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Beds opened and agency costs up — HSE

19 Apr 2015

It has not been possible to implement staff reductions or agency cost reductions “in light of the very challenging position in hospitals in January and February”, the HSE has indicated.

In fact, agency staffing levels had to grow temporarily to meet the service needs, according to latest figures.

In addition, the cost of “exceptional and sustained” delayed discharges levels and the level of management time and capacity taken up with dealing with the issue, meant necessary cost reductions were not met in January, the Executive has said, adding that its focus has been on opening and maintaining additional bed and other capacity. This capacity was not funded in 2015’s National Service Plan and “was intended to be closed”.

HIQA standards loom and the impact of “unfunded regulatory driven pressures” was also a significant factor within the disability and elderly services that make up social care.

The €11.6 million January deficit in the HSE’s core services was due entirely to the acute hospital and social care services and was a “cause for concern”.

Efforts were being renewed both to address the delayed discharge issue and also to “gain traction with cost reduction measures” over the remainder of the year, the HSE reported.

Budget 2015 loosened the purse-strings somewhat and there was “a more realistic funding level” as part of a two-year programme to put the health services on a more sustainable financial footing. The HSE’s non-capital allocation includes an additional €590 million in funding (5.1 per cent above 2014’s original – pre-supplementary – budget). It provides funding levels similar to 2008/2009. Health services net costs can increase by a maximum of €77 million in 2015 (approximately 0.5 per cent).

The National Service Plan outlined a need for an exceptional level of management focus on cutting costs. It required delivery of a minimum savings level of €130 million. In addition, the health services had a further residual financial challenge of approximately €100 million based on the projected 2014 closing expenditure level. Given the final 2014 expenditure level, this residual challenge is now approximately €140 million.

This year will require a particular additional focus on all pay costs with particular emphasis on costs relating to agency and overtime in addition to the costs associated with directly employed staff, the HSE said. At the end of January, the health service had recorded a net spend on an income and expenditure basis of €1.037 billion against a budget of €1.013 billion. This led to a total deficit of €24.4 million – the bulk of which (approximately €13 million) related to the demand-led areas of PCRS, Local Schemes, State Claims and Pensions.

The National Service Plan makes clear that due to the nature of these demand-led areas, any over-runs would not have an impact on funding available for other core areas of health service provision. In addition, there is a deficit of €11.6 million within core services – primarily within acute hospital services and social care services.

The Health Service was allocated a budget of €12.13 billion in 2015 – which included a modest increase, following seven years of budgetary reductions.

Hospital services spent €346.7 million in January against a budget of €335.9 million, a variance of €10.7 milion or 3 per cent.

Total pay (excluding superannuation) was ahead of budget by €7 million or 3 per cent in the month, while agency and overtime costs were both €7 million over budget. Income was on target at the end of January.

Gary Culliton

Click here to view the full article which appeared in Irish Medical Times