On Wednesday, 3 March 2021, ESRI researcher Conor Keegan presented the topic ‘Projections of expenditure for public hospitals in Ireland, 2018 to 2035’ at the conference ‘Irish hospital expenditure beyond the era of COVID-19.’ The conference examined issues relating to expenditure on acute hospital care in Ireland. Findings from recent ESRI research, undertaken as part of the ESRI Research Programme in Healthcare Reform, which is funded by the Department of Health, were presented. To view event details, click here: https://www.esri.ie/events/irish-hospital-expenditure-beyond-the-era-of-covid-19 To view a video of the presentation, click here: https://www.youtube.com/watch?v=mq6xCs2raOE

1. www.esri.ie Informed Policy for a Better Ireland @ESRIDublin #ESRIevents
PROJECTIONS OF EXPENDITURE FOR PUBLIC
HOSPITALS IN IRELAND, 2018 TO 2035
CONOR KEEGAN
PRESENTATION TO ESRI POLICY CONFERENCE
MARCH 3RD 2021

2. 2

3. FINDINGS
BASELINE EXPENDITURE, 2018
3

4. BASELINE EXPENDITURE BY SERVICE 2018
Public Acute Hospitals
€5,907m
Attendances
€1,095m
ED
€419m
OPD
€676m
Discharges
€4,140m
Day
patient
€920m
In-patient
€3,220.5m
Public
acute
adult
psychiatric
in-patient
unit/hospital
*
€179m
Residual
€672m

5. UNIT COST BY COMPONENT
 The proportion of the unit
cost related to each
component varies across
services
 Across all services pay is the
single largest component of
care costs
 For day-patients drugs
account for approximately a
quarter of the cost of care
delivery
76.3%
69.6%
49.2%
66.1%
2.5%
10.0%
23.6%
5.1%
21.2% 20.4%
27.2% 28.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
ED
€298
OPD
€171
Day patient
€885
In-patient
€4,985
Attendance Discharge
Non-pay - other
Non-pay - drugs
Pay
5

6. BASELINE EXPENDITURE 2018
0
1,000
2,000
3,000
4,000
5,000
6,000
<1
10
20
30
40
50
60
70
80
90+
Expenditure
per
capita
(€) Male - per capita Female - per capita 6
0
50
100
150
200
250
300
<5
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90+
Expenditure
per
capita
(€)
Female - per capita Male - per capita
In-patients (excl. mat)
Outpatients (excl. mat)

7. FINDINGS
PROJECTIONS 2018-2035
7

8. PROJECTION SCENARIOS
Low pressure Central High pressure
Demand assumptions
Population growth and ageing Low Central Central
Healthy ageing Dynamic equilibrium Moderate healthy ageing None
Cost assumptions
Pay COMSO Delayed Recovery
2.2% p.a.
COSMO Recovery –
2.5% p.a.
COSMO Recovery –
3.5% p.a.
Non-pay
Drug cost 4.2% increase p.a. 5.2% increase p.a. 6.2% increase p.a.
Other COSMO Delayed Recovery –
inflation + 0.5 pct point p.a.
COSMO Recovery –
inflation + 1 pct point p.a.
COSMO Recovery –
inflation + 1 pct point p.a.
8

9. PROGRESS SCENARIO
Assumption OPD ED Day patient and in-patient
Waiting list management Backlog clearance from 2021–
2025. Additional recurring
activity to sustain lower waiting
times.
N.A. Backlog clearance from 2021–
2025. Additional recurring
activity to sustain lower waiting
times.
Avoidable hospitalisations N.A. Linearly reduce ED attendances
in line with in-patient avoidable
hospitalisations each year.
Linearly reduce rate of
avoidable hospitalisations each
year, converging to 33%
reduction by 2035.
9

