Analysis: Collapse of voluntary disability providers is major worry for HSE

HSE’s chief flagged ‘serious concern’ about deteriorating financial position of providers

Over the past year, as it dealt with Covid-19, another major worry for the HSE was the potential for the collapse of one or more of the organisations providing disability services, and the implications of such a development for the thousands of people who relied on them.

In the majority of cases, disability services, such as residential, respite care and home support, are not provided by the HSE directly but rather by voluntary organisations which receive funding from the Government.

However, the financial position of some of these organisations is believed to be precarious with a number having millions of euro in accumulated deficits on their books.

Many maintain these deficits were incurred as a result of the amount of State funding provided over the year not being sufficient to cover the level of services which they were required to provide.


A worst-case scenario would see one of these organisations go under very quickly, leaving the State scrambling to try to sort out alternative arrangements.

Just over a year ago senior health service management warned the HSE board that a number of organisations providing services to people with disabilities were struggling financially and may not be in a position to keep going.

At the end of July the HSE's chief executive, Paul Reid, in letters to top officials in the Department of Health and the Department of Children flagged "serious concern" about the deteriorating financial position of a number of organisations.

He said there was “now a systemic challenge” in terms of both legacy deficits and in-year financial overruns and the Government should put in place “incentives” to facilitate the consolidation of some voluntary agencies – known as Section 38 and Section 39 organisations in the sector.

The HSE’s own internal risk register warns of the threat to continuity of service and the provision of safe, appropriate and quality care for people with disabilities as a result of deficits in the current operational delivery model.

St John of God

The concerns appeared to be apposite. In September St John of God Community Services told the HSE it had decided to cease running the majority of its healthcare services, due to a funding crisis, and would transfer responsibility to the HSE over a 12-month period.

It said it was facing a financial deficit of more than €37 million.

St John of God Community Services, part of the wider SJOG Hospitaller Services Group, is funded by the HSE to provide services to 8,000 children and adults.

Within the HSE there was concern at the development. A special meeting of the organisation’s risk committee considered the issue last October. HSE management sought legal advice on the obligations on St John of God Community Services and on its structure with a view to looking at how assets could be returned to the State.

Committee members sought a briefing paper on assets that had been provided to the organisation by the HSE and the Department of Health.

The members asked about the risk of St John of God Community Services ceasing to provide services before the expiry of the 12-month notice period.

Management said this seemed unlikely but if it did happen “it would be due to insolvency”.

The HSE did provide funding – of more than €139 million – to St John of God Community Services to run its services up to September 30th this year. There was also additional money to deal with Covid-19 and staff were informed that this, “together with reduced costs associated with the necessary closure or curtailment of services and the redeployment of staff to residential services, resulted in a surplus for 2020, which enabled us to reduce our accumulated deficit to €32.5 million from €37.5 million at the end of 2020”.

However, the organisation maintained that despite the reduction, the scale of its deficit remained “a cause of significant concern”.

Funding crisis

Staff were informed that in discussions the HSE had hinted there may be some developments coming. It said the HSE had “referenced bringing a resolution to the funding crisis”.

However, there would appear to have been insufficient progress to deal with the deficit and this led to the direct letter to the Minister for Health Stephen Donnelly warning of the potential for "liquidation as either a solvent entity or otherwise".

It is highly unlikely the State could deal with the legacy deficits of just St John of God Community Services. It would have to address the debts of all such providers.

However, first it would have to know the amount of money it could be talking about.

The HSE report to its board in March 2020 referred to a limited analysis it had carried out showing collective financial deficits of about €30 million. However, this is likely to be an under-estimate of the real situation.Within the sector some senior figures believe the total deficits could be €150 million or more.

HSE risk committee members were told by management last autumn that it was likely an independent review of the financial deficits of legacy providers may be commissioned by the Government, although it said this had yet to be confirmed.

The Department of Health told The Irish Times last month it could not confirm that a review of legacy financial deficits in disability service providers was planned.

Martin Wall

Martin Wall

Martin Wall is the former Washington Correspondent of The Irish Times. He was previously industry correspondent