Tallaght Hospital is in "a financial crisis of the most serious kind", according to the Deloitte & Touche report on its finances. The report was commissioned by the Minister for Health and Children, Mr Cowen, who published it at a press conference in Dublin yesterday.
"In the absence of an injection of funds in the short term, the hospital will run out of funds," the report concludes. "It is already significantly in arrears in paying its creditors, the principal funding source for the deficit."
The 211-page report says the hospital has received a very significant commitment of public funds. The financial problem needs to be urgently addressed by the hospital in consultation with the Department of Health and Children (DOH&C).
It says the hospital's current relationship with the Department is strained, considerably worsened by the current financial difficulties and hospital grievances over patient-management developments negotiated when the agreement was reached on the move of St Loman's Hospital to Tallaght.
"The relationship needs to be rebased; the agreement of a longer term strategy between the parties and funding for an approved level of service in the new facility in Tallaght is essential in this regard. Developments should be agreed on a phased basis as part of a medium-term plan."
It adds: "The primacy of Letter of Determination (the Department's letter to a hospital or other body outlining its budget for the year) needs to be recognised going forward. Prompt service planning within Determination is also vital.
"We have identified and commented on the primacy of the Letter of Determination as a means of controlling and managing costs in the Irish healthcare system. Every agency, whether public or private, should understand the absolute requirement to operate within its budget. There is no process which allows an agency to operate on the basis that any service level can be provided regardless of the costs involved. Accountability legislation means just that, everyone involved is accountable ultimately to the Oireachtas and the taxpayer.
"We find it difficult to reconcile the governance issues involved where the board (of Tallaght Hospital) adopted a budget of £59.5 million, some £5.9 million in excess of its Letter of Determination, and failed to insist on the development and installation of adequate information systems which would enable the hospital to be monitored even against its own budget and is now facing an overall out-turn for 1998 which is £7 million in excess of this budget and £12.8 million in excess of Determination.
"We are also unclear as to where the authority exists for the level of creditors and which arise as a consequence of the hospital continuing to operate at levels of expenditure in excess of income and Determination.
"At the same time, there is a series of projects and developments being contemplated which will require £11 million in net revenue expenditure in 1999, and if fully implemented, would leave the hospital with an operating cost profile of £87 million on a full year basis. A cost base of this magnitude is significantly out of line with other acute hospitals in the Irish healthcare service.
"Given the difficulties experienced to date, there is an absolute requirement for the board to devolve all management responsibility to a properly structured hospital management team. At the same time, the board should insist on the development and implementation of an effective management information system with an appropriate board reporting system which would enable the board to monitor the care and financial performance of the hospital.
"This report identifies a wide range of actions which need to be taken in relation to management reporting and control, systems, organisation, service planning and cost containment. These need to be addressed if the hospital is to meet its own objective of being a highly cost-effective and efficient service provider.
"The board must insist that management manage the hospital within its agreed cost and operating profile before any further developments are approved. Before the board would approve any such developments, it needs to have a detailed breakdown of capital and net revenue expenditure and written confirmation from the DOH&C that the additional funding has been approved and the timing of such funding.
"In our view, it is not acceptable for the board to continue to seek funding to develop the hospital until such time as they have demonstrated a capacity to create an effective management system for the present profile of the hospital, and operate at net expenditure levels which are accepted as appropriate for the size, nature and circumstances of the hospital, from its new location in Tallaght."