Sustained cuts mean the health service is delivering "less for less", according to an unpublished report commissioned by Health Service Executive Director General Tony O'Brien.
The 40-page report, obtained by RTÉ News, warned that performance and productivity gains in recent years have "run their course".
It found that cuts have been applied to the health budget in an arbitrary fashion, sometimes with no identified savings programme in place.
It added that little work has been done to establish if the annual "spending crisis" in health is due to poor financial control or under-funding.
The report - titled 'Is the Irish health system at an inflection point?' - warned that the Government must be sensitive to the risk where serious problems with safety and quality will occur, due to brutal fiscal consolidation.
The report was commissioned in March and produced by Professor Martin Connor, Executive Director at the Centre for Health Innovation at Griffith University in Queensland, Australia and the former special adviser to then health minister James Reilly.
The HSE said the unpublished document is an academic paper to help inform Mr O’Brien and that it is still under consideration.
The report concluded that Ireland appears to have reduced health spending more rapidly and to a greater extent than its international counterparts and that the health programme appears to have been disproportionately reduced for several years compared to social protection and education.
Prof Connor said there is one remarkable fact concerning the entire debate about health reform in Ireland - the cost of it has never been estimated, let alone factored into budget allocations or savings plans.
The report found that the Government's present expenditure strategy is not sensitive to the risks associated with the rapid and continuing reduction in health budgets and that the processes to monitor and check these risks are underdeveloped.
It recommended that the Government ends real term reductions in health budgets, as the risks of continuing down this path are simply too great.
Prof Connor suggested several options: providing an "at least" inflation increase in the health budget, a target percentage of GDP being reserved for health, or having a cross-party review of health spending to establish a realistic minimal baseline from which a multi-year spending strategy can be developed.
He also suggested that a commission on health spending could be established, ideally with cross-party support, to consider all and any changes to the system.
The report concluded that the requirement to reduce staffing numbers is now running directly counter to the requirement to deliver savings, creating a contradiction in Government policy.
There is evidence that the very high levels of agency staff, used at "prohibitive cost", is driven by the headcount cuts and in some cases is having a detrimental impact on the ability to deliver high quality care.
Prof Connor said the combination of legislated programmes, political direction and policy mandates have significantly reduced the leadership scope for manoeuvre and this process is continuing with the recent medical card controversy.
The report found there is evidence that national decision making is hampering elements of the reform programme, increasing the risks to quality and financial performance.
Prof Connor was asked to review the overall progress on reform and recommend how the HSE could improve its performance.
He said there has been no effective national debate on the costs of reform itself or what the scope of a national reform programme should be, or how this should be organised.
The report also found that moves to improve performance and accountability, to create a more locally responsive and autonomous care delivery system and ultimately to reform the revenue and reimbursement system through Universal Health Insurance are both ethically correct and consistent with international best practice.
