THE DEPARTMENT of Health has instructed the Health Service Executive (HSE) to draw up plans for cutting spending by up to €800 million next year.
In a confidential letter to HSE senior management, the department’s secretary general, Michael Scanlan, said the executive should assess how services would be affected by reductions in expenditure ranging from €400 million to €800 million – in steps of €50 million – in its budget for 2010.
Mr Scanlan said that these assessments should be undertaken as a planning exercise, and in advance of decisions being taken. However, the letter provides the first indication of the thinking in the Department of Health about the scale of cuts expected next year.
All Government departments have been told by the Department of Finance to have a list of cuts prepared by September 11th as part of an overall €3 billion savings package.
About one-third of these planned cuts – which are being drawn up for a crucial Cabinet meeting next month – are expected to come from social welfare. The health sector is also expected to contribute a significant proportion of the €3 billion in cuts.
Mr Scanlan told the HSE that plans by the Cabinet to reduce the general Government deficit to 3 per cent of GDP by the end of 2013 would require “substantive reductions in expenditure across all areas of the public service”. Mr Scanlan said HSE senior management should draw on the recommendations of the McCarthy report, and “any other appropriate measures” identified within the health authority. He said the proposed cuts should contain a balance between those that would involve improved operational efficiencies and those that would need policy and legislative changes.
“Where it is considered that it may be necessary to reduce service levels in order to meet the planning scenarios, I would ask you to consider carefully how service reconfiguration and process improvement might be utilised in the particular area to maintain outcomes and responsiveness for the public to the greatest extent possible,” he said.
The Department of Health has requested the HSE to submit its plans for the cutbacks by the end of the first week in September. Senior HSE management have held meetings in recent days to begin drawing up the cutback plans.
Mr Scanlan also said the department and the HSE would have to complete examining the recommendations for cutbacks in the health area put forward by the McCarthy group by the end of the first week of September in order for this to contribute to the Government’s deliberations on the financial estimates for next year.
The report of the special group on public service numbers and expenditure, chaired by economist Colm McCarthy, proposed savings of €1.23 billion through cuts across the entire health sector, not just the HSE. This included staff reductions of over 6,100.
In the confidential letter, sent to the HSE about three weeks ago, Mr Scanlan said: “We need to go through the measures in paper no 11, volume II of the report systematically for the purpose of advising the Minister [for Health]. While I propose to give the Minister one overall set of advice, I think it would be best if the department took the lead on some recommendations and the HSE on the others.”
He said the McCarthy group’s recommendations on staff flexibility and redeployment would have to be taken into account in the assessment by the HSE on the proposed cutbacks in employment numbers.
Mr Scanlan proposed that the HSE should take the lead in dealing with recommendations in such areas as health service efficiencies, health service staffing and on the suggestion that there should be tendering for professional services to patients under the general medical services scheme.