Budget brings extra investment for health – but savings must be made

The Minister for Health, David Anderson MHK has welcomed the announcement of a net increase of 3% in health spending in today’s Budget. But Minister Anderson has warned that challenges and tough decisions lay ahead for the Department, including a need to identify savings in excess of £1.5 million in the coming financial year.

The Department of Health’s 3% net increase in spending represents just over £3.6 million in real terms. Whilst this increase is welcomed in what are very difficult fiscal circumstances for Government, healthcare costs are increasing by around 6 - 8% a year. Past increases in the Department’s budget have been at around 6 - 10% to meet these funding demands. As a result, despite the increase, significant cost savings are needed to enable the Department of Health to meet demand and maintain the current level of services provided to the people of the Isle of Man.

David Anderson MHK said:

“I welcome the extra investment in Health Services but I would wish patients, staff and Hon Members to be advised that a further saving of over £1.5 million needs to be achieved in 2012/13 in order to meet anticipated expenditure demand. A number of options, particularly in relation to prescription exemption criteria will be considered and presented in due course.

“I am grateful to all concerned within the Department with the efforts made in the past to reduce costs and it is only working collectively that as a Department we meet both the high expectations and demands of our patients.

“We will, of course, endeavour to ensure front line services are protected as best as possible, but we need to be realistic about the financial challenges we face and accept that change is inevitable.”

Development of additional vital services

Although the Department faces a period of fiscal restraint, the development and enhancement of key services will continue, based on clear clinical need and demand. The Department has three schemes outlined for development during 2012/13:

• Introduction of Chlamydia Screening (£50,000) – this is in line with the Department’s Health Strategy, which looks to increase focus on prevention and screening
• New Renal Unit at Ramsey and District Cottage Hospital (£225,000) – this expansion of the Island’s Renal Service from its sole base at Noble’s Hospital, which has reached capacity, is to meet increasing demand for dialysis and related care. The new Unit could be online as early as January 2013
• Design of an extension to the Neo-Natal Unit at Noble’s Hospital (£100,000) – although many people still think of Noble’s Hospital as ‘new’, in health terms, this is not the case. The current facilities were designed 15 years ago. Significant advances in neo-natal care and an increase in demand means that the Island will be able to comply with the highest standards and avoid the more costly prospect of transferring neo-natal care off-Island. It is expected that by negating the costs of off-Island treatment for neo-neonatal care, the investment would in effect see a pay back in three to four years.

The additional £3.6 million outlined in the Budget will fund the introduction of Chlamydia Screening, the increasing costs of clinical supplies, off-Island referrals, medical agency costs and salary increments, as well as surgical consumables and utilities inflation etc. The new satellite Renal Unit and the extension to the Neo-natal Unit will be funded as capital projects.

Sustainability of current funding model

Universality has been a fundamental principle of the Island’s Health Service since it was founded some 60 years ago and remains largely unchanged today, and yet the complexity and diversity of the services offered have changed almost beyond recognition. It is estimated that if only those services provided 60 years ago were all that were provided today, the Health Service would cost two thirds less to run. The Department is faced with the question of how sustainable the present model of funding for Health Services is in the short and medium term.

Dudley Butt MLC, Member for Health said:

“Naturally, I echo the Minister’s comments in very much welcoming this increase in expenditure. It’s all too easy to forget how very lucky we are in the Isle of Man with regards to our health services. In other jurisdictions in the British Isles things are very different. In Jersey for example, there is a charge for a GP appointment, and in the Republic of Ireland patients will be charged for an overnight stay in hospital.

“We must prioritise our spending and in doing so may also need to take into account people’s ability to pay. The question of affordability isn’t something we can ignore. That’s why the Department is looking into eligibility criteria for financial support for areas such as prescriptions and eye tests. I think this is an important step to take in ensuring that we can protect core services that make a real and tangible difference at the point of care. This can mean the difference between keeping wards open or closing them and the ability to continue to offer existing services.”

Investment of savings into front line services

Minister Anderson concluded:

“The Department of Health has taken great strides over the past several years to reduce its costs and operate more efficiently, with savings estimated at £6 – £8 million. Examples include reviews of management structures, streamlining processes and encouraging staff to proactively identify savings opportunities. These savings have then been re-invested into front line services. This work is to be commended, but we’ll need to embrace this approach with added fervour over the coming years. With over £1.5 million in savings required in order to maintain existing front line services, I think it’s important that people realise the Department doesn’t face an easy ride and is certainly not immune from the budgetary pressures facing all areas of Government.”