LAST UPDATE | 24 Oct 2023
THE HEALTH SERVICE will have a deficit of around €1.5 billion by the end of the year, the Oireachtas Health Committee has been told.
A further deficit of around €1.3 billion is expected next year.
HSE chief executive Bernard Gloster told the committee the health service “has a lot of money”, but the cost of running the service is much higher than the funding available.
Gloster said there is “lots we can do over the long term with efficiencies and digitisation” in order to save money but, as it stands today, there is simply not enough funding.
“I cannot sustain that cost base,” he said, later adding: “Need and what we have are two different things.”
Sinn Féin’s health spokesperson David Cullinane said, in other words, this means the health service is “not adequately funded” for next year.
The committee was told that inflation, the Covid-19 pandemic and the government’s response to the war in Ukraine have all played a role in funding issues.
Gloster rejected any suggestion the HSE is wasting public money, as he highlighted the challenges of soaring inflation including energy costs that rose by 85% last year.
Gloster said he “absolutely” rejects the “notion” that HSE managers are “a complete bunch of wasters with public money”.
Since Budget 2024 was announced earlier this month, much criticism over the €22.5 billion health budget has been levelled at the government – with a blame game playing out between Fianna Fáil and Fine Gael as to who signed off on it.
With just €100 million for new measures, there are concerns that a number of programmes will not have sufficient funding to continue next year.
The Department of Health had bid for an additional €2 billion to maintain existing levels of service (ELS) into 2024, but only received €708 million in ELS funding.
‘Ballsy’
Gloster has been vocal in the media about the fact he thinks the health service has not received enough funding. He today said he stands by his remarks, something Fianna Fáil TD John Lahart labelled “ballsy”.
In a recent interview with RTÉ, Gloster said next year’s health budget is “not adequate for all current costs” – a move that angered some government members.
Lahart today said other people may have tried to walk back their comments after the criticism, but Gloster did not, and he commended him for standing his ground.
Gloster told the committee there will also be a large budget deficit in 2024 as “the only alternative to that would be to cut services and, to be fair, I haven’t been asked to do that”.
However, he acknowledged the funding issues will mean it will take longer than planned to implement new developments.
“We will consolidate what we have, we will do the best we can with that. There’s lots of work we can do, this is not all doom and gloom, but we won’t grow all of our development strategies as fast as we would have liked to,” he said.
Gloster told the committee that the final budgetary picture will only become clear when ministers agree a supplementary estimate in the coming weeks to release money needed to address the 2023 shortfall.
That exercise may then see further funding committed to the 2024 baseline.
But he said whatever the outcome of the revised supplementary estimate process, the HSE would still be facing a guaranteed deficit next year.
“There’s one missing variable and that’s the supplementary revised estimate, that will inform the scale of the challenge next year.
“But, even with that, we’re going to be in a financially pressured problem next year that will result in an element of deficit no matter how good I am at control.
But I’m not planning to deal with that deficit by cutting services.
Gloster said only a third of the projected overspend this year was down to costs the HSE could control, with the remainder due to soaring medical inflation and the implications of an ageing population.
Despite the current recruitment freeze, Gloster said the HSE service will be able to employ around 2,200 extra staff members next year. Certain essential roles are exempt from the freeze including nurses, midwives, ambulance personnel, approved consultant posts, dentists and orthodontists.
Gloster told the committee: “Everybody wants to talk to me about the overspending in the health service, nobody wants to talk to me about the fact that when we changed our energy contract when it was up for renewal on the 1st of last April, our full year price on the previous year and on the planned next year on the day we changed the contract went up 85%, that’s not me being a waster.
He continued: “You know, the lights are turned on, our patients are looked after, MRI machines and so on.
“So I have accepted there is a control environment challenge, and that makes up about a third of our challenge, and I’m happy to take that on the chin and I’m happy to deal with it and correct it and I have very good plans in place to deal with that.
But the notion that we’re just a complete bunch of wasters with public money, I absolutely reject that.
‘Productivity puzzle’
Robert Watt, Secretary General of the Department of Health, is also appearing before the Health Committee today. In his opening statement, Watt defended the health budget for 2024.
He told committee members there has been “unprecedented” funding and record levels of recruitment, but added that “new ways of working” are now needed.
Due to increases in demand and issues around affordability, Watt stated: “There is simply no prospect of continuing to treat ever increasing numbers of sick patients in acute hospitals under our existing structures and pathways.”
The committee was told there is a “productivity puzzle” at play, whereby the number of patients being treated is not keeping up with the large increase in
resourcing, according to Watt.
“Even accepting improvements in outcomes, this presents a substantial divergence between resourcing and activity,” he stated.
He added that there is a need to look more deeply at how healthcare services are structured, so as to ensure resources are used effectively.
Forecasts of health expenditure need to improve as does control of expenditure, he stated, adding that new systems around performance oversight and corporate governance are being put in place.
“Savings and efficiencies are also required in the acute health sector and will form
part of the Service plan which is being developed to give effect to the recent
Budget,” Watt stated.
Pay makes up 42% of the budget, he said in his opening statement, adding that since 2016 the pay bill has increased by €3.2 billion.
“Measures will need to be taken on recruitment, overtime and agency as set out by the CEO of the HSE,” he added.
Excluding medicines, non-pay in the acute sector such as medical and surgical supplies, laboratory equipment, heat and lighting, cleaning, and maintenance have all increased.
“This expenditure has increased by more than expected this year due to both demand and high prices. It is now estimated that expenditure apart from pay and medicines will be €2.376 billion this year, €573 million more than forecast,” Watt said.
Meanwhile, Gloster told the committee the health service will be in a “very constrained and challenging financial position” in the year ahead.
He said in his opening statement that his full focus is “delivering the best level of service possible”.
While he said there have been many new national strategies and programmes developed and commenced in recent years, “in the main these will not see growth in 2024″.
He went on to state that there is a significant amount of work to be done with the existing resources within these programmes.
“It is fair to say overall that 2024 will see these services continue with a focus on consolidation more so than growth,” he stated.
Minister of State Mary Butler with responsibility for Mental Health and Older People, had previously confirmed to The Journal she has no new funding for a number of services the government had promised to expand, such as adult ADHD services, which was first launched just two years ago.
Addressing the issue of the recruitment freeze, Gloster said the HSE workforce has “grown considerably”.
“The HSE will reach, if not exceed, its funded additional net target for 2023 by the end of this year. That is the reason and the sole reason for the pause in respect of certain grades,” he stated.
Today’s committee appearance is taking place against the backdrop of tetchy emails between Watt and the then-interim HSE Chief Executive Stephen Mulvaney, which were sent prior to the budget, being published in The Irish Independent last month.
The email exchanges show Mulvaney asking Watt if his department were “plucking figures out of the air” in a discussion on the potential budget shortfall in delivering health services this year.
During a debate last week on the health funding for 2024, Health Minister Stephen Donnelly said a supplementary health budget for next year was “entirely possible”.
He also confirmed that he would be commissioning an in-depth report into the future of funding healthcare, though no details have been forthcoming as to what the investigation might entail.
Contains reporting from PA
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