€150m hospital funding used to clear overdrafts

MORE than €150 million of this year’s funding for hospitals and agencies in the Dublin region was used to clear lingering overdrafts.

Because of outdated accounting practices, the Health Service Executive confirmed €151.4m was paid to 41 voluntary agencies in the old Eastern Regional Health Authority to cover budgetary overspends.

The figure is 34% higher than the debt built up by the same 41 bodies in 2007 as hospital spending increases.

Among the biggest overdrafts on December 31, 2008 – according to figures compiled by the Irish Examiner – were:

* Beaumont Hospital – €19.4m.

* St Vincent’s – €14.5m.

* Mater Hospital – €12.9m.

* Our Lady’s Hospice (Harolds Cross) – €6.9m.

* National Maternity Hospital – €6.6m.

* St Michael’s House – €3.49m.

The outdated practice was criticised in a recent report to the Department of Health, the Considine Report, and questioned in an earlier analysis of the HSE by the National Treasury Management Agency.

Yet three years after the NTMA called for the expensive tradition to be ended this year the hospitals have been cleared to build up the same debt as in 2008.

The HSE explained that hospitals and service agencies were allowed to dip into this reserve if it was necessary to pay for services.

“Sanction is granted in so far as the overdrafts are recognised by the HSE to be part of the funding process with the voluntary agencies,” said the HSE.

The Considine Report found that, across the board, the accounting practices inherited from the old health board system left the HSE’s book-keeping traditions unfit for the purpose.

It followed up on a 2006 review of the HSE by the NTMA which recommended the overdraft facility be eliminated.

The NTMA said it was more expensive to borrow the money than pay it up front.

The practice pre-dates the HSE and was used by the old health authorities in Leinster to encourage voluntary agencies to dip into their own reserves before spending money from central funds.

It meant 41 agencies were allowed to build up an overdraft of up to 7.5% of their annual allocation. In 2007, 4.8% (€112m) was used and this jumped to 6.05% (€151m) last year.

The HSE has confirmed it adopted the most immediate of the Considine recommendations and has capped future overdrafts at 2008 levels.

It said the amount provided to pay off overdrafts did not affect allocation levels.

A breakdown of overdraft habits since 2002 reveals the amount of debt has risen significantly.

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