HSE expects shortfall in savings of €200m

The Government has been told that close to €200 million in savings which are at the heart of health budget for this year will not materialise. The Irish Times understands that on Thursday senior Department of Health and Health Service Executive officials provided a confidential consultancy report to the Department of Public Expenditure and Reform which set out the potential shortfall in the figures.

Under the HSE's service plan for the year, the health service was expected to generate savings of €290 million under the Haddington Road deal on pay and productivity in the public service which came into effect last July.

Further savings
On top of this the HSE plan also earmarked further pay savings of €108 million to be achieved by additional measures aimed at maximise the potential of the Haddington Road deal. However, the report drawn up by PA consultants suggested that none of the €108 million in additional savings was likely to be delivered and that the €290 million basic target for savings under the Haddington Road agreement would not be fully reached. It is understood that the consultancy report suggested a range of potential savings, but that the most likely total figure was about €212 million in cash terms.

However, the report is also understood to have projected that an additional 2.939 million hours of productivity would be delivered under the measures set out in the Haddington Road agreement.

Targets
One source said that the original targets for savings under the deal which emerged from the budgetary process last year represented an estimate while the new consultants' figures were based on detailed work into what could be delivered from a system as diverse as the health service.

The indication that the savings targets in the health service for the year are unlikely to be met are likely to raise tensions further between it and the Department of Public Expenditure and Reform. The Department of Health and the Department of Public Expenditure and Reform have already clashed strongly in recent weeks over Minister for Health James Reilly’s plans for universal health insurance.

The Department of Public Expenditure and Reform strongly criticised these proposals as effectively unaffordable and claimed they could jeopardise the State’s financial position and cost individuals over €1,600 per year.