Budget may shrink by €2bn by end of 2014

MORE THAN €2 billion will have to be taken out of the health budget by the end of 2014, the new secretary general of the Department of Health has warned.

Dr Ambrose McLoughlin acknowledged yesterday that spending cuts were putting pressure on the health system, but claimed it had responded by “delivering more with less”.

Appearing for the first time before the Oireachtas health committee, he said the financial overrun at his department reached €330 million by the end of August and may rise further by the end of the year.

Dr McLoughlin said the proposed reduction in spending between 2011 and 2014 was needed to meet Government commitments and because of “unavoidable pressures”. The €2 billion figure is higher than the €1.1 billion envisaged in the National Recovery Plan, but he explained the gap by reference to the deficit and the need to make savings in order to fund Government initiatives, such as the move toward universal health insurance.

Independent and former Fine Gael TD Denis Naughten said the proposed cut in spending was an “astronomical ask” before new services were even considered.

Independent TD Séamus Healy said it was difficult to take the department’s plans seriously, because they were so completely at odds with what was happening in hospitals, homecare services and mental health services.

Dr McLoughlin said that while 4,900 staff left the health service this year, staff numbers would have to be reduced by a further 6,500 in the next two years.

An ageing population, increasing birth rate, pay costs and the issuing of more medical cards all put pressure on spending, while a number of cost-saving measures would require upfront investment.

Significant progress was being made in reducing the deficit, he told the committee. He expressed confidence that ongoing talks with pharmaceutical companies on reducing the cost of medicine would deliver the savings predicted by the Government. However, these talks were always going to be complex and difficult.

The department was working on recovering €125 million owed to the health service by health insurance companies and a taskforce was engaged in recovering this money. Dr McLoughlin also predicted very significant reductions in the cost of drugs for the State and for private patients would follow after legislation before the Oireachtas on the pricing of medicines was passed.

Absenteeism in his department had been cut from 4 per cent to 2.8 per cent, but in another area absenteeism hit 11 per cent over the August bank holiday weekend, which was not acceptable.

Dr McLoughlin added that significant progress was being made, including a 20 per cent reduction in the number of patients on trolleys since 2011 and a 7 per cent drop in waiting lists for surgery in the past year.