Recession may sound the death knell for major projects as cuts in health spending loom, writes PAUL CULLEN
FOUR OF the biggest hospital-building projects in the State could be in jeopardy after the Department of Finance questioned the rationale for their continued development.
The backers of the development of the Mater adult hospital, the building of a national paediatric hospital on the same site, the new North-East Regional Hospital and the redevelopment of the National Rehabilitation Hospital are all continuing with plans for their projects, notwithstanding the department’s negative assessment.
However, given the dire financial state of the country, and the relative attractiveness to the Government of cutting projects not yet built as opposed to shutting services currently in operation, there must be a question mark over some of the projects.
The department’s view is expressed in a report published earlier this month and submitted to the McCarthy report (“An Bord Snip”).
Indeed, in many areas of activity by the Department of Health and the HSE, the department’s proposals for cost savings were more swingeing than those ultimately adopted by the group headed by economist Colm McCarthy.
According to the department, the rationale for the continued development of these major projects is unclear, given the delays in progressing them and the conclusion reached by PA Consulting in a report that the system already has enough acute hospital beds.
The department also cites the reduction in capital funding for the HSE “to reflect to new economic reality” as a reason for reassessing the need to proceed with the projects. It stresses the importance of other areas of the health programme, such as step-down nursing beds and primary care team facilities, in “breaking the logjam” in acute hospitals.
The preference of the department is clear – expensive acute hospital beds are out and cheaper home care and primary care in the community is in. The department also says the closing or downgrading of “inefficient” hospitals could save another €500 million.
No figure is published for the savings that would accrue from terminating the four major projects, but it is clear that millions have already been spent.
Minister for Health Mary Harney told the Dáil last March that €5.3 million had been spent on planning for the new national children’s hospital at the Mater, into which the existing three children’s hospitals in Dublin are due to be merged.
The timeframe for completion of the hospital has already slipped from the original deadline of 2011 to 2014. In March, Harney repeated her view that the proposed hospital was a “priority project” for the Government, but it remains to be seen how that opinion will withstand the hostility of the Department of Finance.
The much-heralded new regional hospital for the north-east is already on hold since the HSE confirmed last month that there was no money to pay for it and it would have to be accommodated in the next national development plan.
It’s a similar story with the planned €200 million redevelopment of the National Rehabilitation Hospital in Dún Laoghaire. This was due to open in 2010, but the start date for construction was delayed earlier this year when Ms Harney warned that the pace at which the project could progress depended on the overall capital budget for health.
In contrast, the development of the Mater adult hospital is progressing apace, according to spokeswoman Laura Megahy. She said the main contractor, John Sisk, had been appointed, building was under way and the €130 million project was slated to be finished in January 2012.
Elsewhere in the department’s submission to An Bord Snip was a suggestion to charge older people the full cost of home help packages and introduce a means test for them. It is estimated that these measures would save €204 million.
However, this and many other cutbacks proposed for the health service in the department’s submission are rated high risk because they are likely to incite “concerted opposition”, according to the officials.
Some of the department’s proposals, such as increasing a person’s contribution to care costs under the Fair Deal scheme, changes to medical cards or eliminating bonus payments, were taken up by the Bord Snip report. But others, such as the suggested curtailment of hospital projects, were more severe than those eventually adopted by McCarthy and his group.
The submission also proposed the abolition or reduction of the Early Childhood Supplement, with savings of up to €400 million, while warning that “any change that takes money off existing holders runs the risk of voluble resistance”.
The department proposed increasing AE charges by 10 per cent from the current level of €100, but An Bord Snip went further, with a recommendation of a 25 per cent hike to €125. And while the department suggested a €2.50 per item charge for medical card holders on drug prescriptions, the McCarthy report proposed a €5 increase.
Also, the department proposed cutting the numbers employed in the health sector by 4,000, but An Bord Snip put this figure at a minimum of 6,000.
According to the department, health spending has been the most difficult area to “deal with” for a long time.
“The structure of the system, the demand-led nature of much of the service, the high political profile, the strength of vested interests, the vulnerability of the client group and the importance of local issues have militated against clear, rational efficiency measures and cost containment overall,” it said.
Health spending of almost €16 billion annually accounts for over one-quarter of all current spending, with more than half going on pay and pensions, the submission notes.