At his press briefing on the consultants' report on Tallaght Hospital the Minister for Health was asked about the proceeds of the sale of the sites of the city-centre hospitals which went to make up the new hospital at Tallaght.

"There is a level of [budgetary] over-run for which the board has to take responsibility," he replied. "The net figure is £8.5 million. I am awaiting proposals from the board as to how they will deal with that."

He has been meeting the board over the past two days and, although neither side is talking to the press, it is certain this subject has come up. After all, the sites of the Adelaide, the National Children's Hospital in Harcourt Street and the Meath are worth many times more than the deficit.

But it's not that simple.

The structure of the Tallaght Hospital board, and its relationship with the three hospitals which were merged into it, is complicated. It took years of negotiations. Representatives of the three base hospitals make up a majority of its members, and its president (though he does not attend board meetings) is the Archbishop of Dublin, Dr Walton Empey.

But the merging of the three hospitals did not bring an end to the bodies which had previously run them. They had their origins in charitable organisations set up to provide medical care in Dublin, and these still exist, now as foundations committed to supporting Tallaght Hospital. And it is they which own the assets of the former base hospitals.

There are specific conditions attached to how these assets are deployed. As part of the merger and the incorporation into Tallaght, the High Court was asked for permission to vary the use of the charitable funds for which these organisations were responsible. This use had to be as close as possible to the original, and what the High Court specified, in what is known as a "cy-pres scheme", was that these funds were to be used for "new and enhanced services" in Tallaght Hospital.

According to hospital sources, this is legally binding, and means the money cannot be used to fund deficits in the day-to-day running of the hospital.

The hospital disputes Brian Cowen's central contention that the deficit is the board's responsibility, and that it must find a way of discharging it, even if that means borrowing from the banks, as Mr Cowen suggested yesterday.

Sources close to the board insist that the Department was informed of the need for extra money at the beginning and that it was informed of unanticipated expenditure as it arose, and say consultants Deloitte & Touche agreed that the spending was needed to ensure patient safety and care.

The consultants also said the Department never formally rejected the hospital's service plan, which was based on a higher budget than that contained in the Department's allocation. In an angry statement last Sunday, the hospital board chairwoman, Mrs Rosemary French, said the board had on record many statements made by the Department secretary-general and his officials of their determination to support and fund the hospital adequately. This led the hospital to conclude that the money would be found somewhere.

The board was under intense political pressure throughout 1997 to effect the move to Tallaght. In the autumn of 1997 board members were called in to Mr Cowen's office and, according to one source, "read the riot act" about hastening the move.

This source said he was speaking to the wrong board. The board responsible for building and equipping the hospital, as opposed to moving in and running it, was different. It was set up, under the chairmanship of Prof Richard Conroy, for this purpose by a previous Fianna Fail government. Sources in the hospital board feel its failings and budgetary over-runs have received far less attention than theirs.

It is now history that when the move took place last June the hospital was not finished, and many of the financial difficulties have followed from this. But the problem is: what is going to happen now.

The Deloitte & Touche report identified numerous management failings and recommended far-reaching changes in the management system. These have been accepted by the board, and are likely to be implemented, but by whom?

When asked about his confidence in the ability of the board and management of Tallaght Hospital to solve the crisis, Mr Cowen said: "There's a lot of work to be done before the board and management can stand alone." He added that this depended on "some structure" being put in place, separate from the existing management, to oversee putting the hospital on a firm financial footing.

IF this means another managerial layer which would effectively oversee the work of the existing management, it is unlikely to improve the already strained relations between the Department and the board, and could lead to mass resignations. However, some sort of "referees" would probably be an acceptable compromise, at least to the board.

Apart from the management issue, the other major source of contention is who is to pay for the existing deficit, and whether the Department of Health will fund what the hospital board thinks is essential to fulfil its mission.

One hospital source said: "The politicians can't demand services, say this is the money you've got, and when they are told it is not enough, then just say `Go on and do it'."

But the attitude of the Department of Health to deficits in other areas can hardly be encouraging to the Tallaght board. Faced with public flak over ward closures, the sacking of nurses, the separation of twins from their mother at birth, the response of the Department has been to point at the management of the health boards.

The voluntary agencies, like Tallaght Hospital, are statutorily independent. But that independence is inevitably compromised by financial considerations.

The mood in the Tallaght Hospital board has been a mixture of anger and betrayal during the week. But it has not been one of surrender.

Asked what would happen in a worst-case scenario, a source close to the board said: "The board of the hospital would find it impossible to accept the degrading of the hospital so much that it does not look at all like what was planned for the site." This raises the spectre of a majority of the board, especially those coming from the base hospitals, resigning.

This could have repercussions beyond the hospital's catchment area. Tallaght Hospital is very dear to the heart of the Church of Ireland, which was closely identified with the Adelaide. This is illustrated by the fact that it features on the cover of this year's Church of Ireland Directory. As the Northern peace agreement takes another creeping step forward, there must be some muttering to politicians about the signals which would be sent North if it appeared that the plug was pulled on the State's only multi-denominational hospital, pledged to protect a Protestant ethos.