Annual Report: Finance
Director of Finance
In 2018 the Group delivered a strong financial performance, achieving breakeven (0.2% surplus) v budget (maximum expenditure limit MEL).
- Note: Budget equals approved maximum expenditure limit
Net Expenditure v 2017 grew by €41.5m (5.6%) (FIGURE 16), driven by the following:
- National Pay agreements and policy – €25.7m
- New approved Service Developments – €7m
- Activity escalation and Storm costs in first half year – €1.4m
- Pension net cost increases – €0.3m
- Private patient income reduction – €3.8m
- Direct non pay costs (Drugs, Medical / Surgical consumables, Lab, X-ray) driven by activity and complexity increase – €6.9m
- Overheads and hotel costs – €0.6m
- Offset by increased NTPF income €2.4m and reductions in agency usage €3.3m
RCSI HG Net Expenditure increase – (FIGURE 16)
An essential component in the delivery of services is staff costs representing a significant percentage of RCSI Hospital Group total cost base (71%) (FIGURE 17/18). Pay cost increases during the year were driven by the requirement to implement National Pay policy, in particular the restoration of pay cuts under the Lansdowne Road and Haddington Road agreements, effect of additional National agreements with Nursing staff, Junior Doctor’s reinstatement of allowances and pay scale increments. As well pension costs continue to rise year on year increasing by 42% since 2013.
The Group Employment Control Committee ensured a single employment control process in place encompassing all aspects of pay cost control and workforce planning in the Group, maximising value for money from the Group budget and ensuring adherence to agreed staffing levels. As such a major component of the Group savings plan in 2018 was ongoing reduction in usage of agency staff – costs have fallen from €57.5m in 2014 to €36.4m in 2018 (37% reduction) (FIGURE 19). 80% (€8m) of remaining medical agency costs are concentrated in Cavan and Drogheda hospital’s and reflect difficulties in recruitment and retention of medical staff.
RCSI Group – Agency Costs- (FIGURE 19)
New funded Service Developments comprised a €7m cost increase in 2018 including full year implementation of 2017 developments and new 2018 developments:
- Opening of new ward (29 beds) in Drogheda, new beds in Beaumont (20 beds redevelopment), Maternity anomaly scanning service across the Group, additional approved nursing and midwifery staff and new consultant staff.
Growth in non-pay costs was driven by increased activity (4.2% ED new attendances, 0.2% Inpatient, and 2.9% Day Cases). Increased drugs and medicines (recouped as income from PCRS and NCCP) continue to be a major factor in particular Cancer, Multiple Sclerosis, Rheumatology and Hepatitis C service treatment.
The Group has demonstrated strong control of overheads during the year, €0.6m (0.2% increase) year on year, despite price inflation effects and requirement for ongoing maintenance of ageing infrastructure. Additionally, the Group Cost Containment Plan was successful in delivering savings of €6.8m (1%) during the year.
Private patient income reduced €3.8m (4%) during the year and cumulative reduction 18% since 2015. Initial buoyant income from the Government legislation allowing hospitals to charge private patients in public beds significantly fell during the year driven by the impact of the Private Health Insurers advising their customers not to use insurance in public hospitals.