The Department of Health is deeply unhappy that the Health Service Executive's spending is already €300 million ahead of budget. The HSE insists much of the causes are beyond its control.
Correspondence reveals that significant extra money was given by the department to the HSE this year on condition that the HSE would live within its budget and tackle the causes of past budgetary over-runs.
Privately, the HSE argues that about €100 million of the projected €300 million deficit, for example, is the result of Government decisions made after the HSE service plan was agreed last year.
Then, ministers agreed to bring forward a €1,000 payment due under the Lansdowne Road Agreement to public servants by a number of months, which cost the health service an extra €55 million-€60 million.
That decision was taken for political reasons, to assuage public service unions angry that gardaí had received more in a deal to avert a threatened strike last November than their members had.
Other politically-inspired decisions that had major cost ramifications for health included the payment of a living-out allowance to non-consultant doctors, and a separate agreement with nurses on pay issues.
Another €50 million of the projected deficit is the result of greater than expected payouts by the State Claims Agency (SCA) for medical negligence cases. While the SCA handles claims, ultimately the HSE pays the bill, although it has no control over the number and size of payouts.
A further €50 million of the deficit relates to an historical income collection target which has featured on the HSE’s books for some years and is regarded as uncollectable.
That leaves about €100 million in overspending that the HSE accepts can be related to performance issues within the service.
Of this sum, €20 million derives from a fall in expected income from private patients using public facilities. Health sources say a campaign by insurers to encourage their subscribers to say they are public patients when presenting at emergency departments has hit expected income, particularly in Cork.
Hospital overspend
The State’s hospitals are expected to overspend by €80 million this year. Most of this – €50 million – is due to the rising cost of cancer and other drugs, as well as surgical and medical supplies. About €20 million is pay-related, mostly to do with increased spending on agency staff.
Performance notices – a mild sanction that involves greater ongoing scrutiny of spending – have been issued to St James's Hospital and the Mater Hospital in Dublin, and Beaumont Hospital, also in Dublin, has come close to receiving one.
It is unclear as to whether any individual manager has received a personal performance warning.
Disability spending is projected to go €20 million over budget due to the rising demand for expensive residential places. The St John of God organisation, one of the largest voluntary providers in the sector, has received a performance notice due to overspending on its €140 million budget for the year, as has the HSE's community healthcare organisation for the north and northwest.
Despite the failure to meet targets, the HSE believes efforts to streamline the health services are succeeding. The average time a patient stays in hospital has fallen in recent years, for example, and patients requiring procedures are far more likely to be treated as day cases than having to stay overnight.
“Instead of looking for hospitals or service providers to cut services, we want to continue driving economies and efficiencies in the services,” said one source familiar with the issue.
The head of the HSE Tony O'Brien told Minister for Health Simon Harris and the Department of Health secretary general, Jim Breslin, that it noted the clear position of the Government that there would be no supplementary estimates for the health service this year "other than for technical reasons associated with pay awards and other similar matters".
“The health system faces the ongoing challenge of living within a fixed resource while continuing to provide what in many areas are demand-driven services,” Mr O’Brien said.
However in a replying letter to Mr O’Brien on July 7th, Mr Breslin said the Government had been clear when providing substantial additional funding to the health service this year and last year that it was “paramount that the HSE manage the total health budget within the overall funding available for 2017”.
Mr Breslin said the department wanted to see “the concrete actions the HSE is taking to address the underlying causes” of the over-runs.
“The executive will also need to consider the whole health system to ensure it operates within its allocation and a break-even position is achieved in 2017.”
“Detailed consideration will also need to be taken on obtaining savings across the system and ensuring maximum efficiencies.”