The hole in the HSE’s pocket

Haddington Road savings are crucial to rein in the budget

Tue, Jun 3, 2014, 01:00

The serious financial overrun in the Health Service Executive poses significant problems, not just for the health service but for the Government’s overall budgetary arithmetic.

Assessing the HSE’s financial position at any one time and determining where it is heading can be very difficult given the often opaque nature of the level of data made publicly available.

The HSE’s monthly performance reports give some details about its financial position. However, these documents tend to be several weeks out of date and are by no means comprehensive.

For example, while Ministers are given specific financial projections for the health service based on current trends, these are not provided to the public. References to corrective actions being planned are rarely spelled out in a way that would facilitate an assessment of whether they are likely to be achievable.

None of this is accidental.

Last summer The Irish Times revealed an official letter to the Department of Health from the HSE, in which its director general, Tony O’Brien, suggested a “significant streamlining” of the often embarrassing information it published about waiting lists and financial overruns in the health service.

As part of this, he asked the department’s secretary general, Ambrose McLoughlin, which information the department wanted included in monthly performance reports, which are published online, and which information should be sent directly to the department.

Based on the available figures, it is clear the HSE is facing a significant deficit in its hospital sector, will have to deal with overspending in its demand-led schemes and, at the same time, is not generating the levels of cash savings anticipated under the Haddington Road agreement on pay and productivity.

That the HSE is facing serious financial difficulties is not particularly unexpected.

And while medical-card holders gain from last week’s announcement that the Government will no longer review discretionary cards, other health service users will ultimately have to pay for it. More than €600 million is being taken from the health budget this year, on top of €4 billion in cuts and savings made in recent years.

Spend more

The only way to ease the pressure on the service and provide more entitlements is to spend more. And that, because it would need higher taxes, is politically impossible.

The body language of senior health figures after the announcement of the budget last autumn signalled they feared there was insufficient money available.

At the same time it is clear the Department of Public Expenditure and Reform believes that the HSE is simply not making the best use of the saving mechanisms set out in Haddington Road.

After the publication of the HSE’s service plan for 2014, The Irish Times reported that there was a hole of €108 million in the health budget that was originally intended to be filled by money produced from unspecified pay savings

This was in addition to a separate target of €290 million in other pay savings under Haddington Road.

However, it was never fully clear how this €108 million was to be realised and it was evident, from the start, that senior health officials were sceptical about it.

A consultant’s report, commissioned by the health service, forecast in April that these savings could not be reached and finally, a fortnight ago, Minister for Health James Reilly formally killed off the initiative and said it was unattainable.

New proposals

Apart from this €108 million, the HSE has also been experiencing difficulties in realising in full the €290 million earmarked under Haddington Road.

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