Rejection of HSE Service Plan was an exercise in damage limitation

Last week's rejection of the HSE's National Service Plan by Minister for Health James Reilly was nothing but a poor attempt to distance himself from cuts he will oversee. By Sara Burke.

Having received a hammering from the print media over the holiday period, Minister for Health James Reilly launched a media offensive on 5  January 2012, appearing on both RTÉ Radio’s Pat Kenny show and in interview with Fergal Bowers on the News at One. These media appearances seemed, to this observer at least, a combination of damage limitation and pure optics. The same day, Reilly rejected the HSE National Service Plan submitted to him on 24 December 2011.

The HSE Service Plan is the most important health service document published in any year. It is the contract between the government and the HSE about what type and volume of services will be provided in the year ahead within the budget allocated.

Under legislation, the HSE has three weeks to submit a plan to government after the Budget, and the minister then has three weeks to approve it. In the past, this was done with some amendments - usually in the form of a letter to the Chair of the HSE board.

It is usual for the HSE to work closely with the Department of Health in developing the plan so that it reflects government policy. This year, the co-operation was more intense, as the HSE is in the process of being abolished and the Department of Health makes up half of the HSE interim board. The Secretary General of the Department of Health is now chairman of that board.

Since it was submitted on 22 December, the HSE has been negotiating and amending the plan with greater ministerial and departmental involvement than ever before. So if there were no surprises in it, why did the minister reject it?

As Seán O’Rourke said on the News at One, it’s like “Sinn Féin/IRA in the old days”; or as Fergal Bowers said, it’s like “sending a letter to yourself to complain about yourself”.

It seems to me that the minister’s media outings were exercises in damage limitation. His appearance on the Pat Kenny show was to take the heat out of the badly announced increase in the health insurance levy. While he did very well on the Pat Kenny Show, it would not have come to that if the announcement had been better managed.

His lunchtime interview was pure optics, intended to soften up the public for imminent cuts, and an effort to distance himself from those cuts.

The minister made the point that what he wanted was the provision of the same services for less money. The problem with that is that the HSE has been doing that year on year since 2007: providing more services with less money and fewer staff, despite the fact that we have a growing population of older and sicker people.

About €2 billion has been taken out of the health system since 2010, and there are 5,000 fewer staff than there were in December 2009.

And there are 3,200 more staff expected to come out of the health system before February. When the Government announced cuts to public sector pay they gave public servants until February 2012 to retire early without their lump sum being taxed and with their pension at pre-cut rates – a significant carrot.

Counter-intuitively, the fewer who go the more beneficial it is for the HSE in 2012 as it will pay out less in lump sums and will have more staff to provide essential services.

Also in the Fergal Bowers interview on the News at One, the minister said that after discussion with Minister for Public Expenditure and Reform Brendan Howlin he had negotiated health cuts down from €868 to €650 million. My understanding is that Budget 2012 announced €550 million in cuts to health, but that €300 million was unaccounted for – for example increments, the new VAT rate and over-runs from 2011 were not included. But there is no new money for the health system. What the minister might have negotiated is an agreement that if the number who retire in 2012 is lower than the 3,200 expected, then the HSE gets to keep €97 million allocated for lump sums.

Staffing costs are a majority of the health budget - usually 50-60%, and in some cases 90%. New information on staff pay was released on 24 December in response to a Dáil question by Colm Keaveney showing that 40% of HSE staff earn less than €40,000 a year, 75% earn less than €60,000, while 25% earn more than €60,000. These same figures also show that 4.26% of HSE staff earn €160-200,000!

So choices are being made about what to cut and where in the Service Plan without even considering high pay. And that’s where differences emerge between the ministers, with Reilly doing a U-turn on his pre election promise to cut consultants’ pay.

Reilly was very clear pre-election that he wanted to cut consultants’ pay, then went to the Irish Hospital Consultants Association annual conference and said Croke Park was the way to go – yet in an opinion piece in the Irish Times on 4 January 2012 by Róisín Shortall on health reform, she stressed the importance of on lowering the cost base of health care, of more primary care, of providing care at the lowest level of complexity, of managing chronic diseases in the community and crucially of “bringing payments for hospital doctors in line with Europe”. This last sentence reads to me as cutting consultants’ pay.

So the minister is sending the plan back to himself for redrafting and we will know the final detail on 13 January. There is a promise to review in March when the impact of the early retirements are known.

All will be revealed this week. Really it is not a matter of whether to cut but where and how much. Last week’s rejection of the plan was mere window dressing and a poor attempt to distance the minister from the cuts he has no choice but to oversee.