, equipment and expertise being used, £1 million should be paid back into the resources of that hospital. Think what that sum could do in terms of the operation [1809] and resources of that hospital. I encourage hospital boards and health boards to engage in outside work, but I also encourage them to ensure that a profitable return is made to the board as a result.

I would like to contrast what is happening in hospitals with what is happening in third level education. The Government encouraged the third level sector to introduce an element to self-financing. I can give two examples from the Cork area with which I am familiar. University College Cork generates £7.5 million per annum by way of contract work; the Regional College in Cork generates £1.5 million. These are very significant sums of money which can be ploughed back into the system ensuring additional resources in each of these establishments. We should arrive at a situation in health boards where if staff, are involved in extra duties, they would be given additional payments and a fair and equitable return would be made on the use of health board resources.

Extra specialist services are an extremely important and expensive item and every effort should be made to have them fully utilized rather than having them duplicated throughout the public sector. It has been suggested that some of the equipment used in the diagnosis of unusual or special diseases could be adapted for environmental monitoring of pollution levels, for example, and for useful commercial services. In UCC, at the moment, work could be farmed out from health boards all over this country, and with proper interaction between the health services and the local authorities, we could save significant resources. Many successful private companies are involved in mediscans, cholesterol level testing, prognosis and drug screening. Who would be in a better position than the health boards to interact with industry? Prognosis could be carried out on a contract basis negotiated between the health boards and the groups.

In Cork we have companies like Irish [1810] Steel and a major concentration of the pharmaceutical industry. The health board should negotiate with these companies with a view to setting up services such as advice on healthy living, prognosis and checking for any after effects of treatment.

Finally, we must aim at ensuring that only those who need specialist services are referred to hospitals. It is alleged that many people are referred to hospitals at present who do not require these services and they are clogging up the system unnecessarily and being extremely expensive. GPs have been accused in the past of not carrying out proper diagnosis in their surgeries and causing a cluster of people arriving at outpatient clinics. The GPs for their part say there is not proper computerisation in the laboratories in the health service and that as a result, it is impossible for them to make an instant diagnosis resulting in further referrals. By addressing this issue the Minister may bring about major savings to health boards and may, in fact, clear the logjam that is at present part and parcel of the health board system.

Minister of State at the Department of Health (Mr. Flood): I have listened with considerable interest to Senator O'Keeffe's contribution and I am glad of the opportunity to comment on the very interesting topic he has raised. Senator O'Keeffe will no doubt accept that the core business of our health boards is to help maintain the health of our people and provide a high quality of care to those who fall ill.

Consistent with achieving this demanding task, our health service should operate in the most efficient, effective and economic manner and I am glad to say the service has responded very positively to the Department's initiatives in this area in recent years, at a time when the whole health system has been under great pressure.

In a system which is spending about £1.75 billion on capital and non-capital [1811] services this year there will always be room for efficiencies and opportunities for value for money initiatives. My Department have been actively following through with their agencies on a whole series of initiatives to get the most value out of every point spent in the health services. All areas of expenditure, pay, non-pay and income have been and are being thoroughly assessed to ensure that the best possible use is made of resources and that services can be maintained at a reasonable level.

Enterprise is a word which is synonymous with professionalism and enthusiasm and an ability to make the maximum use of resources and opportunities. I am happy that the staff of the health services both medical and non-medical, have clearly demonstrated their enterprise in developing and keeping abreast of new techniques in patient care. Much valuable research is currently being conducted throughout our health services which will benefit patients in the future and provide for more efficient and effective delivery of our services.

I am quite confident that a spirit of enterprise linked to quality of service is very much alive throughout the health system. I see it as part of my role and the role of my colleague, the Minister for Health, Deputy O'Connell to acknowledge, support and encourage that approach provided it is focused on benefiting the patient.

I mentioned the enterprise shown in absorbing and using new technology and in pursuing research and I would like to turn to a third area of enterprise, the pursuit of value for money. By value for money I mean essentially three things: efficiency — doing things right; effectiveness — doing the right things; and economy — doing things for low cost.

One area which provides a good example where good work is being done is in the field of purchasing. The health boards are now combining to use their muscle in the area of purchasing; that [1812] is certainly doing things right. They are developing information necessary for purchasing which will provide them with market information which will be comparable to the information available to the supply side. I consider that to be the right approach. The boards will buy collectively and negotiate collectively to ensure that they purchase at the lowest cost.

