Health service senior management told the country’s largest hospice it would accept cuts to services “if necessary” to ensure it broke even in its budget last year, according to board meeting minutes.
Our Lady's Hospice warned the Health Service Executive that achieving a break-even budget could mean "extensive service cuts" by the healthcare provider, which runs hospices in Harold's Cross and Blackrock, south Dublin.
The HSE has strongly pushed for hospitals and other providers to avoid previous spending overruns and to achieve break-even budgets since Paul Reid became chief executive last May.
The hospice, a section 38 voluntary organisation that is funded by the HSE to provide services, was projected to have an €850,000 budget overrun last year.
The expected overrun was due to a €600,000 cut in HSE funding for older people’s services, a drop in income from private patients and a deficit carried over from previous years.
Audrey Houlihan, the hospice's chief executive, told the hospice board there was "very little scope" to finish the year within budget, at a May 27th meeting.
“The HSE have directed that they will only accept a break-even position from all healthcare providers at year-end, and have advised that they will accept service cuts if necessary,” she said, according to meeting minutes obtained under the Freedom of Information Act.
Not achievable
Ms Houlihan told a June board meeting that break-even was “not achievable”, but the HSE “require a report on service closures to meet a break-even position”.
HSE management has avoided publicly stating healthcare providers should cut or close services in order to meet demands to stay within budgets.
Despite the initial doubts, the hospice did achieve a break-even budget last year. This was in part due to a €600,000 cut in HSE funding for older persons’ services being split over three years, rather than being applied in full last year. This reduced the budgetary hole to be filled through savings by over €360,000.
Other cost-saving measures included “a decrease in pay costs by reducing spend on overtime and agency staff,” and delaying a “range of minor capital works,” a spokeswoman for the hospice said.
Commenting on the suggestion services could be cut if necessary in order to break even, a HSE spokeswoman said the hospice’s final cost-saving plan did not include service cuts.
“All HSE-funded services are required to deliver the quantity of services within their financial allocation as set out in the national service plan,” she said.
Amid the efforts to reduce spending, a funding shortfall of €700,000 emerged last December in a project to build a hospice in Wicklow.
Budget shortfall
Last month Our Lady's Hospice opened a new €10 million hospice in Wicklow, over half of which was financed by fundraising from the Wicklow Hospice Foundation, which counts actor Daniel Day-Lewis as a patron. The remainder of the funding was sourced through a multimillion bank loan, and €2 million provided by the State.
However, just weeks before the new hospice was due to open, the board of Our Lady’s Hospice was informed the project had a budget shortfall of €700,000-€1 million, due to additional charges. The Wicklow foundation was €350,000 short of a €600,000 fundraising target, minutes of a December board meeting show.
“The directors noted that it was extremely disappointing and surprising to be advised of a funding shortfall so late in the development,” which was completed in January, and will begin taking patients in April.
A spokeswoman said the final shortfall amounted to €700,000 and was “due to a shortfall in anticipated fundraising income and increased build costs”, and Our Lady’s Hospice had covered the funding gap by giving a loan to the Wicklow Hospice Foundation.
“It is anticipated that with strong local support, future fundraising from the area will cover this payment when the service is open,” the spokeswoman said.
