Hospitals are facing cuts in funding of around €200 million this year.

The HSE's published its divisional plan for acute hospital services in 2014 yesterday, and confirmed that hospitals face cuts of around 4% on their 2013 budgets. The spenging reduction includes savings under the Haddington Road pay deal.

The report says the plan to reorganise hospitals into groups, and eventually into independent trusts, will continue this year. as will the 'Money Follows the Patient' system, whereby in the future, hospitals will be funded based on their activity levels.

The plan says there will be a major review of maternity services this year with a view to producing a new national maternity service strategy. The HSE plans to implement, with all hospitals, the recommendations from a number
of key reports on maternity services. The HSE will publish progress on these reports during 2014.

The report says challenges to the system include addressing the growth in demand for drugs fuelled both by increased cancer incidence and growth in prevalence and addressing the increasing cost of new technologies and personalised medicine.

The report says the most significant challenge to delivering services this year is 'the availability of appropriate capacity and capability across the hospital division'.

There are  also challenges in meeting 'the increase in patient and societal expectations' in an environment of diminishing funding, the plan says.

Separately, the HSE's Primary Care division plan says €37 million will be allocated this year to provide free GP care to children five and under and 60,000 new medical cards will be provided, according to the plan.

However, 75,000 medical cards are likely to be withdrawn and there will be further cuts to the list of free drugs available under the medical card scheme.

The budget for the medical card scheme has been cut by €140 million for 2014.