Troika unhappyat health budget overruns

The troika has ended its final review of the economy but wants the Government to address the repeated budget overruns in the health service.

The review, the 10th of its kind, also ended without reaching agreement on the politically loaded issue of a precautionary credit line ahead of the State’s departure from the bailout programme in December.

Meanwhile, it is expected the troika will ask the Government to examine ways to create an integrated financial system in the health service which will replace the current situation of duplicate accounting and financial supports in various areas.

This issue is linked to the 2004 changeover from the health boards and is adding to unnecessary health service financial problems.

An e-health strategy which will involve online prescriptions and the ability to track patients across the system, thereby reacting more quickly to potential problems, is also believed to be on the cards.

While the troika is pleased with reforms in the GP and drug pricing areas, it is likely Health Minister James Reilly will also be encouraged to cut more backroom and management staff to reduce costs without unduly impacting on patient care.

The latter point is expected to be raised in addition to yesterday’s confirmation the HSE is set to introduce a fresh voluntary redundancy scheme in a bid to meet the predicted Haddington Road agreement savings.

In a letter sent from HSE director of human resources, Barry O’Brien, to health service managers, the senior official said this new scheme will begin in January. However, he has not stated how many staff will be removed.

Meanwhile, it is also believed the troika has left the decision up to the Coalition on whether to apply for the credit line.

Crucially, if the Government decides it is better to have such a safety net, then it does not have to begin negotiations with other eurozone member states before the country exits the bailout programme in December.

There had been concerns in Leinster House that if the Government applied for a credit line before the German CDU and SPD parties formed a coalition, expected by mid-December, the thorny issue of Ireland’s corporate tax rate would form part of the negotiations.

Ireland has roughly €29bn in cash buffers, which means it is fully pre-funded for 2014 and the first few months of 2015.

However, the Irish banks have to undergo rigorous stress tests next year. If the banks need recapitalising, the Government would have to stump up the funding.

Big international investment firms and major credit ratings agencies have called on the Government to put in place a credit line in the event of an emergency.

To secure a credit line, the Government would have to apply to the board of the ESM, the EU’s rescue fund, which means every eurozone government would have to give its consent.

At that point, conditions would have to be agreed. The Government has said if these conditions are too onerous, it would not avail of any ESM facility.

The review also ended without finding a potential solution for the tracker mortgage problem.

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