Health officials had little sympathy with GPs and pharmacists on new fee cuts

Civil servants told Minister there was scope for additional reductions in payments

Representative bodies and individual healthcare professionals warned of consequences for services if proposed 7.5 per cent fee cuts were implemented by Department of Health. Photograph: Getty Images

Representative bodies and individual healthcare professionals warned of consequences for services if proposed 7.5 per cent fee cuts were implemented by Department of Health. Photograph: Getty Images

Tue, Sep 24, 2013, 01:00

Senior Department of Health officials had little sympathy with lobbying by healthcare professionals, including GPs and pharmacists, to hold off on further cuts in fees and their warnings about the consequences of such a move on services.

Instead, officials told Minister for Health James Reilly, following a consultation process earlier this year, that despite several rounds of reductions in payments in recent years, there was still scope for further cuts.

In July the Government invoked financial emergency legislation and announced cuts of about 7.5 per cent in fees for GPs, pharmacists and others, who are not HSE employees but provide services on a contract basis.

During the consultation process, representative bodies and individual doctors and pharmacists made submissions in which they generally warned of the consequences for services if additional cuts were imposed.

Arguments rejected
The official files in relation to consultation and the imposition of the new cuts, which have been seen by The Irish Times, show Department of Health officials rejected these arguments.

The Irish Pharmacy Union (IPU) told the department that pharmacists collectively had seen their income fall by €525 million (or about €316,000 per pharmacy) under previous cuts imposed by the Government between 2009 and 2012.

However, the department said that of this figure, €258 million related to a reduction in the wholesale mark-up paid to pharmacists. It said this was not a remunerative element of payment to pharmacists and should not be included.

“The department does not view the reduction in the wholesale margin as a reduction in income for pharmacists. It is a payment to cover wholesaler costs and was never intended to form part of pharmacists’ remuneration.”

The department said a similar argument could be made in relation to VAT. It said the HSE paid almost €86 million to pharmacists last year to cover VAT on ingredients and fees.

“Pharmacists paid this money over to the Revenue . . . VAT is not a remunerative element of payment to pharmacists.

“If the Government decided to cut VAT, we would not entertain a claim by pharmacists that that their income had been reduced.

“Excluding the wholesale margin reduction from the analysis, the reduction in direct pharmacy income over the period is €268 million or €94 million in 2012.”


Reductions offset
The department told the Minister that while the IPU claimed that the cuts under the financial emergency legislation had resulted in a significant reduction in overall pharmacists’ income between 2009 and 2012, increased prescribing volumes had offset these reductions.

As a result, the 2012 payments to pharmacists were within 5 per cent of the 2009 figure and would exceed it by the end of this year.

Officials also said that there had been no evidence that the cuts imposed over recent years had impacted on the delivery of services.

There were more community pharmacy contracts in place last year than there were in 2008; 1,711 compared with 1,620.

The department said the IPU continued to argue that generic substitution should be introduced in advance of a reference pricing system as it would deliver immediate savings for the public.

However, the department said “the approach proposed by the IPU would enable pharmacists to dispense products which attracted the highest margins/discounts for the pharmacist but which would not guarantee savings for the patient or the State”.


GP charges
The department told the Minister that the cuts of about 7.5 per cent in fees for GPs would compare with reductions of 7.26 per cent under the Haddington Road agreement for a public service employee with a salary of €195,000.

“While it is acknowledged that GPs have overheads that do not apply to public sector workers, GPs have the potential to earn additional income by treating private patients with GPs on average receiving in the region of €50 per private consultation.

“In addition, many GPs are now charging medical card and GP visit card patients for certain services (which were previously provided free of charge), [such as] phlebotomy services.

“This income, along with private consultation fees, will not be affected by potential FEMPI [financial emergency legislation] reductions.”


Opportunities abroad
The officials acknowledged the cumulative effect of cuts in GP fees and allowances under financial emergency provision since 2009 has been €84 million.

It said the HSE was unaware of any GP resigning from their contracts as a result of fee reductions. It said the number of GPs providing services under the GMS scheme increased from 2,136 at the end of 2009 to 2,353 at the end of 2012.

However, it said the Irish Medical Organisation (IMO), which represents doctors, had warned that further fee cuts could result in GPs seeking better opportunities abroad.

The department said that the IMO had raised the question of the burden of fixed overheads for GPs which it maintained were subsidised in the UK, the Netherlands and other countries.

The department told the Minister that it had taken account of this issue when dealing with financial emergency cuts in 2009 and 2010.

It also said it had to be borne in mind that 60 per cent of the population saw their GP on a private basis and that the State could not be expected to make allowance for the full cost of overheads “in what are essentially mixed public/private practices”.

No restrictions
The department also argued that the State did not place any restrictions on the level of fees that GPs could charge private patients and that there were no restrictions on the number of private patients that GPs could see and that the HSE had no right to impose any restrictions on the working hours of family doctors.

It also said that GPs were “unique among healthcare contractors in terms of the level and extent of allowances that they receive from the HSE towards their practice costs, including secretarial and nursing subsidies, leave cover, medical indemnity, etc”.

Arguments made by doctors in consultation processs

GPs required to cover costs for fixed overheads of up to 60 per cent of gross turnover.


While increasing number of patients with medical cards mitigating some of fee cuts, these patients had previously paid private fees to doctors.


GPs facing increased workload with upsurge in illness relating to financial worries and occupational insecurity.


Rural areas could lose GPs as a result of cuts in fees relating to the distance of patient from surgery.


Waiting lists to see GPs will be inevitable if further cuts imposed.


GPs may cease to carry out pro bono work.

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