Dr Tony O'Connell, the newly appointed national director of the State's acute hospitals is the latest to launch a distress flare signalling alarm at the level of overspending in the health service. It was, it seems, ever thus. Few can remember when health spending last stayed within budget – when spending estimate matched spending outturn at year-end. In 2012, a €360 million overrun in health spending occurred, after promised savings failed to materialise. Last year saw a smaller expenditure overrun. And this year is no better. The Department of Health, which has already exceeded its target for the first quarter, risks a further failure to contain expenditure by December 31st. Health spending is one area over which Government has some control, but where it has had least success in containing costs. And last month the European Central Bank warned that overspending on healthcare now represents the biggest threat to Ireland's economic recovery.
Dr O'Connell, after two weeks in his post in the Health Service Executive (HSE), has been quick to identify the problem: namely, that three quarters of the reductions that acute hospitals claimed they had made were unlikely to realise the required level of savings. In January, the HSE said these hospitals would have to manage with €250 million less in State funding. But the cost containment plans (CCPs), which the hospitals later submitted to help achieve the necessary reductions, were, when analysed by the Department of Finance, seen to be deeply flawed, and wholly inadequate. Dr O'Connell has now asked those hospitals to submit detailed new plans "designed to safely deliver a breakeven position".
The letter follows an earlier admission by Minister for Health James Reilly that his department will not achieve €108 million in pay savings identified in the 2014 budget. Already both he, and Minister for Public Expenditure and Reform, Brendan Howlin have disagreed publicly on what reductions can be achieved in health spending this year. Mr Howlin has insisted that overall savings of €666 million, which the budget arithmetic requires, and which the Cabinet accepted in adopting its provisions, can – and must – be met. The troika of international lenders, as part of the bailout programme, consistently identified the failure to control health spending as a major concern. It warned repeatedly of "implementation risk"; that savings promised in health would not be delivered. But the end of the bailout programme has eased external pressure on government, and raised implementation risk. For Dr Reilly, whose administrative ability has been tested, and found wanting, and whose plans for universal health insurance have been questioned even by Cabinet colleagues, his tenure of office may not survive an anticipated ministerial reshuffle.