Friday 19 December 2014

Reilly's cuts of €781m rubbished by ministers

Tom Lyons and Daniel McConnell EXCLUSIVE

Published 09/12/2012 | 05:00

Top cabinet figures claim savings aren't credible days after Budget

Four senior cabinet ministers have stated they don't believe the €781m cuts to be achieved by Health Minister James Reilly next year are "in any way credible", just days after the Budget was announced.

The news comes as the Sunday Independent today publishes details of a damning confidential Health Service Executive (HSE) report, which states its own budgetary systems are "systemically failing".

The extraordinary admission from four senior ministers means Dr Reilly now stands virtually isolated from all others at the cabinet table, except for Taoiseach Enda Kenny, who continues to stand by one of his chief lieutenants.

It has been confirmed:

• In the run-up to last Wednesday's savage Budget, Dr Reilly was forced to resubmit his estimated cuts of €781m several times after they had been rejected by Enterprise Minister Brendan Howlin and his department.

• Such were the constant difficulties with his figures, Dr Reilly was the very last minister to finalise his saving targets "with only hours to spare".

"Health continues to be the major nightmare, and Reilly's story keeps changing. He is without any credibility, and his savings have to come with a major health warning. I simply don't believe them," said one Labour minister.

And it was not just from within the junior coalition party that Dr Reilly is under fire, with stinging criticism from his FG colleagues.

"He was the last one to finalise his numbers, such was the difficulty with him. His figures are as shaky as I have ever seen. There is no doubt we will be having the same problems next year as we had this year," said one FG minister.

Echoing the unprecedented concern expressed by some at Cabinet, the new, top-secret 85-page report, seen by this newspaper, states that spending by Ireland's health service is rife with "inefficiency" and "inconsistencies".

It concluded that HSE budgetary difficulties were "a consequence of systemic failings in financial management over a number of years".

"Actions to date have delivered little to address weaknesses," the draft report by PA Consulting for the Department of Health concluded.

"Progress to address systemic weakness has been limited due in the main to lack of funding, capability and capacity within the HSE," the report stated.

Seven years after the HSE was founded, PA Consulting concludes financial management systems remain a mess.

Vast sums are being spent, it said, with only "limited evidence," that the HSE "has effective control of either the income or the costs of the health system and can credibly predicate an accurate year-end out-turn position".

ANALYSIS Page 20

The HSE, the report says, faces "a crisis in its financial management", where cuts are sometimes "short-term measures", which "do not take into consideration impact on targets or patient safety".

The sheer scale of the problems in financial management raises serious questions for Dr Reilly's Department of Health on whether it can achieve budget cuts or deliver on big promises like introducing Universal Health Insurance by 2016.

Failings in financial management outlined in the report will also lead to questions for its senior management.

The report acknowledges, however, that the HSE has been starved of resources and investment by the State.

It says, as a result, even "simply monitoring" the performance of Irish public healthcare by the Department of Health was "not supported".

Budgeting and service planning was "flawed" and "fail to reflect activity levels and costs at a local level, resulting in unrealistic and undeliverable targets and cost containment measures".

As a result, PA concludes, responsibility is hard to nail down and this "perpetuates year-on-year inefficiency".

Cost containment in the HSE, it said, was "unstructured, inconsistent and fails to meet the financial challenge".

"There is no clear link between the implementation of cost containment measures, service quality, waiting times and cash saved," PA states.

"Multiple legacy issues" from the days of the health board prior to 2005 were still in place and there were huge "inconsistencies" between different regions of the country.

Only a "limited" number of HSE staff were capable of high-level financial management, making things even harder.

PA Consulting acknowledged the HSE had made efforts to reform some areas of financial management but "the required investment has not been approved".

Locally, it said, some areas like procurement and activity-based costing had improved but again real change was let down by "a failure to allocate sufficient resources".

Yesterday, a spokesman for Dr Reilly said that the evidence of the first half of the year showed there was "an inability of the HSE to effectively control spending. That control of spending came into place in September".

He added: "It was the minister who engaged international consultant Mark Ogden to examine the department and PA to work with the HSE. Under the new leadership, the HSE will significantly enhance the ability to control spending in the health service."

Dr Reilly's spokesman also added that it is under the banner of the Croke Park deal that pay savings will have to be achieved and he said: "Minister Reilly fully supports Minister Howlin in their bid to achieve those savings under the public service agreement."

The HSE said it was supportive of the recommendations of the draft PA report.

"The HSE has commented on many occasions on the shortcomings of its financial systems. It has also emphasised the need to recruit accountants to support the development of a "fit-for-purpose" financial management environment," it said.

The HSE said part of the problem was it was forced to rely on an outdated IT platform to manage its huge budget. "The HSE has sought investment in both financial systems and accountants over a number of years. Unfortunately, given the downturn in the economy, this has not proven possible," it said.

The HSE said it had responded to the draft PA report and it expected changes to be made to its final version. It said criticisms also had to be seen in the context of the cuts it was being forced to make, with €2.6bn in cuts made over the last four years and 10,000 staff lost.

Sunday Independent

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