A further example of enterprise which is of benefit to patients throughout the health services is in the whole area of workshops for the handicapped. In every board area, as well as providing therapeutic service for handicapped people, workshops are now selling their manufactured products and also selling other services. This goes further than income generation as it helps provide employment and training opportunities for disabled people, for example using computers to process data which was previously contracted out to a commercial computer bureau.

One focus of the value for money programme this year will be the whole area of income generation. It is true to say that in recent times many developments carried out by health boards or other agencies have had a self-financing element from income generated by other aspects of the boards' services. There are many areas where health boards can and are indeed maximising their self-financing potential. Examples of this are: commercial services for patients, for example, room telephones, cable TV and so on; commercial restaurant and coffee bars in major hospitals; shopping facilities in hospitals and the sale of diagnostic services, for example X-ray and laboratory, to private health care concerns.

The Department are examining at present the opportunities, generally, for value for money in the laboratory services in major hospitals. This is a good thing. In regard to the issue raised by Senator O'Keeffe, my Department have made inquiries of the Southern Health Board about the matter. The question of [1813] the working arrangements between the Shandon Drug Clinic and the Cork Regional Hospital was raised at a meeting of the Southern Health Board on 2 March 1992. A report has been requested for the next board meeting which I understand will take place on 6 April 1992. That is the report referred to by Senator O'Keeffe. I understand the report is being prepared. The Minister for Health, Deputy O'Connell, will be anxious to receive a copy of the report. I have no doubt he will consider its implications.

In the past two years my Department have promoted a vigorous programme of estate management throughout the health services. It is I believe most important that all the assets employed by agencies are fully utilised. A first step in this is to clearly identify, record and assess by means of modern asset registers those assets which agencies own and those which are considered surplus to requirements.

This concept of estate management, aimed at ensuring effective use of resources, is being promoted actively by my Department throughout the health boards and there has been a very positive and encouraging response by the boards. Since the middle of 1988, sales of properties have realised nearly £5 million and this money has been utilised to develop and rationalise savings, particularly those for the mentally handicapped and the psychiatrically ill.

Another example of enterprise by agencies is to be found in the area of energy management where efficiencies and investment have led to savings which were far in excess of the cost of the investments.

While I am very happy to report on many of these measures I would like to assure the House that I will continue to expand and enhance these initiatives and encourage them wherever possible. A key element I will be addressing in the coming months is the question of incentives for boards and their staff in their efforts to achieve better value for money.

[1814] We all support that objective. I will also be addressing the current cash flow problem which is inhibiting our ability to maximise value for money in the purchase of goods and services.

I believe I have said sufficient to convince this House that there is a culture now in the health services which is value conscious and increasingly enterprising. The service is committed to getting every pound of value it can from the available resources but without reducing the level of care and treatment available to patients. Indeed, given that resources will continue to be limited within the overall context of tight Government control on public expenditure, it will be essential that all possible opportunities for additional income and savings be pursued and implemented. Only by such means can our high standards of health care be maintained for the good of patients.

Mr. O'Keeffe: First, I am glad the Minister of State came to this House. I was pleased to hear him say that a number of incentives are being introduced for the staff looking for better value within the health services. I welcome the initiatives relative to self-financing which the Minister outlined. I am also very conscious that the Minister and the Minister of State want to see an efficient and streamlined health service. That was my reason for bringing this issue before the House. It is my wish too that we would have an effective but also an enterprising health system. Like the Minister I would like to see the health services maximise the opportunities for additional income. I believe — I know the Minister agrees to a certain extent — there are opportunities to increase health boards income. There are individuals and groups making significant sums of money out of the health board system but ploughing nothing back into it. That warrants investigation. It is important for the health services. There could be significant savings. One hospital generates [1815] between £3 million and £6 million. If the facilities, manpower and expertise of a hospital were paid for surely the hospital would benefit. If this happened in all hospitals a great amount of money could be saved. I urge the Minister to investigate my suggestions and ensure a proper [1816] return to the health services for the money spent.

An Cathaoirleach: Thank you Senator. I am sure the Minister will take many of your points on board.

The Seanad adjourned at 8.25 p.m. until 10.30 a.m. on Thursday, 26 March 1992.