It is not fiscally sustainable for the State to continue to increase the budgets of hospitals at the same level as seen over recent years, the Minister for Health Jennifer Carroll MacNeill has said.In a letter to the Dáil Public Accounts Committee (PAC) she also maintained that over-recruitment of more than 900 staff – undertaken locally by hospitals without formal approval from the Health Service Executive or Department of Health – up to 2024 had resulted in “recurring unfunded pay costs that contributed materially to financial pressures”.The Minister’s letter was in reply to warnings set out by three of the country’s main voluntary hospitals at a meeting of the PAC in April in which they said they were facing a funding shortfall of more than €120 million between them this year.Carroll MacNeill said she fully acknowledged the pressures being faced by the acute hospital system including growth in demand, workforce challenges and the rising cost of delivering care. However, she said she wanted to provide some “additional context regarding hospital financial performance, oversight arrangements and the actions expected of hospitals in managing resources”.“Firstly, it should be noted that the acute hospital system has seen a significant and sustained increase in funding in recent years. “Between 2022 and 2026, budgets across the voluntary hospitals increased by €1.1 billion (36 per cent) overall, including increases of €175 million (42 per cent) for the Mater, €137 million (46 per cent) for Tallaght and €119 million (32 per cent) for St Vincent’s. “Over the same period, growth in hospital funding has outpaced increases in community-based services.”“While this investment reflects real growth in demand and rising costs, it is not fiscally sustainable to continue with funding increases of this scale. “Consistent with Sláintecare, the medium-term challenge for the health service is therefore not simply to continue expanding hospital budgets but to achieve better value and improved patient flow by shifting appropriate care from hospitals into community and primary care settings.”The Minister also said hospital output had not increased in line with the rise in staffing levels. She said as a result significant scope remained to improve productivity and throughput within existing resources. She said this was “central to financial sustainability”.“Composite activity is a single measure that brings together the main types of hospital work – inpatient admissions, day-case treatments, outpatient appointments and emergency department attendances – and weights them to reflect how resource intensive they are. Looked at this way, the data shows that growth in hospital output has not kept pace with growth in staffing.”Carroll MacNeill said across hospitals dealing with complex care – known as model four facilities – staffing increased by 36 per cent between 2019 and 2025, while composite activity increased by only 10 per cent.“The same pattern is evident in individual hospitals: in the Mater, staffing grew by 41 per cent while composite activity increased by 12 per cent; in Tallaght, staffing grew by 39 per cent while composite activity increased by 17 per cent; and in St Vincent’s, staffing grew by 35 per cent while composite activity increased by only two 2 per cent.”The Mater hospital told the PAC in April that without additional HSE supplementary funding last year it would have been insolvent.The Mater, St Vincent’s University Hospital in south Dublin and Tallaght Hospital all told the committee that the initial financial allocations provided by the HSE this year would not cover the cost of providing services and paying staff and suppliers.