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Why being €300m over budget out of a total of €13bn may actually be a success

Posted in Articles by saraburke on June 13, 2014

Analysis from the Irish Independent from 13 June 2014 on a hot-headed John McGuinness, Chairman of the Public Accounts Committee (PAC) call for the resignation of the HSE director general, Tony O’Brien and Secretary General of the Department of Health, Ambrose McLoughlin, on the basis that they are not fit for purpose.

Specifically, he said they had failed to ensure the health system could live within its budget, failed to deliver on getting rid of top-ups paid to senior managers and upset the public by removing medical cards.

The HSE is currently €80m over budget, if it continues on its current trends, it would end the year with a €300m deficit. McLoughlin told the PAC, it might in fact be half a billion over budget. Tony O’Brien was confident it would be less than that.

Either way, given that both men came into their posts during the harshest austerity measures and health budget cuts experienced by any OECD country bar Greece, being €300m over budget, out of a total allocation of €13bn, may in fact be a success.

Since the onset of the economic crisis, over one billion net has been cut from the health budget and up to €3bn cut, if our growing, ageing population, with a growing burden of disease is accounted for.

Over €60m of the €80m overspent so far during 2014 comes from the hospital budget. Much of that spend is on agency staff which are used to plug the hole of the crude staff moratorium which has resulted in a reduction of over 12,500 staff.

It might be useful for PAC members from government parties to note that if this Government had delivered on its three-year Comprehensive Public Expenditure plan published in 2011, then the health budget would have got €300m more than it was allocated this year.

The fact that Health Minister James Reilly was outmanoeuvred by the other big-spending departments of Education and Social Protection and then shafted by the Economic Monetary Council made up of the Taoiseach, Tanaiste, Ministers Noonan and Howlin in the run-up to Budget 2014 is not the fault of O’Brien. As HSE boss he has no choice but to live within the budget that he is allocated.

And while there are genuine concerns about the competence levels within the Department of Health especially when it comes to financial and health economics matters, as McLoughlin pointed out, budget allocation is ultimately a political choice. That said, there is room for better negotiation tactics by the mandarins in the health department.

It emerged at yesterday’s meeting that a management consulting agency has been paid over €257,000 for a year’s work for acting as Chief Operations Officer in the Mid Western Hospital Group. The HSE’s defence is that they have advertised twice for this post and failed to fill it and have used this contracting measure as a last resort, with O’Brien admitting it was “far from ideal”.

However, paying such contracts as well as having to pay twice or three times the salary of senior medical posts is another symptom of government policy of cutting the wages of the highest earners, another measure eagerly sought by the PAC themselves, the public and politicians. The issue of top-ups to senior health staff in large voluntary organisations, mostly in voluntary hospital and disability providers was also the focus of the PAC. Two years into a process of reviewing and ceasing unauthorised payments to these staff, it seems the HSE nearly has this particularly thorny issue in hand.

There are 143 outstanding top-up cases out of 97,098 HSE paid staff. Of these, 100 will have their top-ups ceased by July 1, 36 of them are having their roles and pay levels reviewed as part of a wider review of disability services, two are double jobbing, academic teaching with medical practice, so special permission is being sought from the Department of Health for these.

Just eight ‘top-up’ cases are in the legal sphere, i.e their employer claims they are contractually obliged to pay them.

These employers have until July 1 to prove this and if so, the HSE will make a case for their top-ups to continue only as long as those specific people are in post.

Getting on top of the top-ups has been slow but it required due process. Bringing the vast majority of these high earning outliers into line is a positive step in the right direction.

There was much heat and little light from government TDs at the PAC on the issue of taking medical cards off the sick, old and young. Interestingly, there were no opposition TDs battling on this matter, they must feel they have already won that war.

What these government TDs seemed to miss at the PAC was, that it was a direct result of previous populist calls from PAC to curb ‘medical card fraud’ as well as their government policy changes and budget cuts that led to the extensive reviews and removals of these very cards.

It remains to be seen if these same TDs and ministers will deliver on the welcome development of allocating medical cards on the basis of medical need. If so, they will have to find even more money for the health budget.

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