Minister for Health James Reilly has said the gross supplementary health budget of €360m will be offset by a once-off €45m contribution from the Medical Defence Union and €70m savings found in the Department of Health.

Speaking at the Oireachtas Select Sub-Committee on Health, Dr Reilly said the net overrun would be €245m.

The minister said that the overrun represented just 1.8% of the health budget for 2012.

Minister Reilly said his department is working with the HSE on a financial management improvement programme, following a consultancy report conducted by PA Consulting.

He told the sub-committee that higher health costs this year were driven by demand-led schemes and demand-led hospital services, as well as the superannuation cost of 4,700 people leaving the service by the end of February.

Fianna Fáil Health Spokesperson Billy Kelleher told the sub-committee that the HSE's budget for 2012 was "aspirational".

He said it was clear from early in the year that the budget was "in rag order".

He said the €400m in drug savings announced by the minister recently would actually only result in €190m savings over the next three years.

Sinn Féin Health Spokesperson Caoimhghín O'Caoláin urged the minister to use some of the €360m supplementary health estimate to restore the cuts to home help hours and home care packages.

He said the cuts had caused serious pain, fear and discomfort across the State.

He also said that as in 2012, plans to cut around 3,500 more staff from the HSE next year will not result in savings but will have a severe service impact.

Minister Reilly also said that less than 10% of people dealing with money in the HSE have no training to do so.

He said this had not happened overnight but was the case since the HSE was set up.

The recent PA Consulting report on the HSE had found "systemic failings in financial management" over a number of years and that existing governance lacked clarity.

The minister said that six people with expertise in finance and accountancy were being put in place in the HSE to develop a revised budgetary process for 2013.