Funding problems for voluntary hospitals have long history 

Late last month, the CEOs of three Dublin voluntary hospitals – the Mater Misericordiae University Hospital (MMUH); Tallaght University Hospital (TUH); and St Vincent’s University Hospital (SVUH) – were before the public accounts committee (PAC), ostensibly to discuss financial arrangements related to hospital insourcing.

However, a large part of the discussion centred on the broader question of overall funding for the hospitals themselves, or rather what the CEOs described as consistent under-funding.

This has been an ongoing issue for voluntary hospitals for many years, especially due to the historical deficits that have continued to mount.

The PAC heard how these deficits have the potential to have serious consequences for the institutions.

Ms Josephine Ryan Leacy, MMUH CEO, pointed out that the hospital entered into a risk-sharing agreement with the HSE in April 2025 to restore a breakeven financial position.

She said this ensured essential patient services did not need to be reduced or suspended. It also avoided adding to the Mater’s historical deficit of €48.7 million, which would have raised the potential for director exposure under company law.

Ms Ryan Leacy admitted there has been a “significant” financial increase of around €300 million in the Mater’s annual allocation from 2019 to 2025. Just over one-third of this relates to national pay awards.

However, she pointed out the HSE annual service arrangement process, with its single-year focus, is in need of urgent reform.

Ms Barbara Keogh Dunne, TUH CEO, noted that the cost of running the hospital in 2025 was €438 million. The projected out-turn for 2026 is €471 million. The hospital carries a historical deficit of €25 million.

Ms Keogh Dunne also pointed to challenges in relation to the HSE annual budgeting process, and the continued reliance on short-term funding sources, such as from the National Treatment Purchase Fund. There was also the recurring funding requirement to support information technology and capital infrastructure developments and the need for additional inpatient bed capacity.

Ms Pauline McGrath, SVUH CEO, admitted the hospital is “under sustained pressure to meet patient demand”, driven by continuing growth in activity within “a funding framework that has not kept pace with that demand”.

Like the other speakers, she pointed to the difficulty with the annual budget-setting process.

“In recent years, the opening budget issued by the HSE has not fully reflected the actual levels of activity or known cost pressures, including pay agreements, inflation, and increasing demand,” Ms McGrath said.

“While supplementary funding was traditionally used to address this gap, it did not consistently cover the full cost of services delivered. In 2023 and 2024, supplementary budgets were provided. However, the hospital was still left with a funding shortfall despite delivering the services under the agreement.”

This amounted to €26 million over the two-year period. In 2025, the hospital reported a breakeven position as the HSE issued revised spending limits that aligned to hospital forecasts.

“However, this year we are once again in a position where we have been provided with an opening budget that does not meet the service requirements,” she said.

“Therefore, we have not been in a position to sign off on the service agreement with the HSE at this point, but we are actively engaged with the regional HSE team on this issue.”

She said SVUH is projecting a deficit of €41.9 million for 2026. “We need to identify the funding gaps,” said Ms McGrath, who admitted there is tension with the HSE over the issue. “If there have to be some discussions about service reductions, we will have to have those if we do not get the appropriate funding.”

Funding shortages within the sector are nothing new. A feature in this edition of the Medical Independent – prompted by the recent online release of the 1926 census – examines the evolution of the Irish health service, including the role of voluntary hospitals.

By the time of Irish independence, many voluntary hospitals were in serious financial trouble for various reasons. They included: Challenges to traditional philanthropy, reduced subscriptions, and deteriorating physical infrastructure.

However, a novel solution was found, which involved the legalisation of sweepstakes on horse races to raise funds for healthcare.

It was the introduction of the Irish Hospitals Sweepstake in 1930 that saved many of the voluntary hospitals from ruin.

Such an intervention would be inappropriate in this day and age. But there is no good reason why multi-annual budgets, and the long-delayed shift toward activity-based funding, cannot be introduced to help put these hospitals on a more secure financial footing.