National Recovery Plan difficult for but maybe irrelevant for health

Posted in Blog by saraburke on November 26, 2010

The 4 year National Recovery Plan outlines budget cuts for health totalling €1.4 billion, 6,000 fewer staff in the public health system and patients having to pay more for essential health care. So how painful will it be in the years ahead for the health services? And will the policy aspirations actually happen given the inevitability of a change of government…

There is no doubt that the cuts outlined in the 4 year so called recovery plan will be painful, how painful depends on how it is executed by HSE management, the unknowns in the budget yet to be announced but most importantly who is in government over next 4 years.

The plans tells use some of the detail (although not much) of Budget 2011 – that €746 million will be taken out of health. To put it in context, over €1 billion came out of the health budget this year, however 2/3s of that was pay cuts so €750m is VERY significant for 2011. However, if you look at the ear marked areas in the 4 year plan it may not be as bad as it sounds.

€444 million will come from procurement and demand led schemes – we know already that the HSE is negotiating with its top 50 suppliers trying to cut 30% off costs off goods & services such as surgical equipment, energy utilities and healthcare supplies hoping to get €170 million in reductions next year. This demonstrates the potential of them using their bulk purchasing power – why on earth they did not do this before now is hardly worth asking? How it comes out of demand led schemes (which are medical cards, drugs refund scheme etc) is not clear.

The 4 year plan specifies €260 million to come from pay rolls costs including the voluntary redundancy and early retirement schemes. About €200 million in savings should come for those schemes for the HSE in 2011. New information was given to Oireachtas Committee on 26 November telling that 3,776 HSE staff applied for these scheme – of these 2,380 were management administration grades with very high numbers coming from the West and South.

The figures presented show VERY high uptake on senior management grades. The figures presented to the Oireachtas Committee by Cathal McGee, new HSE CEO, show that there are currently 850 assistant national directors, general managers and grade VIIS and 36% (310) applied for the early retirement or vol redundancy – particularly high for general mangers (56%) and assist national directors (42%).

So significant savings can be made there – another way as part of the over all 4 year plan is the 10% reduction in pay for new recruits. Although the cuts in staffing numbers mean there won’t be too many new recruits however it is significant and clever as outside of Croke Park deal and will result in savings over time for the HSE especially in its pay for its highest earning staff such as consultants. .

Speaking at the Oireachtas Committee on health Cathal McGee talked about potential savings in agency and locum staffing but in order to do that they needed increased flexibility with the moratorium so that they can hire in areas they need to.

The 6,000 staff cuts are on top of the 3,000 voluntary redundancies, but as there are about 1,500 natural losses out of the system each year, the 6,000 is doable. And it will be much more doable with more flexibility than they currently have in relation to hiring and an easing of the staff moratorium.

So the plan details how €746 million will be cut next year and then €680 over three years – this is a 8% cut in health budget over 4 years which is very severe no matter what way you look at it especially with fewer staff providing more care to more people with increasing health needs. Also with people’s declining income there will be more need than ever for the public health system.

And one can not underestimate the cumulative impact of the 4 year plan – the combined loss of income, of higher taxes and many more out of pocket expenses including healthcare – will make it very hard for people to cope. But crucial to health system is how its executed and managed. And who drives  the policy.

There is a lot of rehash of existing policy in the 4 year plan – doing more with less, shift from inpatient to day care, from hospital to community, services from 8am-8pm, staff working five days over seven without overtime, redeployment etc…

IMPORTANTLY it specifies ‘the traditional model of completely free provision is not sustainable’ ie patients will have to pay more, removing any universal access that is there – this is very much Mary Harney’s politics.

Now 34% of population have medical cards and do not a have pay for GPs and  pay 50c for medicines while everyone else pays – this is hardest on the lower earners – the plan proposes a model developed by mary Harney’s own group on Resource Allocation which means that 30% on lowest income would continue to get care for free and then tiered payments for the rest of population  – everyone would have subsidised GP care and drugs costs (people would pay less for GP access and drugs no mater how much you earn) – this takes the all or nothing nature of access to primary and drugs out of the system – this won’t happen next year as legislation needed.

Also the plan indicates clear changes to community services for older people. At the moment homehelp and home care packages are free. The 4 year plan outlines applying the Nursing Home Support Scheme to these community services for older people so everyone will contribute to the payment of community care as well as nursing home care. This is rationing and limiting eligibility for these services which are currently provided without charge.

No matter what way you look at it – the intention of the health parts of the 4 year plan is that people pay more for the cost of healthcare. But hopefully none of this will happen next year as it requires legislation.

However, the likelihood of any of it happening is remote as its pretty certain Mary Harney and FF will not be in government next time and we know that FG/Labour have very different health policy goals based on universal access.

When I asked mary Harney how long more she’d be minister she did not answer. When I asked would she run in the next election, she said she had not made up her mind whether to run again – given the inevitability of a general election this is very hard to believe.

When asked if she felt culpable for the current economic crisis in the country, Mary Harney said no – that the government had not failed, that some mistakes were made – that they had an ‘over-reliance on transient taxes’, bench marking in line with private sector not international public sector rates was wrong, that there was reckless lending in banks, but overall she did not think she or the government had failed, that the health system was getting better but that change took longer than she would like or had planned, she wished she had Croke Park a long time ago…

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