Croke Park deal a likely casualty of HSE overspend

THERE IS growing concern in Government at the scale of the financial problems that have emerged in the health services over recent months and on how these should be addressed.

An official HSE report approved by its board last week revealed it recorded a €200 million overrun in the first four months of the year. The report also said the HSE’s revenue account to May showed a deficit of €160 million.

The Department of Health is drawing up a paper for Cabinet on how the deficit should be tackled. However, it appears the issue may reawaken the debate over whether the Croke Park agreement – which guarantees no further pay cuts for public service staff in return for co-operation with reform – is sustainable politically if this causes further reductions in public services.

This issue was always likely to re-emerge as part of the preparations for next year’s budget, when over €3 billion in cuts or revenue-raising measures will be required. However the growing HSE deficit for this year may bring forward this debate.

In correspondence with the Minister for Health James Reilly last month, Minister for Public Expenditure and Reform Brendan Howlin expressed concern at the HSE’s financial position. He said the HSE had recorded a net revenue overspend of €124 million to the end of April, up €30 million from the previous month.

“Worryingly, its overall cash spend for the three months to March 2012 is running ahead of last year,” he said. “And, at recent joint financial performance monitoring meetings, the HSE has been unable to provide monthly profiles of expenditure by programme, adequate explanations in regard to the drivers of expenditure or adequate projections of when and to what extent the savings measures in the 2012 service plan will bring about an abatement of these spending pressures.”

He warned, if current trends were to continue, the HSE was facing a potential €500 million deficit for the year.

“Any significant overrun in the health sector this year would not be sustainable and would undermine our national recovery efforts. It would also render the task of producing the 2013 estimates for the health sector and continuing implementation of the programme for government commitments on health reform extremely difficult, if not impossible.

“I would ask you, therefore, to ensure that immediate action, including additional measures over and above those envisaged at budget/estimate time [last year] if necessary are taken to bring HSE expenditure back on track.”

Dr Reilly has also expressed concern at the growing deficit and has taken steps to deal with it. A UK-based financial management consultant has been commissioned to review the HSE’s capacity to handle its budget and a quartet of senior health service figures have been given the task of working with hospitals experiencing spending difficulties. However, he has also maintained that the €800 million spent on overtime, allowances and premium rates was “the elephant in the room”.

And, as the HSE deficit grows, the Minister appears to be sticking to his belief that overtime and premium pay reductions have to be considered as an alternative to further service cuts.

Public service unions have trenchantly argued that overtime rates, premium payments and allowances are all covered by the Croke Park agreement.

They maintain that, while the Government can introduce measures to reduce its exposure to paying overtime or premium payments, reductions in rates would be seen as a pay cut and in breach of the agreement.

It is unlikely that any move to cut overtime or premium pay rates could be taken in isolation. Such a move would have to be considered in the context of the public service as a whole.

Furthermore, politically, Dr Reilly could not introduce such measures on his own. If the Croke Park agreement was to be breached it could only come on foot of a decision by Cabinet.

Up to now the Government’s position has been that it will stick to the Croke Park agreement as long as the reforms are being delivered. However, in truth the deal is far more popular in the Labour Party than among many in Fine Gael.

Public nursing homes: Up to 900 beds may be closed

NEARLY 300 beds in public nursing homes have closed since the start of the year, the Department of Health has confirmed.

The Minister of State for Health, Roísin Shortall, said the HSE had advised that between January and May this year 296 public residential care beds had been shut. She said the Department of Health did not have a mechanism for identifying the number of beds opened or closed in the private sector in the same period.

The HSE had signalled earlier this year in its service plan agreement with the Government that there would be significant cuts in bed numbers in community nursing units or publicly run nursing homes.

In the small print of its service plan it suggested that up to 898 beds could be closed over the year.

The document specifically said that a minimum of 555 beds in community nursing units would shut. However, contained in the small print on page 47 of the service plan, figures given in relation to public community nursing unit beds suggested a minimum of 555 and a maximum of 898 would close in 2012.

The maximum number of closures had to be worked out mathematically by subtracting the number of beds the HSE expected to have in place in 2012 from the number at the end of 2011.

The service plan said that, in the main, beds would be closed in different community nursing homes rather than shutting down full units.

However it warned that a small number of units would be considered for total closure in 2012 as units were consolidated.

HSE chief executive Cathal Magee said at the launch of the service plan that the number of full closures of community nursing units would be "in single digits". An earlier draft service plan had stated that 10 units could close. – MARTIN WALL