Drumm may have a nightmare job but a €70,000 bonus is just not on

HOW much money would you pay to the boss of an effective and efficient health service?

By “effective and efficient” I mean a service that offers early treatment, keeping people out of hospitals where possible, a hospital service for those who require it that delivers quickly and in relative comfort, and then a recuperation system that gets people out of hospitals quickly, provides an opportunity for quick recovery or, where that’s not possible, provides best care for the afflicted. And which does so for a reasonable sum of money.

Utopian perhaps, although apparently largely achieved in other countries but most definitely not in Ireland. So back to the question: how much money would you pay the person who designs the system and makes sure it’s implemented?

Would €1m a year be too much? Or €2m? That would be eight times what Taoiseach Brian Cowen makes and about three times Pat Kenny’s new reduced RTÉ income, but it is €400,000 less than Owen Killian made last year as chief executive at food company Artyza (formerly IAWS). Would you be prepared to reward the HSE chief on similar lines if the service provided for your money was regarded as excellent?

Of course, we don’t have anything remotely approaching the health service described above. That means Brendan Drumm’s controversial €70,000 proposed bonus for 2007 is possible to explain but almost impossible to defend.

He got the job when it was hoped, if not necessarily expected, that the HSE would deliver a more efficient and effective service than the 11 separate health boards had done heretofore. It didn’t work out that way and Drumm has received the blame, although he is only partially responsible.

The way in which the politicians, in conjunction with the trade unions, negotiated the HSE was insane, creating a bigger and more expensive bureaucracy instead of using the opportunity to rationalise. Bertie Ahern did his usual trick of cutting deals with unions and throwing money at people to keep them happy rather than confronting the issues. Drumm took the job with his hands tied. That said, he has made mistakes of his own along the way too.

He did take the job though, after negotiations as to his terms and conditions. There was outrage at the €370,000-plus salary (with many benefits attached including pension, car and, most probably, medical insurance) that brings his package to about €430,000 (before bonuses), but there were reasons why the pay was pitched at this rate. One was the amount that medical consultants of his ilk can earn through a combination of public and private practice, or by simply selling their services to the private sector. The other is the price that would have been demanded by a non-medical person, or business executive, had he or she taken on the job instead.

Such a person, with what would have been regarded as the required experience and expertise, would probably have been earning even more already or, if on the way up, would have wanted this level of compensation because of the highly public nature of the role.

Drumm’s big personal mistake was not to seek payment of his 2007 bonus in 2008 when it fell due. There was a reason for this. It had not been a good year for the HSE. At the end of 2007 Health Minister Mary Harney wrote to the HSE complaining about its request for an extra €244m for its budget that year and bemoaning that it had not delivered many of the performance improvements it had promised. It had also been in a year in which scandals about cancer misdiagnosis in a number of hospitals had emerged.

That Drumm somehow qualified for a bonus, any bonus, in such circumstances seems extraordinary but apparently he met the bulk of the criteria set down in his contract. The measurements did not relate to cost management alone, but took into account other factors, such as reductions in waiting lists or his ability to influence public opinion through the media.

The cost overruns may have been partially the result of factors outside of his control – such as many more sick people turning up at hospitals than expected, requiring treatment. Drumm gambled that he would be able to turn things around during 2008 and then claim his bonus for that year and 2007 during 2009 which, although it would be a large sum, would not attract as much criticism because he hoped there would be popular support for the performance of the HSE.

This was a bad call. It wasn’t possible to turn around the performance of the HSE at short notice – built as a supertanker on Bertie Ahern’s instructions rather than as a slim-line, fast-moving vehicle – and the economic collapse destroyed the Government’s ability to pay for basic necessities, let alone bonuses.

And yet this April Drumm claimed what was due to him legitimately under his contract. A process was undertaken and the remuneration committee of the HSE board – not all of whom may be Drumm’s greatest fans – saw fit to make the award. Significantly, Drumm has not yet chosen to cash his cheque. He is not unaware of the damage that doing so would cause to his standing. If he takes the money now his credibility in demanding €1.2 billion in cuts to a €14bn budget – about half of which goes on pay to staff – will be shot and his ability to implement the cuts badly damaged. Even if he doesn’t take the money the mere fact that he applied to get it will be held against him – and the fact that he made a five-page submission claiming the money undermines him. This is a couple of full salaries for most people – it is an awful lot of money.

Drumm could not retain his credibility as a leader of the HSE if he were to take the money, especially as he is trying to introduce major cost savings. His tenure, which I believe was well-intentioned, if not well executed, is coming towards an end and, bruised by his experience, Drumm will head back next autumn towards his old job as an academic at UCD where he will be paid up to €280,000 as a teacher (That figure is correct, not a misprint).

YOU could say Drumm is not worth what’s he paid at the HSE, but how much of this is down to unions refusing to change the way their members do things as much as his failure to persuade them? I suspect the problems of the HSE run way deeper than the issue of payments to those at the top and the idea that changing the people at the top – or paying them less – will do the trick is dangerously superficial.

Drumm’s experience suggests there may be a big problem when it comes to replacing him. The job has all the appearances of a horror, irrespective of the pay. What other doctor would do it given the money they earn already? If you went for an organisation or business expert then I’m sure there’d be many ambitious people who would do it for half the existing pay, particularly if motivated by the true public service ethic, but would they be any good at it?

If you were running an organisation the size of the HSE in the private sector, you’d probably be paid millions. I’m not saying that’s right – it’s just the reality of how the world works. Yet it has been decided that his successor will be paid a base salary of €303,000. Many will argue that this is too much in the current economic environment but my fear remains that it won’t be enough to attract the right person, unless, of course, there are major bonuses attached.

The Last Word with Matt Cooper is broadcast on 100-102 Today FM. His book “Who really runs Ireland?” published by Penguin is in bookshops now.