Paying our European pipers
The troika’s latest review of Ireland’s financial recovery plan is firm but fair. Medical Independent column from 31 January 2013.
The latest troika review of Ireland puts health services and money health spending starkly in the firing line. The European Commissions’ Winter Review of Ireland’s Economic Adjustment Programme dated 19 December 2012 commends the Irish Government for making good progress by “putting fiscal policy back on a sustainable base”. In the next sentence, it raps some knuckles by stating that “much remains to be done including addressing new spending pressures in the health arena”.
It details how measures were unsuccessfully put in place last July to try to deal with health overspend and is critical that these were “only partly implemented, resulting in an estimated overrun of €370 million through November 2012”. By any standard, this is heavy-handed re-primanding by the troika – the European Commission, the International Monetary Fund and the European Central Bank – who are now our bankers and bosses in rela-ti-on to the health budget. Since December, the troika is taking a much more hands-on approach to health policy matters.
The Commission’s report rightly highlights the “delayed/failed implementation” of cost saving measures in health due to the slow passa-ge of legislation required to gi-ve them effect. It makes wide ranging recommendati-ons on how further savings can be achieved and cleverly bounces back to the Government their own intentions such as introducing “money follows the patient”, the enhancement of primary care, increased transparency and better cost control measures.
Quite bluntly, they say “while most indicators show Ireland close to average in terms of health outcomes, health spending… is relatively high, suggesting poor value for money”.
Between 1997 and 2007, Ireland’s healthcare spending increases outpaced all other OECD countries. In other words, we kept on spending more without improving our health status.
The mission report, as they call it, recommends that health spending should become part of the Government’s (i.e. the troika’s) high level goals so that it can be monitored and managed. Two specific areas of what they consider excessive spending are identified – “more could be done on the cost of pharmaceuticals” and “remuneration of medical staff should also be reviewed”.
They outline how we tripled our drugs spend between 2000 and 2008 and they use 2010 data to show that we have the highest spending on pharmaceuticals in the EU. They suggest potential drug savings (well beyond what Minister James Reilly has planned), focussing on a much greater use of lower cost generic drugs, reform of reference pricing i.e. having a larger set of countries in which the basket of drugs is priced, and shifting price from the average basket to the lowest, which is exactly what other troika countries have done. They also suggest monitoring and putting in place financial incentives to make sure doctors prescribe the most cost-effective alternatives.
On medical staff pay, the Commission uses OECD data to show how consultant pay is well above the EU average. They show how consultants’ pay is nearly four times the average wage and how the average consultants’ pay in Ireland is €181,000. In other troika countries such as Greece and Portugal, average specialty pay is €48,000 and €46,000, respectively.
This €181,000 figure takes into account the pay cuts implemented in 2010 but purely counts a consultant’s public income. Given that at least two-thirds of consultants ha-ve contracts which allow them to practise privately, €181,000 is a huge under-estimation of actual income, as private earnings can be a multiple of the public salary.
The Commission acknowledges the low numbers of consultants in Ireland and suggest “a comprehensive review of the market for medical staff”. In short, they are recommending having more less well paid consultants rather than fewer extremely high paid consultants, which is currently the case. They also note the 30 per cent cut in newly appointed specialists.
In a separate section on Croke Park, the troika stress the importance of vigilant monitoring of the implementation of public sector reform but interestingly, they cite the recent report that the WHO did for the Irish Department of Health that was slipped up on the Department of Health website in November. The WHO report warned that “additional savings through efficiency gains cannot be made within the required timeframe without damaging patient care unless high salaries and the high price of other inputs are seriously addressed”.
While it is clearly not in Ireland’s interest to have the troika’s grubby hands all over our health policy, if they manage to spur the Government into action that will reduce the price of the drugs bill and cut the excessive pay of consultants, their winter mission’s report is a welcome one.