Irish hospitals spent €700,000 on consultancy reviews

15 February 2019 Consultancy.uk

A report in the Irish press has stated that Irish health officials spent roughly €700,000 on private consultants since 2016. The news comes as the latest chapter in a succession of stories which have seen public spending on consulting work come under scrutiny.

The Irish management consulting market is worth around €700 million, roughly one-tenth the size of the UK consulting industry. Growth has been strong in recent years, ranging between 6% and 11%. The Irish consulting sector is different from the UK and other mature markets in that while they constitute considerable chunks of consulting spending, financial services (21%) and consumer and industrial products consulting (22%) make up smaller segments of the sector than the public sector, which represents a quarter of Irish management consulting turnover.

A sizeable portion of this is spending from the health sector. In line with leading economies all over the world, Ireland is experiencing key demographic changes relating to an ageing population, while strained public services are unable to expand their headcount and facilities due to a decade of austerity inflicted by governments following the Great Recession. As a result, healthcare providers are increasingly turning to the consulting sector to find efficiency savings and areas where cost cutting can be implemented least painfully.

The Irish Government has come under sustained criticism for its outsourcing practices in recent times. Having racked up a €12 million bill on contracts to external consultants in 2016, with just three departments accounting for most of the expenditure – €704,304 of which was spent by the Department of Health – the Government has since attempted to paint itself as watching its waistline when it comes to consulting spending. However, the issue has once again become a matter of intense scrutiny, after it emerged that Irish hospitals have scarcely reduced their consulting spend, several years later.Spending of Irish Government and National Children's Hospital on consulting services

According to documents reported on by the Irish Examiner, Government and officials from the National Children's Hospital have spent almost €700,000 on internal and external consultancy reviews into the project’s governance and financial controls project in the past two years. Since February 2017, Government and national paediatric hospital development board officials commissioned some 12 separate inquiries and reviews into the multi-billion euro project.

The National Children’s Hospital is a working title for an as-yet-unnamed children's hospital currently under construction on the campus of St James's Hospital in Dublin, Ireland, as a regional secondary and national tertiary centre. Once complete in 2022, the new hospital and associated Children’s Research and Innovation Centre is touted by project management firm BDP to become a “world class facility for children and young people from all over Ireland” who have complicated and serious illnesses and are in need of specialist and complex care.

Highest earners

The scale of the review costs to date has been outlined in files provided by the Department of Health to the Dáil's public accounts committee in response to unanswered questions at a day-long meeting earlier in the year. According to the documents, an on-going review into the cost of the project itself by PwC is expected to come with the largest price tag of the bunch, at €450,000. Meanwhile, 11 other reviews in the past two years have increased the strain put on the public purse by more than €200,000.

The next largest figure saw an independent review by DSSR cost €80,000 in October 2018. A bench-marking review two months later cost a further €39,500 paid to Aecom. Contracts for an internal audit report and a review of "business continuity and disaster recovery" meanwhile saw Mazars paid a total of €31,718.

Two audits in 2016 and 2017 cost a total of €36,000 paid to C&AG, while a review of the code of governance manual in May 2018 and a corporate governance review in July 2017 saw Eversheds paid €8,800.  Finally, two contracts for a management review and a stakeholder review saw Deloitte receive a combined fee of €7,448.

“It raises the question, what are officials at the Departments of Health and Department of Public Expenditure and Reform actually doing?… Officials need to explain the full extent of their knowledge of the escalating cost, and how information was escalated at the department.”
– Jonathan O'Brien, Sinn Féin TD

Of the four internal audits, six independent reports, and a further internal report, two were pro-bono procedures. An inflation overview of the Irish construction industry in October 2018 by Linesight cost nothing, as did a "process to guaranteed maximum price" internal review, by National Children’s Hospital’s Internal Report team in November 2018.

The spending has sparked criticism from members of the Oireachtas, Ireland’s national parliament. Speaking to the Irish Examiner, PAC member and Sinn Féin TD Jonathan O'Brien said that the spending on private consultants for reports and reviews was “testament to the incompetence at the heart" of the National Children’s Hospital project.

O’Brien added, "It raises the question, what are officials at the Departments of Health and Department of Public Expenditure and Reform actually doing? Minister [for Finance] Paschal Donohoe has stated that he only became aware of the cost overruns in November of 2018. The Minister, his department and officials need to explain the full extent of their knowledge of the escalating cost, and how information was escalated at the department.”

In the UK, consulting spending by health officials has also come under scrutiny. In 2018, a study revealed that National Health Service (NHS) trusts which hire management consultants in order to reduce expenditure do not end up saving money. The research suggested that rather than finding efficiency savings, under-resourced hospitals actually end up spending more in the long run.

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