Consultant contracts: costly question for the next government

The State’s agreement on working practices and pay with hospital consultants is arguably one of the most important in the Irish healthcare system. However the relationship between the Government and senior doctors has been beset with difficulties in recent years amid allegations of undelivered commitments and bad faith.

It seems clear Minister for Health Leo Varadkar believes the consultants' contract, introduced in 2008, needs to be reformed. The Irish Medical Organisation (IMO) has also indicated that it would be prepared to enter talks on changes.

However it also appears that in other parts of Government there are concerns about the potential costs involved.

The 2008 deal provided for three different types of contract, each with particular levels of pay and differing scales of private practice allowed.

Those working exclusively in the public service, category A, were paid about €240,000. Doctors on category B contracts were allowed limited private practice in public hospitals and those on type C arrangements, which permitted the treatment of fee-paying patients in off-site private hospitals,were to get less money.

However due to the deterioration in the public finances, the full rate in the contract, as well as some other ancillary payments, never materialised. Subsequently serving consultants and those appointed to new positions after autumn 2012 also experienced significant pay cuts.Last autumn the Department of Health said there were 170 vacant posts. In some cases there were no applications for positions that were once highly coveted by young doctors.

In October, in a major speech to the annual conference of the Irish Hospital Consultants Association, the Minister effectively signalled the need to change the State’s official policy over the previous decade of seeking to exert greater control over the working arrangements of senior doctors, particularly in relation to private practice.

In what appeared to be the beginning of a multi-pronged strategy of various financial incentives to tackle the consultant recruitment crisis, Varadkar spoke of the possibility of new pay rates, bonuses and reforms.

He argued the system of Type A, B and C contracts was not working any more. The Minister said he would prefer to have a single contract for hospital consultants, perhaps similar to one in the NHS in the UK where senior doctors receive a basic salary and a system of bonuses and excellence awards. Bonus payments in the Irish public service were abolished in 2009.

Pay restoration

The Minister also said that consultants could receive up to €13,000 in pay restoration over the coming years on a phased basis and salaries for those working exclusively in the public service could be close to €200,000 by 2019. However it was the Minister’s comments on private practice rights that, if implemented, would mark a significant shift in public policy.

He said that being a hospital consultant in a public hospital was a busy, full-time job and that consultants shouldn’t really have time for private practice during normal working hours. However he proposed that doctors who wanted to do private practice, should perhaps have part-time or session contracts instead.

The Minister’s comments came against a backdrop of concern at the top level in the HSE over the impact of changes in legislation introduced in 2014 on official private practice limits.

Up to then hospitals could only charge patients who occupied the 20 per cent of beds designated for fee-paying patients. The 2014 legislation allowed hospitals to charge everyone with private health insurance.

The Irish Times reported in January that, in a candid email to Varadkar, the head of the HSE Tony O'Brien said the percentage division between public and private – which under the 2008 contract was supposed to be capped at 80:20 – was now "a farce in practice".

O’Brien’s email had been sent in reply to correspondence from the Minister last August which provided other insights into his thinking about the problem of recruiting and retaining hospital consultants in the public service.

Varadkar said in that email that despite the improvement in pay for new entrants he was not sure at that stage whether the health service was “winning the battle yet” in relation to consultant recruitment.

He said that,given those doctors in place before 2012 were due to have their pay restored on a phased basis up to 2019, “there might be a case for allowing more flexibility in other areas when it comes to recruitment”.

He proposed proleptic appointments where doctors would be given a provisional appointment as a consultant in a public hospital to take effect on their return from a training programme abroad.

He suggested part-time appointments and said some retired consultants, as well as those with young families, would be willing to take posts involving 20 hours a week or three days a week.

Revised contract

The Minister also suggested allowing for the establishment of more type C contracts – with off-site private practice rights – “more readily where it is necessary to recruit”. He also suggested “just allowing consultants to move more freely between A, B and C contracts. Crucial to this, however, is a robust mechanism to ensure that contractual commitments to the public hospital are actually met.”

The introduction of a revised contract has been complicated by the recent Employment Appeals Tribunal finding which provided for two consultants to receive compensation for the failure by the State to pay them higher salaries agreed more than seven years ago in the 2008 contract.

The HSE believes that if this set a precedent for all other consultants potentially affected, the bill could be up to €350 million.

The Department of Public Expenditure is determined that this ruling will be appealed while broadly similar High Court cases in the pipeline will also be fought as far as practicable. Only at that stage, many years down the road, if defeat is inevitable, would it consider a negotiated settlement.

However it is virtually certain that the medical organisations would seek to see the issue of this compensation addressed as part of any talks on a revised contract. Such a move would crystallise costs for the State much more quickly.

The Department of Health may view the introduction of a revised consultant contract as beneficial in dealing with recruitment and to generate greater efficiencies. However the question for the next government , as a whole, is likely to be at what cost is such a development desirable.