HSE facing €500 million deficit

The HSE is heading for a deficit of up to €500 million at the end of the year unless major savings measures are implemented, Health Minister James Reilly has said.

The health executive is now running up a deficit of nearly €200 million with less than half the year gone, according to its latest estimates.

Dr Reilly told the Oireachtas Health Committee today that unless corrective action is taken, the HSE is heading for a budget deficit of €450 million to €500 million at the end of the year.

He said hospitals will be told to get their activity levels back in line and spending on other areas such as agency staff will be cut. The HSE, the Minister said, had recently presented further savings proposals to his Department, which were currently being assessed.

However, HSE CEO Cathal Magee admitted that he did not believe the hospitals deficit could be dealt with in a single year. He also admitted that the 3% hospital activity reduction target set in January was no longer valid in view of the major increase in demands on hospitals this year.

Figures provided by Mr Magee to the Committee show that the health executive is currently in the red to the tune of a massive €197.3 million, according to figures for up to the end of April.

This represents a €50 million deficit increase over the March figures.

The bulk of the deficit - €106.2 million- has been run up by hospitals, many of whom are now being told by the HSE to cut back on their activity levels to stay within budget.

Primary care reimbursement schemes, including the medical card scheme, are €45 million over budget.

Limerick Regional Hospital is now now €9 million over budget, while Beaumont is €8 million over budget, Mr Magee said.

He said activity levels in acute hospitals are significantly over set targets, and hospitals have already brought forward a combined deficit of €130 million from last year.

Mr Magee told the Committee that hospitals had taken a disproportionate level of cuts. He said hospitals so far this year had tried to meet service demands and the requirements of the Minister's Special Delivery Unit, but to continue to do that in the current funding envelope was going to be very challenging.

Thne need for hospitals to reduce activity levels is expected to lead to further cuts in services and will provide a challenge to Health Minister James Reilly's plans to further reduce waiting lists and ED trolley waits.

The numbers getting planned treatment in hospitals and the number of emergency admissions have increased significantly compared to the same period last year. Mr Magee said elective admissions are up by 5% and emergency admissions have increased by 1.4% compared to last year.

He said targeted savings in drug costs had not yet emerged this year. He said there was was a significant issue with the pharmaceutical industry in terms of the cost of drugs and a reduction in prices.

Mr Magee said other challenges included the collection of €125 million due to the HSE in income from areas like patient hospital charges and the fact that 4,500 staff had left the service under the 'grace period' exit scheme. The exit target under this scheme had been 3,000.

Primary care reimbursement schemes, including the medical card scheme, are €45 million over budget. Medical and GP visit card numbers have increased by just over 150,000 since the beginning of 2011.

Minister Reilly warned the HSE last week that it must the deal with the €800 million paid each year for overtime, allowances and premium rates to doctors, nurses and other staff, in order to make the savings required.

He said the HSE cannot reduce patient services and ignore spending on overtime and allowances.

A UK management consultant is currently examining how the HSE manages its budget.

A great service...if only there were no patients

[Posted: Thu 14/06/2012]