The Health Service Executive (HSE) was forced to delay some €208 million in critical services last year in an attempt to stay within its budgets – a task which it said was “extremely difficult, if not impossible”.
They 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 John Buckely said the HSE knew in October 2006 that the funding being made available to it for 2007 fell some €341 million short of what had been sought.
However, its accounting officer told the C&AG 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, reviewed monthly performance and budgets “continuously” throughout 2007, the HSE’s accounting officer told the C&AG.
The control group was aware from February 2007 that HSE expenditure was already over budget and of the likelihood of “significant financial difficulties for the HSE [expenditure] vote if activity and spending continued at the levels then pertaining”.
“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 financial savings targets should be set for each HSE directorate and that each directorate would undertake an impact assessment arising from those targets.
In June 2007, it requested break-even plans to be submitted immediately.
“As the financial situation continued to deteriorate, it prepared a break-even plan in July which was designed to address the €341m shortfall which had first been identified in November 2006,” the C&AG said.
Savings set out in the break-even plan included the reallocation of some €142.9 million in capital funds for current, or day-to-day, 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 last year 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.
As well as curtailing existing expenditure, certain developments had to be delayed due to the requirement to achieve financial break-even for the year. These included the services for older people, disability services, hospital services, mental health services and primary care.
“This strategy was the subject of correspondence with the Department,” the C&AG said.
He said the HSE’s accounting officer had said 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.