While all agree the health overrun needs to be tackled, the question of what exactly should be done remains, writes MARTIN WALL
THE INTERVENTION of the EU-IMF-ECB troika in the controversy over the escalating health service budget adds a new dynamic to an already complex situation.
As the deficit worsened over recent months, some commentators pointed out that the Health Service Executive’s deficit was an annual problem, and one that was usually solved by the Government providing millions of euro in a supplementary budget towards the end of the year.
However, after the current overspending was identified by the troika as an emerging problem, the Government will, as part of its structural reforms, have to spell out measures to rectify the deficit by the end of September.
The trick will be finding measures to rein in the overspending while at the same time observing the guarantees on pay for staff set out in the Croke Park agreement and the reluctance of Government to see services cut further.
Separately, Taoiseach Enda Kenny told the Dáil last week that there would not be any supplementary funding provided on this occasion.
Reaching a consensus on how to deal with the financial problems in the health service is complicated by the current governance structures in place.
It is Government policy that the HSE is to be phased out. However, for the moment it remains in place and continues to have responsibility for spending. However, actions to tackle the deficit have to be ratified by its board, which is comprised mainly by senior officials in the Department of Health. Separately any initiative that would involve a policy change is a matter for Ministers.
The HSE also has to depend on the Government if it is to realise key targets in its service plan for the year. It needs a deal with the pharmaceutical industry on drug prices – which was supposed to deliver €124 million in savings this year, while it also requires the Government to introduce new legislation if the additional €140 million it hoped to receive from health insurers in additional income is to be realised.
There is also the issue of who will pay for the retirement lump sums for the larger-than-expected number of health service staff who left before pension changes were introduced by the Government last February.
The HSE has argued that it is the failure to meet these income and savings targets, the cost of lump sums as well as growing activity levels in hospitals and increased drug spending in the community that are driving the deficit which increased by €80 million in May alone to top €280 million.
But while everyone seems to agree that something needs to be done to tackle the growing deficit, the question of what should be done remains.
Minister for Public Expenditure and Reform Brendan Howlin revealed in a press release several weeks ago that the Department of Health and the HSE were working on a plan to deal with the overrun.
However, last week The Irish Times reported that the Government had rejected the proposals put forward by the HSE. In essence, the HSE proposed closing more hospital beds and cutting further on elective admissions. Controversially it also suggested that some unspent funds from the €35 million allocated by the Government for mental health service development this year – a key project for the Labour Party – could be diverted to dealing with the deficit in that area.
Within a day of The Irish Times reporting that this was being discussed, Howlin said this was not a runner.
The secretary general of the Department of Health Ambrose McLoughlin told HSE chief executive Cathal Magee last week that the notion of closing beds and reducing elective admissions was “not acceptable”.
“I note that recent performance reports indicate elevated levels of elective activity. I do not share your views that this is driven by the need to achieve targets, since we have many hospitals not effectively managing their resources.”
McLoughlin told Magee that instead of service cuts he should pay particular attention to overtime, sick leave, use of agency staff and drug prescribing by doctors.
He also sought an immediate review at regional level of all budget allocations and programmes to identify areas where money had been underspent, any schemes in development which were not yet in place that could be delayed or deferred or any opportunity to reallocate resources.
The tone of Mr McLoughlin’s letter was quite sharp in places, containing both explicit and implicit criticisms of management in the HSE. It follows on from what highly placed sources described as a “very tense” meeting of the HSE board on Thursday of the week before last.
Mr McLoughlin said there were “serious management deficits” within the HSE’s primary care reimbursement service.
“We must seek to reduce the cost of each [medical] card, or at least control the cost of each card. The present rate of prescribing needs to be managed more cost-effectively.” He proposed the introduction of an advisory service for GPs to cut prescribing costs and to increase generic prescribing and the development of a “proper” business case for a pharmacy review of high prescribing practice and high utilisation patients.
The HSE replied to the McLoughlin letter with correspondence setting out savings that could be made in areas such as overtime, agency and sick leave. However, many in the organisation have doubts that the savings in these areas alone will be sufficient to tackle a budget overrun growing now at €80 million per month.