Outsourcing hid breaches of salary caps from HSE

The HSE's difficulties in trying to get to the bottom of the unorthodox pay arrangements in the Central Remedial Clinic (CRC) were one of the consequences of the State's policy of outsourcing the delivery of health services.

Over the years, millions were given over to what were euphemistically known as “voluntary bodies” but in reality were private organisations – with their own boards – to run public hospital and disability services. However the ultimate hold the State had over these organisations was relatively weak.

The staff of these organisations – of which the CRC was just one – were all public servants. Theoretically these section 38 bodies, as they are officially known, followed public service pay policy. However it is clear there were strong suspicions, if not knowledge, in the Department of Health for years that official pay policy was being widely breached.

Dogged pursuit

The HSE, and in particular its internal audit unit, deserves praise for doggedly pursuing voluntary hospitals and health agencies to get to the truth about what they were paying senior staff.

The interim administrator’s report into the CRC shows how many organisations stonewalled requests for information from the HSE.

Many of the section 38 voluntary bodies jealously guarded their independence. Many – in the words of the CRC report – went their own way on executive remuneration and recruitment.

The Irish Times revealed last September a HSE audit had found senior personnel in voluntary hospitals and agencies were receiving more than €3.2 million in allowances and benefits on top of official salary rates. In November this newspaper first reported that proceeds from sweet shops were being used to supplement the pay of the chief executive at one voluntary hospital. On November 19th, The Irish Times reported the former chief executive of the CRC had received a total package of €242,865. This comprised a HSE-funded salary of €106,900, a CRC-funded salary of €116,949 and a separate CRC-funded allowance of €19,016. The CRC confirmed top-ups were being funded from fundraising revenue.

Details of costs

In 2009, the HSE asked the CRC to take steps to reduce management remuneration. The CRC agreed that from 2010 it would itself fund the salary levels above limits. However the report says while the CRC did not volunteer information on the costs, “neither did the HSE ask for details of the costs or the source of the funds to meet the costs”.

Next week marks the deadline set by the HSE for all section 38 organisations to end top-up payments. Interestingly the CRC report this week has some views on this issue:

“It would be unwise for an interim administrator (or a board of governors) to unilaterally break existing employee contractual arrangements and, thereby, expose the CRC to significant financial risk . . . an employee cannot be held to be blameworthy for what may be viewed as a generous contract . . .”