10. PROJECTIONS OF EXPENDITURE, 2018-2035
10
Low Central High
Emergency department Real 12 17 19
Nominal 62 78 109
Outpatient department Real 12 16 18
Nominal 63 78 108
Day patients Real 21 27 31
Nominal 92 119 161
In-patients Real 25 33 38
Nominal 86 109 150
Psychiatric In-patients Real 16 19 25
Nominal 69 81 120
Projected HCE growth 2018–2035
(%)

11. 11
PROJECTIONS OF EXPENDITURE, 2018-2035
Low Central High Low Central High
Emergency department Real 12 17 19 1 1 1
Nominal 62 78 109 3 4 4
Outpatient department Real 12 16 18 1 1 1
Nominal 63 78 108 3 4 4
Day patients Real 21 27 31 1 1 2
Nominal 92 119 161 4 5 6
In-patients Real 25 33 38 1 2 2
Nominal 86 109 150 4 4 6
Psychiatric In-patients Real 16 19 25 1 1 1
Nominal 69 81 120 3 4 5
0
Projected HCE growth 2018–2035
(average annual %)
Projected HCE growth 2018–2035
(%)

12. DECOMPOSITION EXAMPLES – OUTPATIENT & IN-PATIENT
Outpatient In-patient
0
200
400
600
800
1,000
1,200
1,400
1,600
2018 2035 2035 2035
Low Central High
Expenditure
(€m)
Total Non-pay other Pay Population age structure Population growth
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2018 2035 2035 2035
Low Central High
Expenditure
(€m)
Total Non-pay other Non-pay drugs Pay Population age structure Population growth
12

13. DECOMPOSITION – DAY PATIENTS
13
0
500
1,000
1,500
2,000
2,500
2018 2035 2035 2035
Low Central High
Expenditure
(€m)
Total Non-pay other Non-pay drugs Pay Population age structure* Population growth

14. PROJECTIONS OF GROSS HOSPITAL EXPENDITURE
 In nominal terms, we project gross expenditure requirements for public
acute hospital care of between €10.8bn and €14.4bn by 2035, compared
to expenditure of €5.9bn in 2018
─ 82 to 143 per cent increase
Nominal expenditure growth (average annual)
2013-2018 4.5
Low Central High Progress Central – adjusted
2018-2025 3.3 4.1 5.3
2026-2030 3.8 4.4 5.5
2031-2035 3.8 4.3 5.4
2018-2035 3.6 4.3 5.4
14

15. AGGREGATE EXPENDITURE GROWTH
 In nominal terms, we project gross expenditure requirements for public
acute hospital care of between €10.8bn and €14.4bn by 2035, compared
to expenditure of €5.9bn in 2018
Nominal expenditure growth (average annual)
2013-2018 4.5
Low Central High Progress Central – adjusted
2018-2025 3.3 4.1 5.3 4.5
2026-2030 3.8 4.4 5.5 4.2
2031-2035 3.8 4.3 5.4 4.1
2018-2035 3.6 4.3 5.4 4.1
15

16. AGGREGATE EXPENDITURE GROWTH
 In nominal terms, we project gross expenditure requirements for public
acute hospital care of between €10.8bn and €14.4bn by 2035, compared
to expenditure of €5.9bn in 2018
Nominal expenditure growth (average annual)
2013-2018 4.5
Low Central High Progress Central – adjusted
2018-2025 3.3 4.1 5.3 4.5 6.0
2026-2030 3.8 4.4 5.5 4.2 4.4
2031-2035 3.8 4.3 5.4 4.1 4.3
2018-2035 3.6 4.3 5.4 4.1 5.1
16

17. SUMMARY
 Public acute hospital expenditure in 2018 was €5.9bn
 This is projected to increase by
─ between 1.2 to 1.7% on average, per year in real terms to 2035
o Driven by growing and ageing population
─ between 3.6 to 5.4% on average, per year in nominal terms to 2035
o Driven by the increasing cost of care delivery, particularly pay
 Projected growth greatest for acute day patient and in-patient care
─ Older age profile, complexity adjustment, drugs
17

