Overspend on health to spark crisis for Coalition
Published 28/08/2015 | 02:30
Overspending in public health could scupper various government expenditure plans and priorities - even in the short term.
A report by the Irish Fiscal Advisory Council, seen by the Irish Independent, warns that "continued health spending overruns" is now a looming crisis.
The report suggests there is a problem with the management in some hospitals when it comes to ensuring certain budgetary targets are maintained.
"There is evidence that difficulties in budgeting, and in financial management and governance arrangements in the hospitals area, create a tendency towards budget overruns."
It suggests the need for improvement in this area is "particularly important'' bearing in mind the plans outlined in the government's "Future Health Strategy''.
One of the main areas of "budget excesses" is tied up with the controversial Primary Care Reinbursement Service (PCRS).
Higher than planned spending on drugs is the main reason for overspending in the PCRS area. There is a particular problem with the purchasing of new drugs.
There are limits when getting approval for the purchase of new drugs - but these guidelines are not linked to the overall health budget.
Another problem is that this system of control is not binding.
The report warns that allowing for future challenges to the public health system - including demographic changes - financial planning and systems of governance must be improved.
It is crucial that any such approach must be transparent, it says.
The HSE recorded a financial overrun of €136.6m for the first four months of the year.
The HSE performance report says there was a deficit of €76.6m in core services primarily within acute hospitals and social care.
The report said it has not been possible up to April this year to deliver cost savings that had been earmarked in its service plan for 2015 "in part because our focus has been on opening/maintaining additional bed and other capacity".
"The sustained exceptional level of delayed discharges, the cost pressures these are causing and the level of management time and capacity taken up with dealing with this issue within our acute and social care services is beyond the level anticipated in the service plan," it said.
It says that about €60m of the deficit relates to primary care reimbursement, local health schemes, State Claims Agency payments and pensions.
The EU's economics commissioner, Pierre Moscovici, has warned the Government will have to keep a vigilant eye on spending across all areas and in health services, in particular.
"The evidence from the past few years indicates that Ireland faces challenges in delivering healthcare cost-effectively. Budget overruns have occurred systematically over the past few years, and pressures continue to build up.
Public expenditure on healthcare is comparatively high among EU countries even though population health outcomes are by and large no better."
He said that despite "efficiency gains", the challenges facing the Government in reforming healthcare "remain significant" as Ireland's population ages.