HSE reducing hospital budgets in line with policy to charge all patients

THE HEALTH Service Executive has begun reducing the budgets of public hospitals in anticipation that they will receive millions of euro in additional payments from private patients under controversial new Government measures to be introduced later in the year.

The Government announced late last year that it was to introduce legislation to make health insurance companies pay for all subscribers treated in public hospitals regardless of whether they used beds specifically designated for fee-paying patients.

The VHI said this move could lead to price increases of up to 50 per cent.

Minister for Health James Reilly is expected to introduce this legislation in the months ahead. The Department of Health has made “planning assumptions” that the move would generate €75 million in additional income for hospitals this year if the legislation came into effect in the autumn.

However, official documents obtained by The Irish Times show that the HSE has reduced the annual financial allocations for public hospitals in the expectation that this additional income from private patients will materialise later in the year.

In letters setting out their financial allocation for the year, the HSE has told publicly funded hospitals that, in line with Government policy, their budgets have been reduced “to reflect the forthcoming legislation, which will allow your hospital to charge for all patients presenting, irrespective of whether they are in a private or semi-private bed.

“It is currently anticipated that this legislation will become effective in quarter four, 2012, and you should profile your 2012 budget to allow for this. The basis of the allocation to your hospital is your 2010 private patient bed days.”

In the State’s largest public hospital, St James’s in Dublin, the allocation provided by the HSE has been reduced by €5.05 million to take account of planned provision to allow it to charge for all private patients treated from later this year – part of an overall cut of about €17 million on last year.

The allocation for Tallaght hospital has been reduced by €4.22 million in anticipation of the new charging arrangements.

The HSE budget for St Vincent’s University Hospital in Dublin has been reduced by €3.05 million to take account of the planned new measures.

Hospitals have also been told by the HSE that their budgets for this year have been reduced to take account of the retirement of staff under the “grace period” which allowed personnel to leave before the beginning of March on pensions based on their pre-pay cut salaries.

Hospitals have also been asked to make value-for-money savings at a rate of 1.56 per cent of their non-pay expenditure recorded last October.

Hospitals have been told by the HSE that their financial allocation is based on maintaining front-line services to patients and on achieving a break-even position for 2012.

“Any cost pressures that arise in the course of 2012 will need to be managed by your hospital by achieving cost savings in other areas within your hospital.”

The HSE also warned hospitals that budgets could be reduced further later in the year.

“Furthermore, it should be noted that given the current national and international economic environment, it may be necessary to amend your allocation to take account of any further measures that Government deem necessary. There is no scope for over-spending your allocation in 2012.”

Separately, St James’s Hospital has had €3.95 million extracted from its HSE allocation in respect of the Fair Deal scheme for the provision of long-term care. The hospital was told that the money was refundable on a monthly basis once it fulfilled the criteria and requirements of the scheme.