Children’s hospital costs put other projects in peril, HSE says

The Health Service Executive has warned the Government it will be almost impossible to deliver planned multibillion-euro investments in new healthcare facilities in the coming years because of cost overruns at the national children’s hospital.

Health chiefs have been concerned for some time that the €11 billion funding arrangements for new hospitals and nursing homes, as well as ambulances and equipment, under the Ireland 2040 capital development plan were “not balanced”, with much of the large-scale funding coming towards the end of the 10-year programme.

This issue, along with having to deal with cost overruns from the new children’s hospital in the years 2020 to 2022, “has made what was a very difficult situation now almost impossible”, the HSE told the Department of Health last month.

The Cabinet was initially told last December a number of health projects might have to be curtailed for some time due to the soaring cost of the children’s hospital. However, Ministers subsequently decided no development would be cancelled or delayed and money would be found by rearranging funding this year from a number of other projects.

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St James’s campus

However, the overrun from the children’s hospital, currently under construction on the campus of St James’s Hospital in Dublin, is set to have implications for the health service, not just in 2019 but throughout the next four or five years. Ministers were told by the Department of Health that an additional €107 million would be needed in 2020, €120 million in 2021 and €150 million in 2022.

In a letter to the secretary general of the Department of Health dated May 3rd, the then acting director general, Anne O’Connor, said she had growing concerns about the capital funding position of the organisation, and the emerging impact of the children’s hospital on its overall capital programme.

“You will be aware that the capital requirements of the HSE are large and the list of very important and much-needed capital projects continues to grow. The impact on the quality of care that the HSE can offer is in many instances directly compromised by the quality of the infrastructure.”

Ms O’Connor told the department that while the potential 10-year capital funding was significantly higher than had been available in the past, the way the money was profiled for spending, towards the later years in the plan, had been “a problem since its announcement”.

Financial position

“The additional impact now of the national children’s hospital over the years 2020/2021/2022 has made what was a very difficult situation almost impossible,” she said.

Details of the HSE’ s concerns come as it emerged the financial position of the health authority for this year is more serious than had been understood to date.

In the first three months of the year, the HSE recorded a total overrun of more than €103 million. This followed a €600 million deficit last year and record levels of funding allocated in 2019.

It told the Dáil Public Accounts Committee (PAC) ahead of a scheduled appearance on Thursday: “The HSE’s financial position for year to date March 2019 shows a revenue deficit of €82.7 million which represents 2.2 per cent of the available budget. Of this, €44.8 million is in respect of greater-than-expected expenditure on operational service areas, which includes €17.6 million on community services, mostly in respect of services for people with a disability, and €28.4 million in respect of acute hospital services.”

However, the HSE also said when the effect of overspending last year, being considered as a “first charge” on its accounts for 2019, was taken into account, the overall deficit up to the end of March would increase to €103.2 million.