Haddington Road savings a fallacy

Senior health managers in the country’s voluntary hospitals are seriously concerned that the entire €150 million of anticipated health savings for 2013 could end up as a potential deficit on the books of the voluntary hospitals at the end of the year. Maureen Browne reports.

Senior health managers in the country’s voluntary hospitals are seriously concerned about the way the HSE is trying to implement the Haddington Road Agreement, arguing that  the entire €150 million of anticipated savings for 2013 could end up as a potential deficit on the books of the voluntary hospitals at the end of the year.

Maureen Browne
Maureen Browne

Managers say that in addition to the way that they have been “fleeced” by the HSE’s two exit packages for which they will be paying for the next 15 – 20 years, this will mean a very difficult year for patients in 2014, as they attempt to deliver services with significantly less staff and less funding, but with rising user expectations.

“The exit packages are draining our services to a stage that, if we aren’t careful, we will soon be spending more money on pensions and lump sums than on services.”

“The idea that Haddington Road is going to save €150 million this year is just as big a fallacy as telling people that the two exit packages were going to save hundreds of millions, said one disillusioned manager.  “This is just smoke and mirrors. We will not make the projected savings on foot of Haddington Road this year and the exit packages are draining our services to a stage that if we aren’t careful, we will soon be spending more money on pensions and lump sums than on services.”

Senior managers in hospitals around the country say that they have been given totally unrealistic financial targets and timeframes for savings under Haddington Road.  They say the result is that while they might previously have expected to come in on budget for 2013, they will now have no option but to run a deficit based on the deductions taken from their allocations centrally by the HSE. Hospital Managers were asked to complete detailed templates outlining their anticipated savings yet the deductions made by the HSE in some cases were more than double the anticipated savings advised by local Management. This, they say, is unjustified and it is unclear the basis upon which these projected savings by the HSE are predicated.

Voluntary hospital managers say that the HSE, under its legislative framework, cannot itself carry forward a financial deficit, so the only way it can manage from within its allocation is to reallocate the projected savings across the voluntary sector and give a greater proportionalcut to these agencies against the anticipated savings achieved.  Managers in voluntary hospitals believe that the HSE will cash out its own hospitals but that the voluntaries will be left with an increased year end deficit which will be deducted from their 2014 allocations.  This will mean further dramatic reductions in their services next year.

Senior managers in hospitals around the country say that they have been given totally unrealistic financial targets and timeframes for savings under Haddington Road.

Said one manager “We calculated that we could save a particular sum if we had been in a position to implement the Haddington Road agreement on July 1.  and advised the HSE accordingly.But of course, we couldn’t implement anything on July 1 – we had to start negotiating then and we will be very lucky to get new rosters/some other changes negotiated and implemented by September 1.   That means that we will only have four months’ saving as opposed to six. That means nothing to the HSE – they seem to think we can make retrospective savings.  Bearing in mind all of the above the deductions made from our allocations are multiples of what we believe we can save.

Another manager agreed “We got a budget reduction from the HSE based on the assumption of our making massive savings by cutting out agency nurses and replacing them with extra hours worked under the Haddington Road Agreement.  However, we stopped using agency nurses several years ago, we had already made those savings and couldn’t make them again. As far as I am concerned we are being penalised because we were the “good guys” who didn’t spend millions every year on agency staff.  We are now expected to “save” those millions which we never spent.”

A voluntary hospital manager who says he believes the HSE approach to the Haddington Road agreement will result in his having to cut back services drastically next year said: “The HSE will cash out its own hospitals, leaving us to bear the burden.  The payments to staff in HSE hospitals comes from central HSE funds, whereas we will have to fund them from our own budgets which have already been reduced and, in my case, that means that while I was going to come in on budget this year, I am now inevitably looking at a significant deficit.  I will open 2014 with that deficit which will be deducted from my allocation for that year.  Inevitably that means I will have to cut back services or terminate staff contracts.”

A further compounding factor is that the voluntary hospitals are still reeling from the effect of the payment of pension and lump sum payments to staff insofar as the costs associated with these have had to come from individual hospital allocations.  These meant that the hospitals had to find lump sums and pension payments from their allocations while at the same time having to try and manage services without the people who had left.

Said one manager,  “Look at it this way; take consultants.  For every consultant who left, I had to do without his or her services; or try to get approval and money to replace them. I had to find a lump sum of up to €300,000 per consultant plus an annual pension of up to €90,000.  The pension is on an on going basis. Now how can anybody say that is saving money.  It’s certainly not saving money for my hospital.”

Another manager agreed “We have to pay pensions out of our current resources. The idea originally was that the superannuation deductions we took in each year would pay for pension and lump sum costs, but given the number of retirements this is now not the case.  That has long since gone. In my case my pension payments are almost three times as much as I take in annually in superannuation payments. This problem is now further escalated by the new pension scheme arrangements whereby deductions are made by each employer and have to be returned to Government. It is unclear as to who will foot the bill for the pension and lump sum costs for these staff in the future.

“In the old days people retired at 65 and were lucky if they lived another five years.  Now people can now retire at 50 and could live for as long as 30 or 40 years post retirement.”

“We are rapidly approach the situation where more of our money will go on paying pensions than on service provision.”