Government delays contributed to worsening HSE financial position

Delays on the part of the Government in introducing planned cost-saving and revenue-generating measures have contributed to the financial difficulties in the HSE which potentially could be far more serious than publicly acknowledged by Ministers so far.

Taoiseach Enda Kenny on Tuesday pointed out, correctly, that the HSE was currently facing a deficit of €60 million on the basis of the most recent accounts, and that this was significantly lower than the position 12 months ago.

However, the HSE’s budgetary structure for the year is based on a number of key assumptions, some of whom were outside of its direct control such as planned legislation to generate additional revenue from health insurers and Government cuts to professional fees. Achieving savings targets under the overall Haddington Road agreement was also a key component in the budget for the year.

It has now emerged that some of these assumptions have crumbled completely, while others will only now deliver in part.

The HSE's service plan for the year was based on €60 million in additional funding being generated from new legislation promised by Minister for Health James Reilly to charge all private patients in public hospitals. The HSE's financial report for the first half of 2013, published yesterday, acknowledged that this target could not now be met as the Government had deferred enactment of the necessary legislation until next January.

Separately, the delay on the part of the Government in implementing planned cuts in fees to healthcare professionals such as GPs and pharmacists, which the HSE anticipated would come on stream in May and which will not come into effect until this month, cost it €18 million.

Assumption
The biggest assumption underlying the HSE budget was that the Haddington Road accord would deliver €150 million in savings this year. This is now in serious doubt. The Irish Times understands the Department of Health has signalled to the Department of Public Expenditure that the actual saving could be €104 million, leaving a shortfall of nearly €50 million.

The Minister for Public Expenditure and Reform Brendan Howlin yesterday said he would neither confirm nor deny that the Department of Health had warned him that the savings target would not be reached.

Another key area largely outside of the HSE’s direct control is expenditure on areas such as the medical card and other community schemes which are largely demand-led.

As is usual over recent years, a significant deficit is building up here. The HSE financial report predicts there could be an overspending in this area of between a minimum of €65 million and potentially more than €100 million.