HSE must start living within budget, says new boss

New HSE director general Paul Reid has said the health service will no longer spend money it does not have and breaching budgets "can no longer be considered an option".

In a strongly worded memo to his senior management team on his first day in the job on Tuesday, Mr Reid sought an immediate review of “actions and timelines to bring about a financial break-even” situation. This should be presented to him by close of business on Friday, May 24th.

He suggested that where the HSE faced urgent demands that would lead to it incurring further costs, one of the options that should be looked at was cutting back on other, lower-priority services.

Mr Reid said: “We must deliver a financial break-even in 2019, while prioritising the safety of those services that can be delivered within our budget”. This would “build credibility and confidence” so that the health service would secure a sustained and additional investment over the next five to 10 years, he said.

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Mr Reid told senior managers they would be held to account for their role in securing a financial break-even position while prioritising the safety of the services that the HSE delivered.

The HSE is understood to have recorded a financial overrun of more than €38 million in the first two months of the year, with further losses incurred in March following on from a €600 million deficit in 2018. It received a record €16.05 billion for this year.

‘Stark warning’

Minister for Finance Paschal Donohoe recently gave a "stark warning" to Cabinet colleagues about the need to control spending. And last Friday the Minister for Health Simon Harris said the health service had to live within its budget and there could not be a "runaway train" where individual health managers were deciding on the numbers to employ.

In his memo to each member of the HSE leadership team, each hospital group chief executive and each community healthcare organisation chief officer, Mr Reid said that where the HSE was faced with urgent demands that would lead to it incurring further costs, other options had to be considered, including reducing costs and waste so more services could be provided from the current budget; providing less of a lower-priority service to free up the budget for the urgent demand; and ensuring those most in need of services benefit from the service level the budget will support.

He said he would sit down with managers towards the end of May to look at their plans to bring about financial break-even in the organisation. His chief financial officer would also set out a number of “at-risk areas” for their immediate consideration and action.

"Following this, we can then engage with the Department of Health and the Department of Public Expenditure to ensure these plans are understood and supported."

Proactive management

Mr Reid said no individual health service manager had “the sole authority to make or avoid decisions that will lead to a financial overrun in 2019, or in 2020”.

“However, for the absolute avoidance of doubt, I expect all senior managers in the health service, including clinical managers, to manage and to control spend within budgets. That means managing risks proactively and effectively, as close as practical to the level at which they arise. I will consider it an absolute failure of management, and of individual managers, if the primary net effect of good disciplines of financial management is that multiple problems and risks are simply transferred upwards to the next layer of management and ultimately arrive at my desk.”

The new director general of the HSE also said the executive needed to clearly communicate “the reality that there is no recruitment embargo or moratorium in the health service nor is there a ban on agency or overtime.”

However, he said there was a priority requirement for all services to maintain, or get to, an affordable staffing level that was sustainable in 2019 and 2020, while also prioritising the delivery of safe services.