Senior HSE officials warned of need to pare back Covid-19 spending due to cost pressures

The health service must pare back spending on Covid-19 amid spiralling cost pressures which could leave many services “significantly exposed financially”, HSE chief executive Paul Reid has warned.

In a letter to senior officials and hospital chief executives, Mr Reid said pandemic spending should be at the “lowest level that is clinically justified” and warned there was a build-up of a “significant amount of unfunded costs” in the health sector, as lines are drawn in advance of budget negotiations this summer.

He warned that there had been pressure to increase non-Covid spending “beyond what has been funded” in the first quarter of the year, which will “undoubtedly continue through 2022″.

“If we allow spending to exceed what has been funded, this would leave many of our services significantly exposed financially as we enter what is expected to be a difficult estimates process for 2023,” he wrote, adding that there was “very real pressure” on government finances and “significant competing demands for same across the public sector”.

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“The build-up of a significant amount of unfunded costs within the health sector is a serious matter in this context,” he wrote on Wednesday.

Health chiefs were told to strictly adhere to a number of steps to bring costs under control. On Covid, Mr Reid wrote: “I want to be very clear as to what is expected of you”, outlining that all costs “should be minimised to the lowest level that is clinically justified by direct reference to the actual and immediate need to respond to Covid-19,” with leaders told to “give this your personal attention”.

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There is a slower than expected fall off in Covid costs “given the pattern of the disease” in recent months, he wrote. While elements of the overspend were outside of officials’ control - such as inflation - “I need to ask you to take additional steps to satisfy yourself that every action that can be reasonably taken to mitigate all unfunded costs is being effectively and efficiently taken”.

The health service has been given €1.4 billion in additional recurring spending over the last two years, and was given €250 million in 2022 to reduce waiting times.

Mr Reid advised that funded posts should be filled before the end of the year or “as early as possible” next year, and told his officials that “robust financial management” systems should be put in place to “avoid or limit any growth in spending for which funds have not been approved” - including making sure staff are not hired into unfunded posts. Staff in unfunded posts are to be channelled into “development posts for which funding has been provided”, with development funding also to be sent to areas that are driving spending.

The hospital managers were told to “take whatever steps” where necessary and appropriate within non-Covid budgets and to “absolutely minimise any potential for overspend”, and to seek guidance from top HSE officials, up to and including Mr Reid.

They were also told to make full use of so-called “access to care” funds allotted for this year, a €210 million initiative to purchase care in private hospitals “to ensure the maximum amount of additional activity” in order to meet targets.