Hospitals paid €884,000 to their own firm
THE Health Service Executive (HSE) is trying to wind up a private company with a turnover of €900,000 that was set up by voluntary hospitals to bulk-buy medical equipment, the Sunday Independent has learnt.
The Hospital Procurement Services Group (HPSG) includes some top voluntary hospital chief executives and is financed by membership fees from member hospitals.
As the controversy over top-up payments in some voluntary hospitals continues, it has emerged that the private company raised more than €883,791 last year in fees paid by State-funded voluntary hospitals even though the HSE now provides a similar service free of charge. The HPSG also receives an annual "grant" of €85,000 – €340,000 over four years – but it is not known who pays it.
It is understood that the HSE is currently in talks with the HPSG about absorbing its services, as part of its broader attempt to get more control over State-funded voluntary hospitals and health agencies.
The HSE is currently scrutinising voluntary hospitals and State-funded health agencies, which were found to have paid €3.2m in State funds to "top up" senior executives' salaries, often without permission.
Most of the HPSG's €969,299 income went on staff costs but the company said its directors did not draw salaries or expenses. Wages totalling €806,801 were paid to 13 employees last year, according to the company accounts.
While the accounts stated that the employees "included the directors", the company's chief executive, Tim Carey, said this weekend that board members do not get any income or expenses from the company. He said the audited accounts show salaries for employees only. It was also pointed out that the directors have no beneficial interest in the company.
The board includes some of the key figures in the voluntary hospital sector. They include senior managers who were revealed to have been paid generous "top ups".
The directors of HPSG in 2012 included Nicholas Jermyn, group chief executive of St Vincent's Health Care Group; Lorcan Birthistle, the chief executive at Crumlin Children's Hospital; and Pauline Treanor, secretary manager of the Rotunda Hospital.
Spokespersons for St Vincent's Health Care Group and Crumlin Children's Hospital confirmed Mr Jermyn and Mr Birthistle did not draw fees.
Other directors include Liam Duffy, chief executive of Beaumont Hospital; Derek Greene, chief executive of the National Rehabilitation Hospital; Danny Dunne of the Royal Victoria Eye and Ear Hospital; and Michelle Fanning, chief executive of the Incorporated Orthapaedic Hospital, Clontarf.
The HPSG said it would address other questions submitted by this newspaper next week, including the cost of fees paid by State-funded hospitals that use its services. But the accounts suggest that the fees were substantial.
According to the accounts, the HPSG is chasing three hospitals for outstanding "fees" – St James's Hospital owed €115,000, Tallaght Hospital owed €95,000 and St Luke's Hospital owed €27,000.
The accounts stated that management "will continue to pursue" the hospitals to "settle the outstanding debt".
Tallaght Hospital said this weekend that the €95,000 debt was "incorrectly invoiced" to the hospital "after we had ceased using the services of the HPSG" and that it hasn't paid it. St James's said it was a member of the HPSG for four years until 2008 and insisted it had "no outstanding debts" to the company.
The private company, set up by voluntary hospitals 15 years ago to get greater "bargaining power", continues to operate even though the HSE set up a national procurement agency to buy cheaper medical equipment and supplies across the entire health sector.
The HSE said it introduced a national procurement model in 2010 which State-funded health agencies could access. It is now in discussions to "incorporate all procurement activity for all agencies within the national procurement function".
The HSE is scrutinising the voluntary hospital and State-funded health agencies after an audit revealed a litany of top-up payments to senior executives, many in breach of public pay policy.
More than €3.2m was paid in allowances and top-ups to 191 senior managers.
The controversy culminated last week when the Central Remedial Clinic revealed that it used charitable donations to top up its former chief executive, Paul Kiely's, salary.
The Dail Public Accounts Committee was told last week that 30 organisations had claimed to be compliant with public pay policy – but not all were.