The St John of God organisation has said the HSE has indicated it may put forward new proposals to deal with its current financial crisis.
The care provider, which had a deficit of more than €30 million at the end of last year, said in the absence of concrete measures for sustainable funding, plans to transfer responsibility for running disability and mental health services back to the State from the autumn would proceed.
St John of God Community Services announced last September that it had decided to cease running the majority of its healthcare services, due to the funding crisis, and would transfer responsibility to the HSE over a 12-month period.
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 on behalf of the State. It employs 2,500 people and is one of the biggest providers of intellectual disability and mental health services in Ireland.
It has been grappling with a mounting financial deficit in recent years, citing underfunding from the HSE.
Clare Dempsey, chief executive of St John of God Community Services, has told staff that the HSE had "referenced bringing a resolution to the funding crisis" in talks with the organisation.
However, she said no proposals had yet been put forward by the HSE for consideration by the board of St John of God Community Services.
“In the absence of concrete and realistic proposals to address the deficit and fully fund service provision sustainably into the future, I therefore remain mandated by the board to work with the HSE to plan for the transfer of services to the HSE,” she said.
In a letter to staff in recent days, Ms Dempsey said the HSE had provided funding to the organisation to run its services up to September 30th next.
“This funding, which amounts to €139.2 million is sufficient to provide the current level of services for this nine-month period and will therefore enable us to focus our energies more directly on the ongoing transition process,” she wrote.
“The HSE also provided additional funding for 2020 in the main to cover the costs of Covid-19. This additional funding 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 €32.5milion from €37.5 milion at the end of 2020.
“While the reduction to the accumulated deficit is welcome, it remains a cause of significant concern,” Ms Dempsey wrote.