The HSE’s plan to establish an integrated financial management system for the health service over the next year has required assurances to voluntary hospitals and agencies that their autonomy will be protected. Paul Mulholland reports
The need for an integrated financial management system (IFMS) for the health service has long been recognised by the HSE. The financial systems currently used by health services vary throughout the country and are a legacy of the health board structure that predated the establishment of the Executive. The procurement of a single system has been delayed for various reasons, including the financial crisis of 2008, which resulted in reduced funding for substantial healthcare projects over the proceeding years.
Recently, progress has been made on the issue. A financial reform programme, including the IFMS, has been overseen and mandated by a finance reform board, chaired by the HSE CEO and consisting of senior representatives from the HSE, Department of Health and Department of Public Expenditure and Reform. Following a public tender process, SAP was selected as the software platform for IFMS in June 2017. The procurement process for a system integrator (SI) to support the HSE with the detailed design, build and testing of the system within SAP was concluded in September 2019. The HSE board approved the appointment of the SI in December 2019.
According to the HSE, the IFMS will provide better financial reporting and forecasting and will enable improved financial management, governance, compliance and transparency, and a better overall financial control environment.
The HSE Service Plan 2021 states €12 million has been set aside for IFMS implementation this year. The system is expected to complete its “national design, build, and test phases” during the fourth quarter of 2021 with deployment commencing in 2022. HSE East, Health Business Services (HBS), the National Distribution Service and Tusla (the Child and Family Agency), are scheduled to go live in the second quarter of next year.
It is anticipated that the IFMS programme will have successfully been rolled out to 80 per cent of the public health system by the end of the third quarter of 2024, with roll-out prioritised by areas of “significant expenditure”.
“This system is based on the modern SAP S/4HANA platform and will support our services to deliver and demonstrate further value and probity around the use of our existing resources, allowing us to secure the maximum appropriate investment in health and social care for patients and their families,” according to the Service Plan.
The plan refers to how the HSE will “continue and further expand its engagement” with stakeholders, including voluntary organisations funded under section 38 and section 39 of the Health Act 2004, in advance of their adoption of this system. The relationship between the HSE and voluntary organisations, including financial matters, was the subject of a recent report by an independent review group (see panel).
The Service Plan notes that dealing with any in-year or accumulated historic financial overruns within voluntary organisations is primarily a matter for the boards of those organisations. “The HSE will continue and, where necessary, seek to enhance its engagement and relationship with its section 38 and section 39 key partner organisations in order that we can provide as much guidance and practical support as is feasible,” according to the document.
The HSE has said that the deployment of a single standardised financial and procurement system to voluntary organisations will, for the first time, provide quality standardised financial and procurement information across both statutory and voluntary services. This will allow for valid comparison of costs across the entire sector and a more equitable and evidence-based resource allocation model, among other benefits. However, the voluntary sector has concerns about how the use of a new integrated system could potentially undermine their autonomy.
Documents obtained by the Medical Independent (MI) through Freedom of Information (FoI) law have provided more detail around these issues.
Last year the HSE prepared a consultation framework paper concerning the introduction of the IFMS into the Irish healthcare system. The paper, ‘Irish Health Service Financial Management Framework’, sets out the approach to section 38 and 39 agencies in respect of the IFMS.
“The HSE is conscious that some organisations may have concerns in relation to adopting a single integrated financial procurement system with an associated set of nationally standardised processes,” according to the document.
“The HSE is conscious, in particular, of the need to provide relevant reassurances to the board members and senior leadership teams of [section 38 and 39 agencies].”
The document also noted the “separate legal… status” of voluntary organisations. It stated the “the HSE must work with organisations to ensure that adoption of the IFMS assists with, and does not adversely impact on, the obligations and responsibilities of board members”. It added that the adoption of the IFMS “must not interfere with the reasonable exercise of their proper autonomy as befits separate legal entities operating within relevant policy, legal, regulatory, and contractual frameworks”.
