Tallaght hospital in Dublin has received a €39 million debt write-off from the HSE after a review questioned its future financial viability because of massive cumulative debts.
By the end of last year, the hospital owed €57.9 million, which could take more than 20 years to clear even if it continued to cut spending, the review has warned.
Once-off loan
Chief executive Eilish Hardiman confirmed last night the hospital's finances have been "rebased" through a once-off €39 million "loan" which was added to its allocation.
Although the review warned of the danger of “moral hazard” if its deficit was written off, Ms Hardiman said the measure was a once-off and there was no question of money having to be “poured into the hospital” again.
“Tallaght has credibly demonstrated that it is at break even in its operations and had made steady, measured progress in dealing with the legacy issues we have inherited,” she said.
Overspent
The HSE ordered the hospital to carry out the review last year after it spent its full-year allocation in nine months. Even after making more than €11 million in savings in 2012, it overspent by €13.2 million.
The extra funding provided by the HSE on foot of the review’s findings leaves the hospital with a remaining cumulative deficit of €18 million.
Two options
The report said the hospital has become over-dependent on short-term cash facilities as a way of dealing with what is really a medium-term working capital problem. It suggested two options for dealing with the problem:
Allowing the hospital a long-term loan facility to pay off the debt, similar to mechanisms used in the NHS in Britain
Writing off the deficit.
The report, obtained by irishhealth.com under freedom of information, also recommends improvements in business, human resources and IT systems at the hospital, as well as better income collection from private patients and other sources.
Last year, Tallaght had to rely on a €12 million bank overdraft facility to ease its cashflow problems. The HSE agreed to provide extra funding, provided the hospital agreed to review its sustainability and drew up a sustainability plan.
Policy position
The report, drawn up by a team chaired by St James's Hospital chief executive Brian Fitzgerald, said there was a need for a policy position to be considered by the HSE and Department of Health in relation to the financial viability of a voluntary hospital that was carrying such a substantial financial deficit.
“It will only be possible in the very long term (circa 20 years or more) for Tallaght hospital to provide services and in parallel reduce net expenditure in the context of offsetting a legacy deficit of this magnitude.”
Even if the hospital’s existing allocation wasn’t cut, it was still extremely likely that a 5 per cent target for savings this year would not result in break even by the end of 2013, the review says.
Over budget
So far this year, the hospital is 2 per cent over budget, but Ms Hardiman said it was on track to break even by the end of the year.
Tallaght’s budget has shrunk from €210 million in 2007 to €169 million last year.
The hospital was at the centre of controversies over patient safety and record-keeping in recent years until new governance arrangements were introduced.
