Last Thursday the Minister for Public Expenditure Paschal Donohoe told the Dáil he had no concerns at present about health spending but that all departments would be expected to live within their means.
This is, perhaps, unsurprising given it is less than a month into 2018.
However, official correspondence suggests, despite receiving an increase of nearly €600 million this year, the HSE fears it could face an unprecedented cash crisis by the end of 2018.
The HSE budget for this year was set at €14.5 billion, which Minister for Health Simon Harris said would provide an "opportunity to continue to improve services for our patients and for the public".
However, internal correspondence shows the HSE believed a lot more money would be needed to maintain existing levels of service.
The documents show the HSE initially sought €1.481 billion in additional funding to maintain current service levels in 2018.
This scale of increase was strongly disputed by the Department of Health which ultimately provided funding of close to €500 million to maintain existing level of services.
After extensive discussions, eventually a national service plan on how to spend the €14.5 billion budget was submitted by the HSE, approved by Harris , and formally announced about a month ago.
To make the figures add up, a key element of the plan was a requirement to deliver value-for-money savings of €346 million.
Vague
The plan was somewhat vague on where these savings would actually come from – an issue which has been raised both in the media and by the Opposition in recent weeks.
However, it has now emerged that even before the service plan was published in December, at the top level of the HSE there were grave doubts that these value improvement targets could be realised in full.
In addition, it appears that several hundred million in other financial risks were not included in the service plan for this year on foot of a number of “planning assumptions” made by the Department of Health.
These include provisions for pay pressures of €68 million which the HSE believes may emerge during the year, and a €174 million financial deficit from last year which, under legislation, should represent a first charge on spending in 2018.
The €346 million value improvement programme savings were to be broken down into three “themes” or strands of €77 million, €119 million and €150 million.
HSE director-general Tony O'Brien told Harris, in a letter on November 29th, that work had already commenced on the €77 million in the first "theme".
However, he said measures to achieve realistic and achievable opportunities under the €119 million second “theme” to reduce corporate and overhead-type costs that existed at national and local level were “as yet unidentified”.
“Delivery on this €119 million, in addition to the €77 million [from the first priority theme] will be extremely challenging.”
Mr O’Brien also said that third €150 million value improvement target carried the “highest level of delivery risk for 2018”.
Stakeholders
He said this was more long-term and strategic in nature and would involve other relevant external stakeholders, as appropriate.
It is also unclear at present as to what will happen regarding the carryover deficit from last year – an issue which the official correspondence suggests has been pushed back into the second quarter of 2018.
Section 10(b) of the Health Service Executive (Financial Matters) Act 2013 provides that if the health authority spends more in one year than officially allocated by the Minister, the excess shall be charged to its income and expenditure account for the following year.
The HSE was told by the Department of Health on October 26th last year that in framing its service plan it would need to make an estimate of the level of this first charge, given the Government planned to absorb some of the overrun which related to centralised public service pay deals and payments made by the State Claims Agency.
However, on December 8th, the Department of Health changed its mind and said the HSE was not required to make such a provision for a first charge in its service plan.
“Recognising the aforementioned statutory obligation, it is intended that the matter will be addressed upon completion of the HSE annual financial statements, when the actual amount, composition and implication of any first charge are known.”