“Specifically, the HSE will not by virtue of the implementation of IFMS seek to second guess the judgement of [section 38 and 29 agencies] by inserting a requirement for additional ‘approvals from the centre’ to be obtained via IFMS, for example before a purchase can be made or an accrual or other journal entry posted.”
It noted there would be “earlier and more comprehensive” visibility of financial and related information available to Community Healthcare Organisations, Hospital Groups, and central HSE as a result of a new integrated system.
“This is in keeping with the current and emerging transparency and accountability expectations. It is acknowledged that the HSE also has a requirement to take cognisance of provider organisation concerns, including [section 38 and 39 agencies] as to the appropriate use of that information.”
According to the document, the requirement for the IFMS to be adopted by all section 38 and 39 agencies is mandated by the finance reform board. Any obligations arising from a new system would be dealt with through current formal service level agreement (SLA) processes, the HSE stated.
Voluntary Healthcare Forum
Given the scale and impact of the project, voluntary hospitals did not agree that a new system could be incorporated through existing SLAs. The Voluntary Healthcare Forum (VHF), which represents voluntary hospitals, sought greater assurances that the IFMS would protect the governmental and financial autonomy of their members. On 30 July 2020, VHF Chair Mr John Gleeson and Director Ms Patricia Doherty wrote to the HSE following a meeting on the issue earlier that month.
“The substantive outcome of the meeting from our perspective was the acknowledgment that a legal framework will be necessary before our members participate in the platform and we welcome that clarification,” according to the letter, seen by MI through FoI law.
“We note we disagreed on the vehicle for such an agreement, your position being that it can be incorporated into the service arrangement whereas we consider a stand alone agreement will be required.”
The letter stated that while there were operational issues, which could only be identified at the end of the design phase of the IFMS platform, the major issue for the voluntary hospitals remained the governance and “specifically the protection of the autonomy of our members”.
It was the view of the VHF that the HSE should set out how it proposes to give legal effect to the assurances contained in the consultation framework paper. In advance of a position paper on the subject, the VHF listed a number of the key issues from its perspective in a short document produced in September 2020. While the VHF acknowledged that the HSE had signalled its intention to work with voluntary agencies in its consultation paper, the Executive had not yet identified the specific design features of IFMS that will protect the autonomy of non-HSE entities, nor “specific legal assurances it will provide to do so”. The VHF called upon the HSE to address these issues “urgently”.
While it noted the accountability framework provided through SLAs, the VHF document stated the IFMS “provides not just accountability, but comprehensive financial processing, and financial control, and as such goes far beyond” what is required by section 38 of the 2004 Act.
“Individual VHF members have obtained their own legal advices, which have confirmed the potential of IFMS to significantly undermine their board members’ fundamental obligations in respect of the control of their entity in the absence of design features to protect such and/or an appropriate legal framework.”
The shape and content of a legal framework would ultimately depend on the design of the platform and specifically its control features. However, issues that could be identified at an early stage, according to the VHF, included: Data ownership, usage, and sharing; report generation and sharing; system approvals; financial statements; access to bank accounts; processing of payments; and procurement.
A HSE spokesperson told MI that one of the most significant risks to the finance reform programme is that the voluntary sector would “resist” the adoption of the IFMS.
“The mitigation of the above risk includes extensive engagement with this key stakeholder group since the inception of the project, including inviting representation from each voluntary organisation to participate in the detailed process design and system design phases,” the spokesperson said. Engagement with the voluntary sector has intensified over the last year as the detailed system design has progressed. A network of over 500 representatives, almost 200 of whom are drawn from voluntary organisations, was established to participate from the beginning of the process design stage. The voluntary sector is represented at project governance and project delivery level.
“For example, the National Federation of Voluntary Bodies has very proactively engaged with the HSE to ensure that their membership is represented across the project,” according to the HSE spokesperson. All stakeholder groups are required to sign off on detailed system designs. A series of design confirmation workshops – 43 in all – at which detailed system designs were presented, took place in November and December 2020, attended by 11 (out of 16) acute and 18 (out of 22) community section 38 agencies.
