Annual Report: Finance
Director of Finance
In 2016 the Group delivered a strong financial performance, achieving breakeven versus Gross Expenditure Budget and a surplus on Income Budget (excluding National Accelerated Income target).
- Gross Expenditure Outturn – Breakeven – residual deficit €0.7m (0.1%) v Budget €833.2m
- Income Outturn – surplus €2.2m (0.3%) v Budget €146.3m (excluding National Accelerated Income target €5.1m)
Gross Expenditure grew by €31.7m (3.9%) during the year, accounted by the following cost pressures:
- National Pay agreements and policy – €7.8m
- New Service Developments – €6.2m
- Pension cost increases – €1.2m
- Drugs costs increase recovered as income from PCRS – €3.6m
- Transfer of Regional Renal service to Beaumont – €2.8m
- Staff WTE increase including Beaumont Improvement Plan – €3.8m
- Direct non pay costs (Medical / Surgical, Lab, X-ray) driven by activity increase (8.1% ED new attendances, 4.5% Inpatient, 2.4% Day Cases) – €5.2m
An essential component in the delivery of services is staff costs representing a significant percentage of RCSI Hospital Group total cost base (71%) (FIGURE 16 / FIGURE 17). Pay cost increases during the year were driven by the requirement to implement National Pay policy, in particular the Lansdowne Road and Haddington Road agreements, effect additional National agreements with Nursing staff including Emergency Department WRC agreement, Student Nurses (revised pay rates and increment allowances) and reinstatement of twilight payment. As well pension costs continue to rise year on year increasing by 27% since 2013.
Figure 16. RCSI HG Pay Category
Figure 17. RCSI HG Payment Type
The Group Employment Control Committee (established in February 2016) 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 was ongoing reduction in usage of agency staff – with related costs have falling from €57.5m in 2014 to €43.7m in 2016 (FIGURE 18)
Figure 18. RCSI Group – Agency Costs
New funded Service Developments comprised a €6.2m cost increase in 2016 including full year implementation of 2015 developments and new 2016 developments:
- Full year cost of 2015 Service Developments – extension of service at St Joseph’s Day Hospital Raheny, opening of Connolly Cherry Ward, Phase 1 of the Drogheda Modular Unit and additional transit care beds in Louth Hospital.
- 2016 developments – Plastic Surgery service in Beaumont and Connolly, Gynaecological service Rotunda and Connolly, Endoscopy service Connolly and funding for approved consultant posts in Rotunda, Beaumont and Connolly demonstrated the Group direction and purpose of integrating services across all clinical sites.
Growth in non-pay costs were driven by increased activity (8.1% ED new attendances, 4.5% Inpatient, 2.4% Day Cases). Increased drugs and medicines costs 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, €0.9m reduction (4.5%) year on year, despite price inflation effects being evident and the ongoing impact of activity. Additionally, the Group Cost Containment Plan was successful in delivering savings of €7.8m (1%) during the year.
Income overall grew by €1.8m (1.2%) during the year. The major component was recoupment of drugs costs funded by PCRS. Overall private patient income reduced year on year. Initial buoyant income from the Government legislation allowing hospitals to charge private patients in public beds began to significantly fall during the year driven by the impact of the Private Health Insurers advising their customers not to use insurance. Additionally reduction in income from the pension levy was evident during the year.
The 2016 financial performance is the result of the dedication and adherence to budgetary targets by all staff in the Group.