18. POLICY IMPLICATIONS
 Significant investment in capacity and workforce (including resources to address unmet
demand)
 Some acute care could be more appropriately delivered in the community and would
be expenditure saving to the acute system (but in turn would require community
investment)
 What role for productivity in offsetting some of the projected cost increases?
 Finally – demographic change should be welcomed!
─ while additional resources will be required to finance care needs, sustainability should be viewed in
the context of growing national income and tax base
18

19. WHAT’S NEXT FOR HIPPOCRATES?
19
 2021
─ Projections of private hospital expenditures to 2035
─ Non-acute expenditure projections to 2035
─ National and regional projected workforce requirements

20. THANK YOU
 A big thank you to our data providers!
20

21. ADDITIONAL MATERIAL
21

22. AVOIDABLE HOSPITALISATIONS – REDUCTION RATE
 A parameter is included in the model to allow us to reduce the avoidable
hospitalisation rate.
 We assume that this will linearly converge to 0.33 by 2035
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
<1
3
6
9
12
15
18
21
24
27
30
33
36
39
42
45
48
51
54
57
60
63
66
69
72
75
78
81
84
87
90+
Activity
Rate
2035
Age
No shift
β = 0.25
β = 0.33
β = 0.50
22

23. SENSITIVITY ANALYSIS
Public acute hospitals
Psychiatric
in-patient
ED OPD Day patients In-patients Adult
Projected 2035 expenditures
based on central scenario
746 1,062 1,995 6,332 325
Assumption Percentage effect on 2035 expenditure of changing one assumption (%)
Population
Low -3.0 -2.2 -1.6 -2.0 -2.0
High 7.1 5.3 3.7 4.4 4.8
Healthy
ageing
None 1.5 1.7 3.2 4.2 N.A.
DE -1.5 -1.7 -3.2 -4.2 N.A.
CM -3.0 -3.3 -6.4 -8.4 N.A.
Avoidable
hospitalisation
reduction
0.25% by 2035 -1.2 N.A. N.A. -4.1 N.A.
0.33% by 2035 -1.6 N.A. N.A. -5.4 N.A.
0.50% by 2035 -2.4 N.A. N.A. -8.2 N.A.
Pay
Productivity improvement
1.0% p.a. -11.7 -10.6 -6.6 -9.8 -12.2
1.5% p.a. -16.8 -15.4 -9.6 -14.2 -17.6
Pay freeze
2021-2022 -3.7 -3.3 -2.1 -3.1 -3.8
2021-2022, 1.5% p.a.
wage growth thereafter
-12.3 -11.2 -7.0 -10.3 -12.8
23

24. BASELINE EXPENDITURE - AGGREGATE
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
0
50
100
150
200
250
300
350
<5
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Expenditure
per
capita
(€)
Expenditure
(€m)
Age
Males - total
Females - total
Males - per capita
Females - per capita
Expenditures, 2018
€m %
ED attendances 418.6 7.1
OPD attendances (incl. maternity) 676.4 11.4
Day-patient discharges (incl. maternity) 919.5 15.6
In-patient discharges (incl. maternity) 3,220.5 54.5
Combined services total 5,234.9 88.6
Residual 672.2 11.4
Total HSE gross expenditure 5,907.1 100
24

25. HIPPOCRATES MODEL – DIAGRAMMATIC REPRESENTATION
Base year activity rates (t)
Activity rate adjustment (t+j)
Population projections (t+j)
Projected demand (t+j)
Base year unit cost (t)
Projected unit cost (t+j)
Projected expenditure (t+j)
Unit cost indexation (t+j)
DEMAND COST
25

26. UNIT COST BY SERVICE
ED
attendance
OPD
attendance
Day patient
discharge
In-patient
discharge
€ € € €
2015 263 142 733 4,555
2016 270 156 754 4,602
2017 294 163 836 4,794
2018 298 171 885 4,985
Average annual growth
2015–2018
4.2% 6.2% 6.5% 3.1%
26