Reilly failed to act on HSE deficit warnings, letters claim

THE DEPARTMENT of Health failed to act as the financial position in the health service deteriorated over recent months, HSE chief executive Cathal Magee has claimed.

In letters to the Department of Health, Mr Magee repeatedly pressed for decisions to be taken and policy directions to be given to deal with the financial position.

In early April he said guidance was required from Minister for Health James Reilly and the Department of Health to the HSE on how projected overspending would be financed and how cost-cutting would affect services.

It is understood that among the policy issues on which Mr Magee sought guidance was whether the HSE could reduce activity in hospitals and in the community, the cost of which was running about 5-6 per cent ahead of the target.

The HSE also wanted to know how reducing activity would tally with the demands of the Department of Health and its special delivery unit to increase patient throughput to achieve targets on reducing waiting lists and the number of patients on hospital trolleys.

In other correspondence Mr Magee said the key financial risks which had emerged over recent months had been discussed with the Department of Health as far back as the second half of 2011.

On June 7th, Mr Magee told the secretary general of the Department of Health, Ambrose McLoughlin, that since late February he had been seeking policy direction and decisions on dealing with the severe financial challenges facing a number of large acute hospitals this year “by way of determining the appropriate balance between continuity of acute services and financial breakeven in 2012. I still await a response and guidance on these issues.”

Four days later Mr Magee sent a copy of the same letter to Robert Watt, secretary general of the Department of Public Expenditure and Reform. Details of correspondence between the Department of Health and Mr Magee, who announced his intention to step down a fortnight ago, is likely to put further pressure on Dr Reilly over how the HSE financial situation has been handled.

The Irish Times reported last month that Minister for Public Expenditure and Reform Brendan Howlin had written to Dr Reilly, warning the HSE deficit could reach €500 million by the end of the year and asking him to engage personally in dealing with the issue.

Last month the EU-ECB-IMF troika also highlighted the HSE deficit, which reached €281 million by the end of May.

In his letter on June 7th to Mr McLoughlin, Mr Magee said he shared the concerns about the financial position of the HSE, in particular the deficits carried over by hospitals from last year, the funding of retirement packages for staff who left prior to pension changes in February and the failure of the Government to negotiate price cuts with the pharmaceutical industry and to introduce legislation to improve income charging and collection from health insurers.

“There were explicit decisions made as part of the development of the service plan, the impact of which is to leave acute hospitals with significant financial challenges and, by implication, service issues.

“I recognise that the decisions required are weighty and will impact on services. However, the failure to act now will mean that the financial position will not improve.”

On June 27th Mr McLoughlin said an independent expert had been commissioned to evaluate financial performance management systems in the HSE, to review the current situation and to make recommendations.

“In the meantime, I would remind you that, as CEO, you have responsibility and accountability for delivering the national service plan as approved by the Minister.

“In that regard my view is that there are some areas which you need to attend to where further cost savings could be achieved.”

Mr McLoughlin highlighted sick leave, locum cover, overtime, more cost-effective prescribing, more flexible rosters and greater redeployment.