Politicians know higher pay in health is a ‘toxic’ issue

Speaking at a medical conference this month, Minister for Health Leo Varadkar acknowledged that Ireland was competing in an international market not only for doctors but also for hospital administrators and managers.

He accepted the pay rates for managers in the Republic were below salaries in the North and Britain.

However, he said in the wake of a deep recession telling the public they would have to pay more to managers was “unbelievably politically toxic”.

This is all the more true against a backdrop of a health service top-up payments controversy.

This emerged in 2013 after The Irish Times revealed a confidential internal audit which showed senior personnel in voluntary hospitals and agencies were together getting €3.2 million in allowances and benefits over and above their official salaries.

This newspaper later published details of internal Department of Health files which showed the scale of extra payments to some health service managers, with top-ups in certain cases drawn from privately-generated funding or even public donations.

In one case the then chief executive of Our Lady’s hospital in Crumlin was shown to be receiving an additional €30,000 funded from shops on the campus

The most controversial case to emerge in the storm over top-up payments related to the Central Remedial Clinic in Dublin.

Some managers considered to be public servants avoided the full impact of public service pay cuts imposed on other staff because the organisation artificially split their salaries between amounts funded by the HSE and money generated by its public fundraising arm.

One of the arguments used to defend the unauthorised additional payments was that official rates were not sufficient to recruit the best people.

In its response the Government adopted a twin-track approach. The then minister for health James Reilly insisted top-up payments had to stop.

Separately, a review was set up to determine appropriate salary scales in the voluntary hospital and State-funded health agency sector.

However, the abolition of top-up payments for serving personnel proved not to be straightforward.

The hospitals and health agencies argued they had entered into contractual arrangements with senior managers which stipulated they would receive amounts higher than the officially sanctioned levels.

They warned they could be sued if they reneged on these.

Last November the Department of Health said it had received 85 business cases from hospitals and agencies seeking approval for individual pay levels in excess of the official rate to be retained by their senior managers on a “personal-to-holder” basis.

The Department of Public Expenditure said this week it had approved Department of Health proposals for dealing with this issue subject to conditions.

It seems likely that many managers will be permitted to retain the additional payments.

“Of the original unsanctioned payments noted by a HSE internal audit report, the Department of Health sought sanction, in accordance with legal advice relating to acquired/contractual rights for payment, for the ongoing payment of a small number of salaries and allowances to staff across 26 agencies on a ring-fenced personal-to-holder basis.

In contrast, the Department of Health has indicated that payment of allowances where staff are not considered to have acquired contractual rights has or will be stopped.”

The HSE said while there was approval in principle in relation to continuing the additional payments, there were a number of requirements that had to be fulfilled.

It said one of these was a confirmation from the hospital or agency that where an allowance was awarded for extra duties, these were still being undertaken and it was not possible to make alternative arrangements

Secondly, it said it was insisting all remuneration had been reduced in line with the Haddington Road deal and the Government’s financial emergency requirements

Separately, given the Minister’s comments about health managerial salaries falling behind international comparators, there are likely to be some eyebrows raised at the decision to cut official pay rates for top teaching hospital administrators.

Ironically, Varadkar in July urged that the new groups of public and publicly-funded hospitals should be given autonomy to set their own pay rates for senior managers and doctors outside the constraints of public service rules .

It seems unlikely the final word has been heard in this debate, particularly as the economy improves and competition for skilled administrators intensifies.