The redevelopment of Our Lady's Hospital for Sick Children in Crumlin must proceed urgently, according to its latest annual report published yesterday.
The report states that the world of healthcare has moved on considerably since the hospital was designed more than half a century ago.
"There is a clear recognition of the need for change," it said.
The report was presented at the a.g.m. of the hospital board on Wednesday night as controversy continued over the hospital's decision to cancel a child's heart surgery earlier in the week because of a shortage of intensive care nurses.
Two-year-old Róisin Ruddle from Adare in Limerick was discharged after her operation was cancelled and died at home within 24 hours.
She was laid to rest yesterday.
A report requested by the Minister for Health, Mr Martin, into the case was still being compiled and is expected to be published within days.
The hospital's annual report for 2002 refers to the effects of many decades of under-investment being "evident in outdated equipment and old buildings". While it welcomed Mr Martin's approval for the appointment of a Hospital Development Group to plan the changes necessary it emphasised the hospital's "considerable regret" at not being included in the National Development Plan. It has requested this be amended.
"While we appreciate the need for Government controls on spending, the hospital has found it extremely difficult to maintain the highest standards of services required within the approved financial allocation," the report said.
It ended 2002 with a €2.4 million deficit, which it has had to carry into this year.
And while it received State funding for new operating theatres, the report notes many other facilities are paid for by donations.
These included the purchase of accommodation for parents to stay over with their children, bought from the proceeds of a Late Late Show appeal, and a new infectious diseases unit built from the proceeds of Niall Quinn's testimonial match in May 2002.
The report also shows that despite its difficulties the hospital's activity levels increased in 2002.
Inpatient and day case attendances increased by 8.45 per cent on 2001 to 19,585, outpatient activity increased by 2.79 per cent to 64,367 and new patient attendances at accident and emergency increased by 1.5 per cent to 29,594.
Approximately 36 per cent of patients treated travelled from outside the eastern region.
Apart from the costs incurred in treating extra patients, the hospital's payroll costs increased by more than €7 million in 2002.
This was partly due to having to recruit new staff for new service developments and due to having to use agency staff.
"The increase in administrative expenditure is mainly due to an unprecedented increase in general insurance of 133 per cent as well as a 20 per cent increase in medical insurance over 2001 costs," the report said.
Furthermore, it said the hospital's management team was convinced the hospital was "seriously underfunded to deliver the current range of services expected from our institution.
"In these circumstances the hospital is requesting the Eastern Regional Health Authority to engage in an independent review of our funding allocation".
Earlier this year it closed 25 beds due to funding difficulties.