St John of God order warned for years it could no longer ‘bail out’ services

Years before Declan Leavy became a resident of a small St John of God care home in Ardee, Co Louth, the religious order behind the healthcare group was warning that it could not continue to cover the losses being incurred running disability and mental health services.

The 54-year-old resident with intellectual and physical disabilities lives in the Co Louth home with three others. His sister Paula Walsh says he is thriving in the home and enjoys trips to local GAA matches and concerts with care staff.

“They make him a part of the community, I couldn’t fault it,” she says. Residents and families need “continuity of care”, she says.

That continuity of care is now potentially at risk with last week’s announcement that St John of God Community Services, one of the largest voluntary providers of disability and mental healthcare, would be handing responsibility for those services over to the Health Service Executive (HSE) by August 15th.

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St John of God Community Services, the largest part of the wider SJOG Hospitaller Services Group, is funded by the HSE to provide services to 8,000 children and adults on behalf of the State, but for years has complained about a shortfall in funding.

In the absence of any last-minute deal the HSE will either have to run the services directly, or fund other voluntary healthcare providers to take them over.

St John of God provides care to 2,500 people with intellectual disabilities, several hundred of whom live in residential care homes mainly spread across Dublin, Kildare, Louth and Kerry. It has 5,500 patients in mental health services concentrated in the Dublin southeast area, with five clinics for children and teenagers in south Dublin and Wicklow.

Internal correspondence, minutes of board meetings and company filings show the financial crisis facing the south Dublin-based provider has been developing for years.

Financial accounts over the past decade show that as St John of God Community Services continued to post annual multimillion euro deficits, the religious order behind the services provider, St John of God, indicated it would not be able to continue to “bail out” the provider.

In 2014 the organisation reported a deficit of €5.1 million, a significant shortfall considering that the losses over the previous three years combined had not topped €1 million. This was followed by a loss of €3.5 million in 2015 and €2.85 million in 2016. During that three-year period the religious order contributed €15 million into the organisation’s coffers, financial records show.

Even at that early stage concerns were being raised internally about the scale of the financial losses. Company accounts filed for 2016 said the religious order had indicated it did not have the resources to keep providing such “bailout-type funding”.

“The level of cash deficit now being considered is simply beyond the levels which the order would be in a position to provide support on,” the filing said.

The provider continued to lose money, recording a deficit of €8.9 million in 2017, €6.5 million in 2018 and a €5.6 million loss in 2019, which its accounts again noted the order was not in a position to subsidise. St John of God has argued that as the cost of providing care increased, funding from the HSE did not kept pace.

Minutes of board meetings detailed that the financial pressure was such that in March 2019, the organisation would not have been able to pay staff salaries the following month, but for a cash advance of €5 million from the HSE.

Towards the end of that year board members were meeting to discuss St John of God walking away and having the HSE take over the services if the State did not substantially increase its funding.

Total contributions from the religious order between 2017 and 2020 had dropped to less than €230,000, a SJOG spokesman confirmed.

Finances improved during the Covid-19 pandemic, with the provider reporting a €1.1 million surplus in 2020, followed by a €700,000 surplus in 2021 and a €800,000 surplus in 2022. However, by that point it was carrying an accumulated financial deficit of more than €30 million on its books.

The decision to request the HSE take over the care provider’s services will not impact St John of God’s 180-bed psychiatric hospital in Stillorgan, south Dublin, which accounts show is doing well financially.

The private hospital, owned by a different company in the SJOG group structure, recorded a profit of €740,000 from €35 million in revenue in 2021. That company also houses the group’s 62-bed dementia care facility, St Joseph’s Shankill.

After months of internal concerns about the finances, in September 2020 the board notified the HSE of its intention to hand over community services in 12 months’ time, due to a failure to address its accumulated deficit of €37 million.

The decision, which caused considerable alarm among families at the time, was put on hold following an agreement to enter into a process with the HSE to examine future funding.

Correspondence shows Robert Watt, Department of Health secretary general, wrote to Paul Reid, the HSE’s then chief executive, pushing for talks to find “a pathway to financial and operational sustainability” for St John of God. In the April 2021 letter Mr Watt said his “foremost concern” was to ensure the provider could continue to run its services.

A July 2021 board meeting offered some insight into the HSE’s position in the dispute. Minutes show directors were told Stephen Mulvany, HSE chief financial officer, felt St John of God “would have to deal with the majority of the deficit”.

Unusually, the meeting was attended by senior figures from the wider Hospitaller Services Group, which outlined the parent entity had “no cash available” to help.

The organisation had a critical need for €32 million in funding to continue to run services sustainably, alongside a plan to clear the accumulated deficit

—  Clare Dempsey, chief executive of St John of God Community Services

One senior HSE source involved at the time confirmed there was a view that the wider St John of God group should play a bigger role in helping to plug the financial hole.

The bigger concern, given the State’s reliance on voluntary organisations to provide healthcare, was whether St John of God would be the first of several providers to shut, they said. The organisation was far from the only disability service under financial strain from increasing costs. “It was known that the sector was in distress,” the source said.

By February 2022 St John of God’s board was discussing the lack of progress in funding talks “with concern”, according to minutes released under the Freedom of Information Act. At several points the board agreed to continue to defer its notice to the HSE withdrawing from services while talks continued.

Minutes of a June 23rd, 2023 meeting between the provider and the HSE heard the organisation remained “very concerned” about its financial deficit.

Matters came to a head last month when Clare Dempsey, chief executive of the provider, wrote to the HSE stating that despite years of talks there had been no proposals to address the funding deficit.

The January 12th letter said an analysis by auditors EY into the provider’s deficit had determined that almost €28 million was incurred as a result of providing services for the State. Ms Dempsey said the organisation had a “critical” need for €32 million in funding to continue to run services sustainably, alongside a plan “to clear the accumulated deficit”.

Last week St John of God announced it was moving ahead with its long-deferred decision to transfer responsibility for its community services to the State.

In response, HSE chief executive Bernard Gloster said the organisation had “more than enough money” to continue to operate. There had been no need for such “immediate action”, which had caused anxiety for families of those using its services, he said.

Since the announcement last Friday there had been correspondence exchanged between the two sides, which the board of St John of God was considering, a spokesman said.

In a transfer of services, the 3,000 staff working for St John of God would move over to the new provider. The vast majority of the 300 properties where care is provided – a mix of large facilities and small group homes – are owned by the religious order.

Forty of the properties, valued at about €20 million, were transferred into the ownership of the disability provider in 2015. Sources on both sides recognise moving staff from St John of God to the HSE or another voluntary provider – and sorting the question of what will happen to the property – will be complicated.

Far removed from boardrooms or crunch meetings discussing funding, families of the thousands of people using the services have reacted with concern about what will happen next.

For Declan Leavy and his family, the prospect of him having to leave his care home in Ardee would be incredibly disappointing, his sister said. “I would really hope he wouldn’t have to move, I would object to that in the strongest possible terms... It’s [his] home,” she said.

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