In 2010 and 2011 the health services saw unprecedented budget reductions of approximately €1.75 billion. This was followed in 2012 with additional reductions of €750m. These reductions occur at a time when demand for health services continues to grow.
It is well known that the HSE is running a significant budget deficit currently. This deficit exists due to a number of factors, including the increased demand for services. For example, due to increased demand, the HSE has issued 125,000 medical cards over and above Service Plan projections, which is contributing to approximately €100m of the current budget deficit.
The deficit as of 31st August 2012 is €259m. The HSE has a statutory obligation to remain within its allocated budget of €13.2bn for 2012.
Detailed cost containment plans have been in place across the health service since the beginning of the year. However, there has been an increasing demand for services which has contributed in a significant way to the the continuing deficit. Should robust cost reduction action not be taken at this juncture, the HSE faces a potential year-end deficit of €500m.
In order to deal with the existing deficit and to remain within budget, the HSE is now obliged to introduce a range of additional cost reduction measures to be implemented throughout the remainder of 2012 and into 2013.
The range of additional measures amounts to €130 million. In compiling these measures, every effort has been taken to target areas that do not impact on direct client/ patient services, with a view to protecting, in as much as is possible, the most essential frontline services. However, it is inevitable that some impact on service delivery will be experienced through the implementation of these measures.
The €130m of cost reduction measures is in addition to other non-operational measures to be undertaken, that have been submitted to the Troika. These non-operational measures include cash acceleration of receipts from health insurers and the transfer of surplus money within the health group of votes such as the NTPF.
Amongst the cost reduction measures included within the €130m are:
? €37m through cash and stock management initiatives;
? €26.5m through savings in medical equipment (non-capital), furniture, education, training, office expenses, travel and subsistence and advertising;
? €35m through reductions in the usage of agency and overtime in line with the targets set in the HSE Service Plan of reductions of 50% in agency and 10% in overtime;
? €6m savings on reimbursements for certain products including Glucosamine, Orlistat and Omega-3-Triglycerides;
? €10.8m through the reduction of Home Help hours. This involves a reduction of 5.5% from the 11 million hours (€195m budget) provided annually. The impact of these reductions will be minimised by ensuring that services are provided for direct patient care;
? €1.7m through the reduction of 200 Home Care Packages per month. This accounts for a reduction of 3.7% from the 5,300 packages (€140m budget) delivered annually. The impact of these reductions will be minimised by achieving greater efficiency in the packages currently provided;
? €10.8m through the reduction of Personal Assistant hours from the current €1.4 billion budget for the provision of disability services;
? €2m through savings in the procurement of medical equipment. This relates to non-capital equipment only.
Each of the Regional Directors of Operations is working with their staff to develop implementation plans in order to give effect to these measures. While many of the measures are already underway currently, further plans will be developed and discussed with staff and unions over the coming week.
While implementing these plans the health services will at all times attempt to minimise the impact on frontline services and ensure that patient/client quality and safety is maintained to the highest standard possible