Statement by the Minister for Health & Children, Mary Harney, T.D. on the HSE National Service Plan 2009
The Minister for Health & Children, Mary Harney, T.D., has written to the Chairman of the HSE outlining a series of measures totalling €147m to address financial pressures on the Executive and aimed at avoiding service level reductions that might otherwise have taken place.
The Minister has asked the HSE to continue to focus on delivering the level of services as originally planned.
Last December, the Minister approved the 2009 HSE National Service Plan.
Since then, a number of potential financial pressures, some of which were identified in the Service Plan, materialised which were estimated based on latest available information, at €540m. The HSE submitted a proposal for a revised Service Plan to deal with this situation.
The Government made significant decisions on spending, revenue raising and employment control in the Supplementary Budget.
As a result, and as set by the Minister in her statement on the Supplementary Budget on 7th April, a potential shortfall of €147m remained to be addressed.
That has now been addressed in the measures (outlined below) which the Minister has decided and has communicated to the Chairman of the HSE.
The Minister said: “My priority and that of the Government is to sustain services to patients and to match key health priorities with available funding.
“My Department and the HSE are working closely to manage the considerable budget challenges of the HSE in difficult economic circumstances. My decision on the proposed amended National Service Plan was taken with these challenges in mind and with a priority to maintain, in every possible way, services to patients. All options to avoid service reductions were examined in great detail.
“The measures I have approved put the priority on services to patients. In particular, I continue to prioritise home care services for older people, the development of the cancer programme, and services for people with disabilities.
“Taxpayers are funding approximately €16 billion for health services. This is 46% of expected total tax revenue this year.
“I must emphasise that budgetary situation makes it more, not less, important to continue to press ahead with the various reform initiatives that are already underway in order to deliver higher quality services to patients with the resources that taxpayers are providing.
“It is for that reason alone that the new consultants’ contract is to be implemented. The gains to patient services from the new contract must be secured. The reduced payments to consultants from those agreed last year are, in the circumstances of the country, fair and reasonable.
“More broadly, given the budget challenges, it is for all HSE staff to work together with new flexibility. It is not a task simply for management; nor is change only to be asked of staff.
“Today, we are able to avoid some unpalatable reductions in services. Only if all management, clinicians and staff work and change together can we continue to do this, and maintain and develop the type and quality of services we want patients to have.”
The Minister has decided to sanction only part-payment of the new consultant contract salary rates. Over 2008 and 2009, €143m less is being paid to consultants than previously envisaged. A half of the new salary rate will be paid this year, as and from 1st January, but the other half scheduled for 1st June is not being sanctioned. Increased on call allowances and call-out payments are not being paid. This will save €75 million this year, in addition to €68 million not paid in 2008.
The allocation to the National Treatment Purchase Fund is being reduced by €10 million and the amount transferred to the HSE. The NTPF will seek to maintain service levels by achieving cost reductions in the services it purchases for patients. Other health agencies funded by the Department of Health & Children are being reduced.
There is also to be a one-off payment of €50m from the VHI to the HSE to reflect outstanding monies due.
The position regarding the cost of additional medical cards due to the economic downturn will be monitored closely over the coming months. The Minister has informed the Chairman of the HSE that, if needed, she will seek a Supplementary Estimate to cover this cost.
|Savings on consultant contract||75m|
|Other agencies transfers||3m|
|VHI advance payment||50m|
- The HSE National Service Plan 2009 approved by the Minister in December 2008 included €250m in economy and cost avoidance measures for 2009 (in addition to a continuation of €280m value for money measures from 2008).
- Since then, a number of potential exposures (some of which were identified in the National Service Plan) materialised. Based on the best information available, a figure of €540m was arrived at through detailed examination undertaken by the HSE and the Department of Health & Children. Some of the costs involved are once-off in nature while others have ongoing implications.
- In response to these emerging issues, the HSE Board had previously identified €133m in savings which would not impact on National Service Plan activity levels in addition to the planned new savings of €250m. The Minister advised the HSE to examine the scope for saving a further €72m while the remainder was considered by Government in the context of its budgetary deliberations.
- The HSE submitted an amended National Service Plan on 2 April 2009 under Section 32(4) of the Health Act 2004 proposing savings totalling €72m which involved significant service reductions.
- As part of the Supplementary Budget on 7 April, additional funding of €160m has been made available to offset the projected reduction in the yield from the health levy. It was also agreed that the funding provision in respect of medical cards would be kept under review.
- The approach agreed as part of the Supplementary Budget when combined with the €133m in measures already identified by the HSE and not affecting the Service Plan left a residual problem of €147m. It has been identified that the following measures set out now provide a basis to close the remaining funding gap:
- €75m savings on the estimated cost of the new consultant contract. This will involve not paying certain increases due under the contract. A specific circular on this issue is being issued to the HSE.
- The Minister has decided to reduce the 2009 allocation to the National Treatment Purchase Fund by €10m (on the basis that the NTPF should be able in the current economic climate to negotiate improved prices with private hospitals) and to increase the HSE allocation by a corresponding amount.
- The allocations of other health agencies funded by the Department of Health & Children are being reduced by a further €3m, with a corresponding increase in the allocation of the HSE.
- The VHI has agreed, following recent discussions between the Minister and their CEO, to make a one-off payment on account of €50m to reflect the outstanding monies which the HSE says are due. This will need to form part of further overall considerations with the HSE and the Department of Finance.
- With regard to the remaining €9m, a number of potential sources will be examined. The Ministers deliberations under the Financial Emergency Measures in the Public Interest Act 2009 in respect of professional fees, including payments to pharmacists and others, are due to conclude in the very near future. A separate sum of €50m in relation to savings from community pharmacy reimbursement payments has been assumed in the overall budget plans for the HSE this year, and this will also have to be addressed. The Minister also believes that there are further reductions possible in areas such as advertising and legal costs over and above those targeted in the National Service Plan.
- The combined effect of the foregoing measures would amount to €147m, thus obviating the need for the proposed amendment to the existing National Service Plan.