HSE FINANCES:THE HEALTH Service Executive (HSE) was forced to delay the introduction of €208 million in critical services last year in an attempt to stay within its budgets.
The HSE described the task as "extremely difficult, if not impossible". The savings included services for older people (€74 million), sundry hospital services (€38 million), disability services (€31 million), primary care (€22 million), mental health services (€22 million) and other services (€21 million).
Outlining the details, the Comptroller and Auditor General (CAG) John Buckley said the HSE knew in October 2006 that the funding being made available to it for 2007 fell some €341 million short of what was sought.
However, its accounting officer told the CAG that it framed its national service plan (NSP) in accordance with its budgeted allocation. "Despite its initial assessment of the financial position, the HSE senior management team did not direct any specific action at this point to achieve the savings that were likely to be needed to stay within budget," the report said.
"In rolling out the budget it did warn managers that the budgetary position was tight but, for example, it did not ask for specific plans to achieve quantifiable savings."
The HSE's control group, comprising senior management, was aware from February 2007 that HSE expenditure was already over budget and of the likelihood of significant financial difficulties for the HSE if activity and spending continued at the levels then pertaining, the CAG said.
"As the year progressed, the control group grew more concerned about the budgetary position and began to take action to try to stay within target."
In April 2007, it decided that savings targets should be set for each HSE directorate. In June, it requested that break-even plans be submitted immediately.
"As the financial situation continued to deteriorate, it prepared a break-even plan in July which was designed to address the €341 million shortfall which had first been identified in November 2006," the CAG said.
Savings set out in the break-even plan included the reallocation of some €142.9 million in capital funds for current spending.Value-for-money or cost-containment initiatives were to save a further €133.7 million, while service curtailments under the plan would save another €16.5 million.
Local managers were instructed to cut staff travel, to reduce overtime, to delay new appointments and give more consideration to the need to replace absent staff, and to delay capital expenditure. But by October the break-even plan was progressing at a slower rate than expected and the control group called for "an immediate intensification". These actions did not result in the HSE coming within its budget but their combined effect was to reduce expenditure by €96 million for the year.
Mr Buckley said the HSE's accounting officer reported that ultimately, the challenge which was extremely difficult if not impossible for the HSE to fully manage, derived from increasing costs associated with demand-led schemes, which have a statutory basis. "As each year progresses the HSE is challenged by the prescribing of new and highly expensive medications especially in the cancer and cardiovascular areas," the report said.
The number of items prescribed for patients was also increasing at a rapid rate and the number of medical cards issued could increase substantially above planned levels, based on changing national economic circumstances. Each card costs the HSE about €1,500.
The CAG said that in the course of his review, local managers reported that budget allocations were founded on unrealistic baseline figures, in that employee numbers agreed in the past to provide new and developing services were often not reflected in this baseline budget.