Our health system, at or over the tipping point

Posted in Articles by saraburke on June 12, 2014

My Medical Independent column on how the health service is now at tipping point but if more cuts are implemented the worst is yet to come.

Tony O’Connell, the most recent person appointed to the post of HSE National Director of Hospitals, has entered his new role with a bang. Within two weeks of Ian Carter being ‘reassigned to the post of National Director Strategic Development’, O’Connell issued a diktat to all hospital CEOs and general managers, telling them to curtail their hospital spending.

O’Connell was first appointed as the CEO Dublin North East Hospitals and then was made National Director for Acute Hospitals, without any apparent appointment process or any rationale for Carter’s move sideways. O’Connell is now a member of the powerful HSE Directorate, which replaced the HSE Board, on which Carter no longer sits.

O’Connell’s letter does not hold back; it clearly reprimands the hospital managers for the current state of their hospitals’ finances. The HSE March Performance Assurance Report lays the facts bare. The HSE was €80 million over budget at the end of March and just over three-quarters of this overspend came from hospitals. So what’s driving the overspend?

As budgets were allocated to hospital groups for the first time in 2014, the March report details the variance with budget allocation by hospital group. Presumably coincidently, this shows the three hospital groups with CEOs appointed are the ones with the largest proportion overspent.

The Mid West hospital group, now known as the University of Limerick Group, is the worst culprit, having spent 12 per cent over its budget allocation. The South/South West and the West/North West Hospital Groups are just under 9 per cent overspent. Nationally, the overspend is at 6.86 per cent.

The March report shows how the HSE was 1,457 people above its employment ceiling and 2,500 ahead of where they need to be by year-end, staffing wise. Interestingly, these three groups are amongst the closest to their staff ceiling, indicating a relationship between hospital groups’ overspend and their need to supplement understaffing with agency staff.

Nationally, we know that increased costs of agency staff is definitely driving up the HSE overspend. Agency spend is an expensive and crude measure, with few gains, except for the agencies who provide these temporary staff.

The letter from hospital chief O’Connell was focusing on hospitals not gaining savings out of extra hours and flexibilities laid out under the Haddington Road Agreement (discussed here previously on 1 May).

The HSE March report shows that the vast majority of the agency budget is for medical and support staff — essential for the very running of the health system, not to mention the hospitals. It also explains that these staff groups have already reached the increased hours and therefore there was no actual cost savings to hospitals.

O’Connell’s letter states that “hospital costs are running at unsustainable levels and are trending at 6 per cent above allocation and 2 per cent above 2013 levels”. He raps the hospital CEOs’ knuckles for either not providing or the poor quality of cost-containment plans, telling them to cut their spending to 4 per cent less than 2013 levels.

This fails to recognise that cutting a hospital’s budget by 4 per cent is actually equivalent to at least an 8 per cent reduction in services. The vast majority of these costs are overheads, which can’t be cut. Staff will have to be paid, no matter what.

This rough measure also fails to acknowledge the deficits that many hospitals started the year with, alongside the increased demand for services. Emergency admissions are up by more than predicted in the 2014 HSE National Service Plan, at 4 per cent. While the HSE can ration day cases and inpatient activity to live within budget, it has no control over emergency admissions – if one arrives at an ED needing admissions, one will be admitted.

These HSE figures show each hospital group providing more public care than it did a year ago. The knock-on effect of this is €40 million less income from private care than expected.

While the predominant health concern cited by the public in the RTÉ exit poll was the removal of discretionary medical cards, the Primary Care Reimbursement Scheme (which funds these) is just a fraction above its budget.

What the discontented public do not yet realise is the impact that the proposed cuts will have on hospital services. It is no wonder that waiting times and lists are up for the first three months of 2014, but if the cuts as specified in O’Connell’s letter are implemented, much essential hospital care that is currently being provided will be called to a halt.

Our political leaders need to realise that the health system, as its currently configured, is over its tipping point and the worst is yet to come unless urgent action is taken.

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