The Department of Health has signalled that the health service will require additional funding of some €500 million next year from the exchequer, as well as a further €500-€600 million over the coming three years.

The department said there was no capacity to safely operate the health service next year with less money than was provided by the exchequer in 2014.

In a submission to the Department of Public Expenditure, it said if further savings in the health budget were required, “the focus will have to be on cutting elective activity/scheduled care”.

“While this has the potential to yield some savings, it is inefficient due to the extent of the fixed cost base.

Longer hospital stays

“In particular it should be stressed that a reduction in access to elective treatment will give rise to further waiting-list increases, and patients will present to emergency departments at a higher level of acuity, resulting in a cycle of higher costs and longer hospital stays.

“It is clear that if a person’s healthcare needs are not met in a timely and appropriate manner, with community-based supports or timely elective interventions, they may deteriorate, and present with greater levels of acuity and complexity, and require more expensive acute treatment.”

Further cuts

The Department of Health said any further cuts to the health budget in the short to medium term were “likely to result in greater expenditure requirement in the long term”.

The Department of Health report to the Department of Public Expenditure, which was submitted last month, said the number of people aged 65 and over would increase by 20,000 per year from 2015 onwards.

It said this demographic change would lead to an additional funding requirement of about €200 million per year for the health service between 2015 and 2017.

The Department of Health said that over the last number of years the health service had been striving to deliver more services with less money. This had been achieved with higher volumes of activity recorded in the health service for less cost. The ability of the HSE to do this had now diminished.

The department said the emerging picture indicated that the health service was facing a possible financial overrun of €500 million should existing trends continue.