“Technical designs were signed off by participants from voluntary organisations with a caveat that design sign-off did not constitute binding agreement to deploy IFMS and that any such decision would require approval of each organisation’s board,” according to the HSE. The detailed technical design stage of the IFMS project is due to be concluded in July 2021, immediately prior to commencement of the system build and test phase.
The spokesperson said that “contrary to VHF’s assertion”, the IFMS has not been designed for a single governance organisation, but readily accommodates independent legal entities. They pointed out the pre-cursor system to the IFMS, SAP Stabilisation, deployed in the HSE since 2015, accommodates multiple independent legal entities such as Tusla, Children’s Health Ireland and (prior to its dissolution in 2019) Our Lady’s Children’s Hospital, Crumlin.
“The accommodation of these independent legal entities on the system, along with the operation of transaction processing, payroll, finance and procurement shared services on their behalf, has established a useful precedent and demonstrates the feasibility of such arrangements in practical terms,” according to the spokesperson.
“However, as referenced in the framework, the HSE fully acknowledges the concerns of the voluntary sector and is committed to working in partnership with key stakeholders to develop a legal framework, which will codify the reciprocal accountabilities and provide the necessary assurances to boards around independence and autonomy.”
Work on an outline legal framework is ongoing at present.
It is as yet unclear what impact the recent cyberattack on the HSE will have on implementation of the new system, and the timeline for its roll-out. The systems of voluntary hospitals were less affected than those in HSE-run hospitals by the incident. Section 38 and 39 bodies are likely to seek assurances about the security protocols for the new integrated system.
According to the HSE, the SAP platform on which IFMS is built will “incorporate a range of security features in line with industry best practice”.
“Enterprise-wide (including, but not limited to, IFMS) cyber security and disaster recovery protocols will be informed by learnings following the recent criminal ransomware cyberattack on both HSE and voluntary hospital systems,” according to the spokesperson.
“As with any critical incident, post-incident review findings and recommendations inform the process of continuous improvement. The IFMS project is currently in design stage, prior to build and test, and deployment stages, respectively.” Preliminary cost estimates associated with the cyberattack, including the enterprise-wide restoration of ICT systems and upgrade of ICT devices, security and infrastructure, are expected to exceed €100 million. The HSE CEO Mr Paul Reid recently told the Oireachtas Health Committee the cost could rise to half-a-billion euro. The IFMS will operate on this upgraded security environment and infrastructure, the spokesperson said.
IFMS and the independent review group recommendations
An independent review group (IRG) was established in July 2017 to examine the role of voluntary organisations in publicly funded health and personal social services. The report of the IRG, which was published in February 2019, acknowledged that the challenge is to find an appropriate balance between the necessary control by the State over policy and funding, and the autonomy and independence of the voluntary sector. This would ensure that the voluntary sector can continue to deliver agreed services to nationally determined standards of care in ways that enable it to play to its strengths.
According to the report, the voluntary sector must also recognise that its dependence on the State for a large proportion of its annual funding means it cannot work in isolation but rather must co-operate fully in delivering national health and social care strategies. It stated the sector needed to demonstrate compliance with best practice in terms of governance, quality, safety and financial probity.
A spokesperson for the HSE told the Medical Independent the deployment of the IFMS by the voluntary sector can address a number of the issues raised by voluntary bodies themselves and referenced in the IRG report. For instance, the new system can eliminate repetitive requests for information in a variety of formats and templates from different units and individuals within the HSE.
“This imposes a significant time and resource burden on smaller organisations, as well as placing an unnecessary difficulty on the HSE to request and process that information multiple times. This is a particular issue for organisations which currently have service arrangements with multiple HSE Community Healthcare Organisations,” according to the HSE.
The IFMS could also help with “the heavy onus of compliance on some organisations and the amount of time and resources required of the HSE to ensure compliance”. The IRG made recommendations in relation to simplifying the process of financial reporting in such cases. The IRG also recommended that a publicly funded support function should be established to help smaller voluntary organisations.
“This could provide access to training (for staff and boards) and shared legal, accounting and other services. IFMS will provide shared accounting and procurement services to these voluntary organisations,” according to the spokesperson.
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