St John of God community services warn Government of potential disorderly collapse
Donnelly told service faces liquidation without State support to deal with €32m deficit
St John of God Community Services maintains the amount of State funding provided over the years was insufficient to pay for the level of services it was asked to provide.
One of the country’s main disability and mental health service providers, St John of God Community Services, has warned the Government it could potentially face a disorderly collapse with major implications for up to 8,000 children, adolescents and adults who rely on it.
It has told Minister for Health Stephen Donnelly that without State support to deal with an accumulated legacy deficit of more than €32 million, it could face “liquidation as either a solvent entity or otherwise”.
It warned that this could lead to it having to sell off assets and properties to meet its debts. It suggested that such a scenario could have significant implications for the thousands of people to whom it provided services.
St John of God Community Services is a voluntary healthcare provider, with its own board and management. It receives funding from the HSE each year to operate services and employs about 2,500 people.
It is technically known as a Section 38 organisation, meaning its staff are considered to be public service personnel.
It announced last September that it would cease running the majority of its healthcare services, due to a funding crisis. It said at the time it would transfer responsibility for the services to the HSE over a 12-month period. Over this period the HSE could either arrange to run the services itself or transfer them to another operator.
The HSE subsequently provided funding of more than €139 million this year to allow the organisation to continue to operate its current level of services until next autumn. It also received additional money to deal with the impact of the Covid-19 pandemic.
However, it has warned the Minister in a letter of the potential serious consequences of its accumulated deficit – which now stands at €32.5 million – and the implications this could have on its plans for an orderly wind-down and transition.
It is understood that St John of God Community Services – along with a number of other voluntary organisations in the sector – maintains that its deficits were incurred largely because the amount of funding provided over the years by the State was insufficient to pay for the level of services it was asked to provide.
Clare Dempsey, chief executive of St John of God Community Services, told the Minister in the letter that the HSE had over recent months occasionally referenced bringing a resolution to the funding crisis at the organisation but no proposals in this regard had been put forward.
She said the issue of the outstanding deficit was “of very pressing concern”.
“If this matter is not addressed quickly, it could raise a question mark as to whether the service faces liquidation as either a solvent entity or otherwise. That, in turn, may trigger a possible sale of assets and properties in order to discharge all outstanding liabilities which would then seriously jeopardise the orderly transfer and future operation of the day and residential services which 8,000 children, adolescents and adults currently depend on.”
St John of God Community Services did not comment on Sunday night on the content of its letter to the Minister.