Throwing money at the big spenders

The HSE’s new funding system is showering cash on hospitals that have failed to stay within their budgets

It’s that time of year when hospitals receive news of the budgets they are supposed to work within, and this year there are some clear winners and losers.

The 2012 allocations are based on the sums the Health Service Executive expects a hospital to spend during the year, rather than on historic budgets. In many hospitals the latter tended to be works of fiction, which is one reason large budget overruns were regularly seen at the end of each year.

The new system means that budget overruns in the hospitals at the end of 2013 will be less spectacular than in previous years, leading to fewer of the last-minute cuts to services seen in previous years as administrators struggled to balance budgets.

And that means less bad press for the HSE and Minister for Health James Reilly.

Rewarding offenders

However, the effect of this change is to punish those hospitals which have been keeping within their budgets, while at the same time appearing to reward offenders who consistently failed to adhere to budgets.

It’s a strange way of doing business and it seems to run counter to a lot of the recent rhetoric from the Department of Health, which has warned that overspenders would be punished, not rewarded.

Thus it is that St James’s Hospital in Dublin has been handed the largest single cut in its budget, which is being reduced from €264 million in 2012 to €255 million this year. Aside from being the largest hospital in the State, St James’s is also one of the best managed: it comes closest among all the big hospitals to staying within budget, it has far fewer patients on trolleys than the other Dublin hospitals and it recently landed the National Children’s Hospital project.

The allocations seem designed with a view to tackling the problems in the hospitals with the longest trolley waits.

While in most hospitals the figures for patients on trolleys, and for inpatient waits, have greatly improved, a number of hospitals haven’t been able to improve their systems sufficiently.

The solution put forward by the HSE is to throw money at the problem.

Trolley numbers

Thus, the Louth-Meath Hospital Group, which includes Our Lady of Lourdes Hospital in Drogheda, is getting 13.9 per cent more in funding this year, while the Mid-Western Regional Hospitals Group, which includes Mid-Western Regional Hospital in Limerick, is up 11.5 per cent.

In Dublin, two hospitals with big trolley numbers have also received increased budgets: Beaumont Hospital is up 8.4 per cent while Connolly Hospital Blanchardstown is up 6.2 per cent.

“Limerick and Beaumont overrun budgets because they admit patients too early, discharge them too late and have a very high ratio of private to public consultant activity. St James’s and some others do not,” said a disinterested but informed source.

HSE director designate Tony O’Brien is probably right when he says the new budgets will give hospitals a fighting chance of breaking even.

However, with most allocations still 3-5 per cent below what the institutions spent last year, there will still be overruns.

While hospital budgets are determined by the HSE, which says it hasn’t been lobbied, the figures are undoubtedly good news for Taoiseach Enda Kenny, whose local hospital in Mayo has had its allocation increased by 9.9 per cent.

Minister for Enterprise Richard Bruton and Ministers Joan Burton and Leo Varadkar will no doubt be spreading the good news about the budget increases for Beaumont and Connolly, which are located in their respective constituencies.

Meanwhile, the budgets for Wexford General Hospital and St Luke’s General Hospital in Kilkenny have been increased by 4.3 per cent and 3.9 per cent respectively.

Upgrades fast-tracked

Both have been in the news recently after it emerged that upgrades were fast-tracked by Dr Reilly in 2011, with the announcements made by local ministers Brendan Howlin and Phil Hogan before approval was given by the HSE board.

The increase for St Luke’s is interesting, given that it is already probably the best-performing hospital in the State. Meanwhile, Waterford, which has no Cabinet minister, sees the budget of its regional hospital rise by just 0.3 per cent.

Curious decision

Curious also is the decision to cut the budgets of Our Lady’s Children’s Hospital Crumlin and Children’s University Hospital, Temple Street, at a time when both facilities urgently need medium-term upgrades pending the development of the National Children’s and Maternity Hospital at St James’s.

This isn’t the first time that underperforming hospitals have been showered with cash: some of the facilities with the worst records for patients on trolleys have already received extra allocations from the National Treatment Purchase Fund.

The problem is that injections of money may work only for as long as the tap is turned on. Without a longer-term improvement in performance, the benefits will be only temporary.

The flip side, of course, is that the better-performing hospitals will struggle to meet their budget targets, and may even question the wisdom of their thrift and hard work in recent years.

But at least all hospitals are sharing this year in an increased budget for their sector, in contrast to areas such as disability, palliative care and older people’s services, which have suffered financially because of the emphasis on righting the wrongs of the hospital sector.