Health spending faces big cuts as financial deficit hits €280m
THE GOVERNMENT has ordered a review of health service spending on foot of alarming new figures that show the financial situation in the Health Service Executive has worsened considerably over recent weeks.
Confidential financial figures given by management to the board of the HSE on Thursday state it had recorded a financial deficit of €280 million to the end of May.
Highly-placed sources said last night that the HSE financial figures would be assessed by the Department of Health before being authorised for publication. However, a review of expenditure across all headings is to take place.
This is likely to include areas of investment announced early this year.
Some sources said there had been discussions in recent days about using “time-related expenditure”, money originally allocated but which will not be spent in full this year, to defray the deficit. It is understood discussions in recent days suggested parts of a €35 million investment in mental health services could be used to offset overruns in that area. This programme has been strongly championed by Labour Minister of State for Mental Health Kathleen Lynch.
Sources said last night there would be a close examination of costs in the HSE’s primary care reimbursement service. Sources also said a “very clear directive” would go out to the health system indicating that there should be new curbs on spending, particularly in relation to agency staff and overtime. An initiative aimed at securing more cost-effective drug prescribing will be announced in days.
However, it is understood that the Government wants the HSE to work within its existing service plan.
The Cabinet sub-committee on health, comprising the Taoiseach, Tánaiste, Minister for Public Expenditure and Reform and Minister for Health James Reilly, will meet next week to discuss the deficit.
This is likely to centre around a mid-year cost containment plan put forward by the HSE.
This is expected to include separate and additional measures. Dr Reilly late last month raised the prospect of cutting overtime and premium pay rates for health service staff as an alternative to further service cuts as a means of dealing with the deficit. Trade unions argued this would breach the Croke Park agreement.
Minister for Public Expenditure and Reform Brendan Howlin has already warned that without remedial action the deficit could hit €500 million by the end of the year. He urged Dr Reilly to engage personally in dealing with the financial problems. HSE chief executive Cathal Magee agreed last week that the deficit could hit €500 million.
Government and health service sources have argued that the deficit is partly due to increasing demand. The number of medical cards has hit a record 1.8 million. Activity levels in hospitals are also ahead of those predicted in January.
However, Mr Magee also said that some assumptions on which the HSE’s service plan had been based were no longer valid. It had been projected that €124 million would be saved on drug costs this year. However, this had not yet come through.
Mr Magee said there had been an expectation that an additional €145 million would be generated in income from private health insurance companies. However, this had not yet been delivered.
Fianna Fáil will next week seek to put pressure on the Government over the increasing deficit. It will argue that the health estimate in Budget 2012 was misleading “given the fact that it was based on assumptions and targets that were not deliverable by the Minister for Health”.
In the Dáil last week Taoiseach Enda Kenny strongly rejected any suggestion that Dr Reilly had been dishonest in the presentation of his budgetary estimates.