Painless cuts are over - so frontline services now go under the knife

ANALYSIS:WHILE THE HSE has said it will seek to minimise their effects, there is no mistaking that the health cuts announced yesterday will have more of an impact on frontline services than any such measures introduced since the 1980s.

The €750 million in spending cuts earmarked for 2012 comes on top of cumulative budget reductions of €1.75 billion over the past two years.

Since they hit a peak in 2007, staffing levels in the HSE have fallen by 8,700.

As HSE chief Cathal Magee suggested at the launch of its service plan for 2012, all the relatively painless cuts, such as in procurement and drug costs, have been made.

Given that more than 3,300 staff are expected to leave the organisation this year, allied to the reduction in the exchequer allocation, frontline services will be hit more directly than in previous years.

Minister for Health James Reilly also acknowledged yesterday that the scale of the financial challenge facing the HSE meant that service reductions were “inevitable and unavoidable”.

The full impact of the cuts announced yesterday will take time to emerge.

The spending plans for each of the four HSE regions will not be completed for a number of weeks and the financial allocations to the main voluntary hospitals including the Mater, St James’s and Beaumont were not announced so it remains to be seen how their individual services will be affected.

The Minister made clear that he wanted to see the impact of the spending cuts offset by “fast- tracking new innovative and more efficient ways of using reduced resources” and by introducing new models of care which would see patients treated “at the lowest level of complexity”.

It remains to be seen how these measures will work in practice.

Much of the focus on alleviating the effect of the overall 7.8 per cent reduction in average acute hospital budgets will centre on the implementation of efficiencies under the HSE’s national clinical programmes.

Progress to date in these areas has not been as rapid as anticipated. The allocation of €23.4 million to progress the clinical programmes, announced in the service plan yesterday, was originally to come on stream last year.

In order to balance its books and to provide the level of services set out in the plan, the HSE will have to raise significant sums in savings and in revenue.

It has been set a target of securing more than €140 million – largely through changes in arrangements for charging private patients in public facilities.

Some of these reforms require legislation and any delays in this area will have knock-on effects on the budget.

Similarly, there is a target to produce savings of €124 million in primary care, which is mainly dependent on introducing new legislation governing reference pricing of drugs.

Again, this is out of the hands of the HSE itself.

The service plan also warns that some of its measures could be subject to legal challenges, while other elements require a supportive industrial relations climate to deliver changes to skill mix, staff rosters, attendance patterns and other factors.

Then there is the danger, which on the surface seems to be a contradiction, that if more than the estimated 3,300 staff opt to leave, budgets may have to take another hit to fund the retirement lump sums of those departing.

Both the Minister and the HSE have warned that the year ahead will be challenging.

The service plan has been carefully crafted over weeks of negotiations between the HSE and the Department of Health.

It has many conditions and caveats, all of which will have to be met if 2012 is not to be even more daunting than first anticipated.