HSE warned Government of health deficit of up to €500m

The HSE has warned the Government of a risk that it could overrun its budget by up to €500 million this year.

The Irish Times understands that the warning was set out in a confidential letter to the Department of Health in late December.

While the HSE’s service plan – its agreement with the Government on how its €13 billion budget will be spent – identifies a number of risks to its delivery, no details of a potential deficit were published at the time either by it or the Department of Health.

It is understood that the HSE advised in the letter of a risk that the cost of delivering all the services set out in the service plan could lead to a financial deficit at the end of the year of between €300 million and €500 million.

No supplementary budgets

The emergence of a deficit in the health service could cause significant difficulties given the stated position of the Government that there cannot be any supplementary budgets this year.

There have been suggestions that deficits would have to be addressed in one of three ways: by cutting services towards the end of the year to tackle any overrun; by considering any overspending by hospitals or agencies as a first charge on their budgets for 2017; or by securing surplus funds in other Government departments to bail out the health service.

The HSE has not published any financial data so far this year.

However, informed sources said this weekend that on a cash basis it had recorded a deficit of about €23 million in January.

The final figure for the month is likely to be larger.

A slightly larger overrun is expected to be recorded for February when these figures are provided to the Government over the coming days.

Challenges

Senior Government sources this weekend argued that the HSE in its letter had not advised of a likely deficit but rather set out the potential financial challenges it faced if projected savings, for example, were not made.

Government sources maintained that it was too early in the year to forecast the likely shape of the HSE’s finances at year end.

The Minister for Health, Leo Varadkar last October, when announcing the health budget for this year, said it contained provision for saving and efficiencies measures of €125 million to be generated in the areas of procurement, prescribing and drug costs.

One of the key initiatives was a scheduled new deal with the pharmaceutical industry on drug costs.

However talks on such an agreement have yet to commence.

The HSE last year received a supplementary estimate of about €600 million.