HSE facing new financial crisis

Major pressures on the HSE budget for this year have been revealed in the health executive's first financial performance report published since the lifting of the IMPACT union's industrial action.

The HSE, in the report, admits that severe budget cuts are affecting services on the ground, that hospitals are running up large deficits, and has expressed concern about the effects of the controversial recruitment moratorium.

It has also warned that recruitment of additional key staff for vital services is under threat.

This is the health executive's first financial update report since the IMPACT action halted collection of financial data earlier this year.

The new figures indicate that further severe health service cuts are looming as the HSE tries to live within a vastly reduced budget which is already under serious pressure with less than half the year gone.

The performance report shows the HSE had a deficit of €109 million in its budget at the end of April, and the report admits that the budget reduction of €1.2 billion at the start of the year has meant that services are struggling to meet the budget levels set.

It says there is a particular problem with hospitals running over their budgets. Already, some hospitals have started closing beds.

The HSE report says the deficits being run up by hospitals in the west in particular require urgent action.

It adds that there will have to be an "enormous focus" at hospital and local health office level to acheive the relevant savings.

It says key risks include the recruitment moratorium's impact on services, the challenges to the delivery of service plan actions as a result of the lack of flexibility of staff, and the numbers retiring from the service not meeting the target for staff reduction set for 2010.

The report says the trend in retirements to the end of April is not sufficient to achieve fhe full year staff reduction target of 1,520. Were the current trends to persist, the final staff cut number would be closer to 1,000, according to the report.

It says the impact of this would be to "underachieve" the recruitment moratorium savings already deducted from the HSE's budget and would "therefore require additional savings." This, the HSE says, would be offset by a lower total pension payment in 2010.

The HSE had €650 million cut from its allocation for this year to reflect public service pay cuts and staff reductions. A further €400 million cut was to be met by other cost reductions, increased charges and collection of outstanding income.

It points out that the recruitment of additional staff to support service developments this year was contingent on the reduction by 1,520 in existing staff being achieved. However, the report warns that the trend to the end of April does not support additional recruitment.

The report says there is evidence that pay reductions for 2010 as outlined in the estimates were €49 million higher than the likely real savings.

The performance report also notes that the level of private health insurance in the population is reducing and there has been a drop in the number of patients presenting with private insurance.

It says the HSE's additional income target of €75 million will be difficult to achieve in this context.

The report also states that with the speeding up of medical card application processing, the demand this year for medical cards may exceed what was budgeted for.

It also notes there are are a significant number of public nursing home beds being vacated as people move to private nursing homes as a result of the Fair Deal scheme being introduced. This may result in local health office budgets being reduced as funding moves to Fair Deal.

A breakdown of HSE superannuation benefits paid out so far in 2010 shows that the highest lump sum paid was nearly €300,000, to a hospital consultant.

The HSE says that while this was the first performance report since December, following the lifting of the industrial action by IMPACT last month in relation to financial data, the action in relation to other data remains in place.

The report says because of the continuing industrial action, it is not possible to to understand the main cost drivers behind the financial position.

Meanwhile, the public services committee of ICTU hs now accepted the Croke Park Deal.

This paves the way for talks to begin on reform of work practices in the health sector, which are expected to yield substantial savings. However, these savings are unlikely to kick in this year.

See also 'Doctor shortage could close services'

[Posted: Sat 12/06/2010]