Irish hospital costs are 80% higher than EU average - report

Costs in Irish hospitals are 80 per cent higher than the EU average, the Department of Public Expenditure and Reform has estimated, in an internal paper prepared for the Government.

In the paper, which was drawn up last September, the department said its findings were based on a report drawn up by the OECD in 2014 which looked at the prices for a number of comparable treatments, making adjustments for how costs were calculated in different countries.

The OECD study looked at a range of costs, including laundry, patient food, cleaning, security, staff salaries, drugs and medical equipment.

International standards

The department argued that as hospital costs were high by international standards, available resources should be concentrated on those with the most activity as measured by, for example, patients treated or procedures carried out.

“The cause of the identified high cost base needs to be understood so that further mitigating action can be pursued.

In 2016, the Department of Health and HSE should pursue a workstream aimed at identifying the components of hospital spend, with a view to explaining where costs are incurred."

Teaching

It said this should include costs related to private work carried out in public hospitals by doctors, costs related to teaching and those stemming from diseconomies of scale.

The HSE strongly disputed the department’s findings in a response document which has also been seen by The Irish Times.

It described the findings on hospital costs as “misleading”.

"Countries such as Bulgaria, Lithuania and Albania are included in that average. Clearly Ireland is not comparable in terms of standard of living to these economies," the HSE said.

“In a sensible analysis, outliers such as this would be excluded from the calculation of the average – which would not place Ireland 80 per cent higher.”

The HSE said its officials had “recently met a physician from Lithuania who was earning €20,000.”

In the response document, which was also drawn up in September, the HSE said the suggestion that resources should be concentrated on centres with the highest activity levels was “directly conflicting with the policy framework within which small rural hospitals exist”.

The Department of Health said the OECD itself had acknowledged that it was difficult to make meaningful comparisons between countries.

Expenditure reductions

The OECD had therefore established a pilot project to develop a better understanding of variations in hospital costs across a number of countries, in which Ireland would be participating, it added.

The HSE said that the department’s document was also unfair as it looked only at the cost of a weighted unit from 2010 onwards and compares this each year with the previous year.

This was not a fair assessment given that budget cuts and expenditure reductions began in 2008.

The evaluation should start with 2008 and compare each year against that base.