HSE 'faces €500 million deficit'

The chief executive of HSE has today confirmed the organisation is facing a possible financial deficit of €500 million by the end of the year.

Cathal Magee told Dáil Public Accounts Committee that plans to save €120 million on drugs had not yet come through.

Mr Magee said an additional €140 million that was to be generated in additional revenue from insurance companies had not yet been delivered. He also said plans to cut its expenditure on agency staff by 50 per cent would not be realised.

Mr Magee said the financial systems in the HSE were "not fit for purpose".

The committee also heard that in 2010, one individual in the health service received €186,000 in allowances.

Fine Gael TD John Deasy said the Croke Park agreement was undermining national recovery efforts.

Party colleague and Minister for Transport Leo Varadkar recently said the payment of increments to staff in the public service should be deferred.

Mr Varadkar was speaking after Minister for Health James Reilly raised the prospect of cutting overtime and premium pay rates in response to a call from Minister for Public Expenditure Brendan Howlin for “immediate action” to address a huge costs overrun at the HSE.

In a statement before the hearings opened, committee chairman John McGuinness TD said: “The HSE has a budget of approximately €14 billion a year, which it must manage effectively to obtain value of money and to ensure that all voted moneys are spent as intended.

"Concerns have been expressed about the effectiveness of the HSE controls and the worsening financial performance.

"The committee will want to ascertain what is the current budget deficit and what is the projected financial position for 2012. We will also want to determine whether the HSE has a strategy in place to deal with their deficit.”