State may have to bail out health service over shortfall

Questions remain over HSE presentation of spending plans in context of its certain deficit

Minister for Health Simon Harris: is unhappy at poor budgeting in the HSE and at a submission  by chief executive Tony O’Brien which set out the risks as he saw them. Photograph: Cyril Byrne

Minister for Health Simon Harris: is unhappy at poor budgeting in the HSE and at a submission by chief executive Tony O’Brien which set out the risks as he saw them. Photograph: Cyril Byrne

 

For the public, the only thing that matters about the current controversy over the health budget will be whether there is sufficient money to maintain or improve services this year.

It is clear the Health Service Executive’s top management is concerned it has not been given enough resources, while the Government is adamant that the State allocation of close to €15 billion should allow both existing service levels to be kept in place and new developments to be introduced in some cases.

A major deficit, if it emerges, is unlikely to lead to widespread cutbacks in services. A more probable scenario is that the Government will have to inject more funding later in the year.

A mid- or end-of-year financial bailout for the health service would not be unknown. In fact, although Ministers routinely profess that the HSE must live within its resources, supplementary budgets have become a regular feature over recent years.

This, in its own way, is not surprising. Health is a demand-led business after all, and forecasting a year or so in advance how many people will get sick and need care can never be a precise science.

However, publishing a spending plan in the full knowledge that it will not be sufficient is another matter.

Fianna Fáil leader Micheál Martin last week argued in the Dáil that there had not been honesty or transparency in the health service budget for this year.

Funding gaps

Official background papers make clear there were arguments between the HSE and the Department of Health over how much money was needed for 2018, which is to be expected. But the manner in which the HSE was ordered to hide its concerns over funding gaps from the public in the plan it eventually published is more worrying.

As it happens, eventually the funding gap was papered over by the insertion of plans for €346 million in value-for-money savings, although we now know that even before the HSE service plan was published in the days before Christmas that its top management was , to say the least, sceptical about these targets ever being realised.

In addition, the papers show there was an understanding or “assumptions” made to keep off the books potentially hundreds of millions of euro in other financial risks. There was no provision made, for example, for pay pressures which the HSE estimated would reach €68 million. Thousands of health and social care staff are to go on strike on February 14th to seek such unfunded pay rises.

More importantly, perhaps, was a late change of heart by the Department of Health in instructing the HSE not to include any sum in its plan to deal with a carryover of its financial deficit from 2017.

Health service legislation requires that excess spending in one year be made a charge on the HSE’s income and expenditure account the following year.

The full amount involved will not be known until around April, but the HSE estimates it could reach €174 million. Ultimately the carryover deficit may be higher or lower, but there is no provision in the budget to pay for this, nor any indication so far as to where such money may come from.

It is against this background that Minister for Health Simon Harris strongly criticised HSE chief Tony O’Brien in a letter last Friday week.

Poor budgeting

The Minister was unhappy at poor budgeting in the HSE in general, but in particular at a submission sent by O’Brien in December which set out the financial risks as he saw them. This letter suggested the potential financial challenge for the HSE this year could reach an unprecedented €881 million.

The Minister and his department believe this will not be the case. They also argued to O’Brien that while the HSE may pitch for specific levels of annual funding, once Cabinet makes its decision that should be the end of the matter and the HSE should get on with its job and stop complaining about potential financial challenges which could be “misinterpreted”.

There are also evident frustrations in the department at the HSE over both excess spending, failure to deal with a growing overtime bill at a time of increased staffing levels, and poor implementation of a move to convert personnel brought in through employment agencies to directly employed staff.

The publication now of further background papers showing how the Department of Health wanted potential financial difficulties played down in the HSE’s published service plan is likely to lead to further questions from the Opposition about the health budget for this year.

Both the Minister and the HSE director-general are scheduled to appear together before the Oireachtas health committee on Wednesday. It should prove to be an interesting session as TDs seek to tease out what actually went on in the preparation of the health service spending plan for this year.

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