ANALYSIS:The HSE's previously predicted financial difficulties are now coming to pass, writes Martin Wall.
THE FIRST real data for the year produced by the Health Service Executive (HSE) shows that its widely-predicted financial difficulties are actually coming to pass.
The HSE board was told last week that following overspending of nearly €26 million in January - largely on hospital and community drug services - that "actions are now required" to correct this position.
Next week trade unions expect the HSE to spell out how its "rigorous and active" cost-containment plans will impact on both patients and its 130,000 staff.
However, the HSE chief Prof Brendan Drumm has said that the financial "challenge" facing the organisation was in the region of €300 million or even higher, depending on spending on the "demand-led" drug schemes.
He warned that without savings to bring the budget into line, the HSE would have to look at other measures such as the operation of A&E units in smaller hospitals, the possible restriction of some wards to five-day activity and the closure of some facilities over the summer. The HSE has already introduced strict controls on employment this year.
However, coming on top of last year's recruitment freeze, many staff have expressed concern at the pressures under which they are having to work.
The new financial report shows that since last August the numbers on the payroll have fallen by about 2,000.
The HSE report warns of the impact on its budget of increasing numbers of medical card patients and says that delays in introducing the controversial new pharmacy payment arrangements cost it €10 million per month.
It says that the upward trend in unemployment "is anticipated to increase the numbers eligible and therefore demand for these schemes beyond budget provision".
The new drug price arrangements were implemented in the last few weeks.
However, one pharmacy owner has secured a High Court injunction preventing the new system being applied to him pending a legal challenge.
If other pharmacists seek similar injunctions it could have a further impact on the HSE's finances.
On the hospital side, the HSE this year wanted to reduce expensive in-patient activity, while raising the number of less-costly day-care procedures.
However, in January both in-patient and day-care activity levels were ahead of target.
The HSE itself told the Department of Health in December that it had received some €450 million less than was required to maintain services at last year's levels.
Last December the Minister for Health, Mary Harney, warned the HSE that there could be no recurrence of the €244 million overspend recorded last year, which resulted in it having to be bailed out by the Government.
She stressed that it was an "absolute necessity" for the HSE to operate within its budget.
"This is an essential requirement which must be met if the HSE is to retain the confidence of the Dáil and the Government in its stewardship of public funds," she said.
The underlying message seemed to be that widespread overspending this year could see responsibility for the HSE's €13 billion budget being given back to the Department of Health.
On the other hand, the HSE will come under ferocious public pressure if there are significant cutback to services, while any moves outside of the partnership process could lead to further trouble with the trade unions and possible industrial action later in the year.
Overspending
€16.4m
The National Hospital Office overspend in January 2008.
The budget was €368.3 million
€15.3m
The primary, community and continuing care overspend. The budget was €650.2 million