Committee of Public Accounts Meeting 15nd June 2017 Opening Statement
Mr. Tony O’ Brien Director General Health Service
Chairperson and Members, thank you for the invitation to attend today’s meeting to discuss the HSE Annual Financial Statements for 2015 and 2016.
I would like to introduce the Senior Management members with me today:
- Mr. Stephen Mulvany, Chief Financial Officer and Interim Deputy Director General
- Ms. Mairead Dolan, Assistant Chief Financial Officer, Finance Division
We have submitted information and documentation to the committee in advance of the meeting and I will therefore confine my opening remarks to the following issues:
Financial Outturn 2016
Following discussions which commenced in May 2016, a Revised Estimate for Health was approved by the Oireachtas on July 7th 2016, with an additional €500m notified to the HSE as part of this revision. This represented a significant commitment to ensuring that our health and social care services were placed on a more sustainable financial footing for 2016 and marked a move away from the practice of allocating supplementary funding at the year end.
The Annual Financial Statements for 2016 reports a combined (Revenue and Capital I/E) surplus of €12.4m before the impact of the first charge mechanism. The result after the first charge related to 2015 is a combined surplus of €4.7m.
Financial Outturn 2015
The 2015 Annual Financial Statements reported a combined (Revenue and Capital I/E) deficit of €7.7m which under the principles of first charge has been reflected in the financial statements of FY2016.
This was after a total of €649m was provided in supplementary funding for the 2015 financial year which included:
- €212m in net supplementary estimates to the HSE in respect of projected deficits in areas within its direct control which are reflective of financial performance challenges. This primarily related to cost pressures within Acute Hospitals and Disability Services.
- €437m in respect of overruns in PCRS, Pensions, SCA as well additional funding for new initiatives approved after the HSE’s National Service Plan was finalized such as waiting list and winter planning initiatives. This €437m is approximately two thirds of the total supplementary for 2015 and does not reflect any adverse financial performance by the HSE.
To put the HSE’s financial performance over recent years in context, If we look back over the 9 years from 2008 to 2016 there has been:
- €500m in net supplementary estimates to the HSE in respect of areas within its direct control which are reflective of financial performance challenges. This equates to 0.46% (approximately half of one per cent) of the €108.512bn total original net vote over the period.
- €791m in supplementary estimates to the HSE in respect of PCRS (Medical Cards / GP fees, Drugs and Other demand led Schemes, DTSS etc.) which equates to 0.73% of the €108.512bn total original net vote over the period.
- €1,948m in supplementary estimates to the HSE in respect of Exchequer related and other items outside of the control of the HSE which equates to 1.80% of the €108.5129bn total original net vote over the period
Further detail in respect of the years 2008 to 2016 has been provided in the briefing already submitted.
Matters of Exception Reported by the C&AG FY2016 and FY2015
In the Comptroller and Auditor Generals audit certificate which accompanies the Annual Financial Statement, the C&AG drew attention to concerns in relation to the monitoring and oversight arrangements in respect to grants to outside agencies, and also non competitive procurement issues. The HSE acknowledges these matters of concern and is progressing medium to long term plans required to bring about improvements.
Non Compliant Procurement
The scale and complexity of the HSE’s overall procurement activity is such that it will take a sustained focus over a number of years in order to ensure high levels of compliance and this is a key focus for the HSE. The HSE continues to progress a number of initiatives which are organised around three key themes:
- Supporting infrastructure (includes training, improving data analytics etc.)
- Sourcing (putting in place additional contracts and frameworks)
- Compliance (supporting services to move to compliance with contracts and frameworks).
Further detail in relation to the steps being taken to address the issue of non-compliant procurement are published in the Statement of Internal Financial Control (SIFC) within the 2016 Annual Financial Statements.
Monitoring and Oversight of Grants to Outside Agencies
In 2016 just under €3.8bn of the HSEs total expenditure related to grants to over 2,000 outside agencies. These range from the large Voluntary Hospitals and Disability Organsiations to small local community based agencies. Weaknesses in the monitoring and oversight of these grants to outside agencies have been identified.
The HSE continues to progress the necessary medium to long term actions to address these weaknesses coordinated nationally by the HSE Compliance Unit which was established in 2014. This unit is supporting the development of improved grant oversight by our Community Healthcare Organisations (CHO’s) and Hospital Groups. This improved oversight is intended to raise the level of compliance by grant funded agencies with the HSE’s Governance Framework.
An example of the actions already taken is the external review of governance arrangements in respect of all Section 38 providers which is underway.
Further detail in relation to the steps being taken to address the issue of weaknesses in the monitoring and oversight of grants to outside agencies are published in the Statement of Internal Financial Control (SIFC) within the 2016 Annual Financial Statements.
The C&AG’s reporting is therefore timely and will assist the HSE in managing these key areas of focus.
This concludes my opening statement.
Last updated on: 15 / 06 / 2017