The HSE is on course to run up a deficit of €1.6 billion this year, driven by inflation, higher than expected patient numbers and cost overruns, its board has been told.
Senior managers have been instructed to draw up cost-containment plans to deal with the “substantial” budget shortfall expected this year and a supplementary estimate is expected later in the year. The €1.6 billion figure is a “heavily caveated” initial indication that could change as the year goes on, board members were warned.
The overspend sets the HSE on a collision course with the Department of Health, which has previously dismissed its predictions of a €2.2 billion funding shortfall this year.
Initial indications are for an income and expenditure deficit “in the region of circa” €1.6 billion with a cash shortfall of €1.1 billion, according to HSE chief financial officer Stephen Mulvany.
In the department’s view, this estimate “overstates” the level of financial issues and risks in the health service, Mr Mulvany told a board meeting in April.
Despite this difference of opinion, Mr Mulvany said the department and the HSE were “fully aligned” on the need for measures to mitigate the financial risks and agree it “will not impact negatively on planned service capacity, activity or access”.
“There is a clear agreement between the HSE and the department that our joint efforts to control costs will not result in cuts to services,” a HSE spokesman told The Irish Times.
The National Ambulance Service (NAS), in a letter seen by The Irish Times, has warned its staff the HSE was projecting a “substantial” budget shortfall this year.
NAS director Robert Morton said spending had been comprehensively reviewed, a draft cost-containment plan had been drawn up and the executive team was finalising “a number of immediate actions that will need to be taken”.
The spokesman confirmed the NAS and other services were taking action to control costs so they were targeted on the objectives of the HSE service plan.
HSE chief executive Bernard Gloster recently paused the recruitment of senior management and administrative grades in order to make pay savings, but this is not expected to result in significant savings this year.
Sinn Féin health spokesman David Cullinane called for full transparency around the HSE’s financial position.
“Given we are seeing cost-containment measures being rolled out across the NAS, the question for the Minister is what similar plans are being rolled out elsewhere,” the Waterford TD said. “Can he guarantee any potential failure to properly fund existing levels of service in Budget 2023 will not result in a cut in any service provision?”
Despite receiving a record €21.1 billion in this year’s budget, the HSE had incurred a deficit of €127 million at the end of February and €178 million a month later.
Minister for Health Stephen Donnelly has said it was not possible to give a “definitive picture” of the HSE’s overspend at the end of the year, but current indications suggest it will be “substantially lower” than the €2.2 billion signalled in the HSE service plan.
Former banker Brendan Whelan has been appointed the new chairman of the HSE’s audit and risk committee, following the resignation of Brendan Lenihan, a former president of the Institute of Chartered Accountants. He resigned in March over the way the predicted funding shortfall was presented in the service plan.
An appointment process is under way to ensure at least one member of the audit and risk committee holds a professional qualification in accounting or auditing, according to Mr Donnelly.
Last November, the board considered reducing services to match the funding available to it, but opted instead to “provide the services needed by the public”. It warned that this could mean the HSE running a deficit of more than €1.5 billion this year “without appropriate additional funding support”.
The board repeated its concerns when considering the final plan last March and said it feared any overrun “could be interpreted as mismanagement by the HSE”.
