The HSE has told suppliers it “can no longer sustain” rising prices for medicines, medical devices and agency staff which are eating into “much needed funds” for patient care at a time of unprecedented demand.
John Swords, HSE national director of procurement, said the health authority would “no longer consider” paying increased prices for goods and services due to budgetary constraints.
Mr Swords and HSE chief financial officer Stephen Mulvaney issued a letter to suppliers on April 25th, entitled “HSE cost containment”. It said the HSE “has, where justified, extended price increases over the past number of years due to varying geo-economic factors”.
“However, having conceded numerous increases we are now in a position where we can no longer sustain growth in price as this impacts on the much needed funds for patient care in a growing challenging environment,” they said.
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“I am writing to advise you that due to the budgetary constraints and unprecedented levels of demand on the health system the HSE will not consider price increases in respect of goods and services between the date of this letter and the foreseeable future.”
Goods and services include among other things, personal protective equipment, medicines, medical devices, ICT services and agency staff or recruitment services.
The two officials said normal contractual obligations would not be affected by the implementation of the measure.
“We understand that this decision and your support for its implementation may raise issues for you. However, we are confident you will understand that it is absolutely necessary,” the letter went on. “HSE staff have been advised not to implement any application for price increase requests received, with immediate effect, and internal procedures are being put in place to manage this process. We wish to take this opportunity to acknowledge your service and support, and we look forward to your continued co-operation in the future.”
The Department of Public Expenditure recently expressed concern about the “sustainability” of growth in health spending, which was up 15 per cent year-on-year in the first quarter. The Department of Health said this had been driven by a 12 per cent increase in presentations for unscheduled care in acute hospitals in the first three months of the year.
Mr Mulvaney told the Public Accounts Committee in February that the HSE’s financial deficit for last year was expected to be €1.75 billion.
A recently-published report, drawn up by the Irish Government Economic Evaluation Service and the Department of Health, found the health budget had risen from €13.7 billon in 2014 to €22.8 billion this year, and that more than 50,000 additional healthcare staff have been employed. However, these increases had not been matched by a similar level of rising activity in Ireland’s hospitals, which is lagging considerably behind the level of State investment.
A report by the Parliamentary Budget Office published last year showed the costs of hiring staff from agencies increased by 139 per cent over the 2015-2022 period to €619 million. The HSE’s National Service Plan for 2024 seeks to drive “immediate” savings through a number of measures, including reducing the reliance on agency staff.
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