HSE Director General Tony O'Brien warned Health Minister James Reilly late last year that the health executive's 2014 service plan as then drafted could not fully guarantee patient safety and that the closure of smaller hospitals had been considered.

The correspondence shows that Mr O'Brien felt some of the health savings measures demanded in the Budget were impossible to achieve without risking quality of care and safety.

The HSE chief also told the Minister that savings projected at the time from reviews of medical cards and unspecified' payroll savings were not deliverable, according to the correspondence, released to irishhealth.com under FOI.

In a letter to the then Minister on November 25 last year, during the drafting process for the service plan, Mr O'Brien said 2014 would be very challenging financially - maintaining patient safety, improving service quality and providing the best levels of care were central themes in the plan.

However, Mr O'Brien added: "Unfortunately, these objectives are not fully supported by certain elements of the (draft) plan, which have been included solely to comply with our obligation to remain consistent with savings measures described in the AEV (Government Budget estimates)."

The HSE chief noted that the 'savings challenge' for 2014, totalling over €1 billion, was ‘a considerably more challenging position than we would have anticipated prior to the (October) Budget."

Mr O'Brien told Dr Reilly that since Budget day the previous month, the HSE had been assessing what was achievable within the financial constraints and human resources that would be available in 2014.

He said in doing so, "we were faced with some stark choices", and the development of the service plan entailed consideration of either reducing or closing services, "for example, by limiting home care services or by closing particular services including smaller hospitals, or by significant funding reductions to voluntary bodies."

In the letter, Mr O'Brien said the HSE had decided to adopt a service plan that maximised the financial resources available while protecting core services.

He said measures proposed by the HSE to manage its budget within its major financial constraints included using a reduction in the pension lump sum provision to partly offset the expected 2014 deficit, delaying the commencement of some new developments in areas like primary care and mental health till the last quarter of 2014, and implementing savings in areas like procurement and ‘value for money'.

Mr O'Brien also warned Minister Reilly about major difficulties with the planned savings of €113 million in medical card 'probity' agreed as part of the 2014 Government Estimates process ‘against the specific advice of the HSE and Department of Health'.

He said at most, with the withdrawal of 225,000 medical cards, ‘ a figure which seems improbable on probity grounds alone' the maximum realisable savings would be of the order of only €44 million.

Mr O'Brien said achievement of the full €113 million savings target on medical card reviews was not achievable ‘without significant policy changes, which would have the effect of reducing ineligible persons who currently are eligible, with the social and health consequences that would flow from that.

He pointed out that the €113 million medical card savings target was introduced in the Budget as a measure that would not change current eligibility policy.

The Director General also told the Minister that the Budget stipulation that €108 million in 'unspecified' additional payroll savings be made would not be deliverable in 2014.

Mr O'Brien said these pay savings, a further €80 million in pay savings under Haddington Road and the medical card probity target would build in a ‘guaranteed deficit' of up to €221 million in 2014 alone, with an overall risk of a full year deficit of over €450 million.

The Director General, in the letter, said the financial position for health services in 2014 would be ‘extraordinarily challenging', the choices available to the HSE to develop the plan were very limited and the draft service plan was ‘'the best we can provide in the current circumstances'.

Mr O'Brien said if the HSE had implemented ‘more troubling' savings targets outlined in the Budget estimates, it would have led to measures 'that would have created enormous risks to quality, access and safety'.

He told the Minister some Budget measures proposed for the health services were simply not implementable and which built in a significant inevitable deficit, the risk of which could not be mitigated by the Directorate (of the HSE) without significant alternate service cuts which would have a serious adverse impact on quality, access and safety'.

In a follow-up letter to the Minister two days later, Mr O'Brien sought, having discussed the matter with senior Department of health officials, an additional €221 million, which he said would address the general risk associated with the medical card probity target and the payroll cost reduction target.

Minister Reilly, in a response to Mr O'Brien on December 13, did not commit to extra funding but asked the HSE chief to bring to his immediate attention any specific potential threats to patient safety.

He asked Mr O'Brien for confirmation that none of the items in a long list of service requirements with no funding provision for 2014 in areas such as cancer services, kidney dialysis and critical care 'involve statutory requirements the HSE is obliged to meet' in 2014. Mr O'Brien later confirmed that none of these involved statutory requirements.

Minister Reilly also asked that the HSE change its service plan from having no patient waiting longer than nine months for hospital treatment to eight months.

Three days later, Minister Reilly wrote to Mr O'Brien confirming that following consultations between the Departments of the Taoiseach, Public Expenditure and Health, an additional E47 million would be applied to the medical card budget in the HSE service plan, thereby reducing the ‘probity target' for medical card reviews down from €113 million to €23 million.

The Minister said the identified €108 million in payroll savings, which Mr O'Brien had said were unachievable, would be further considered by the three Government departments with a view to finalising realistic implementation plans, as would a further €63 million in savings that remained to be identified.

"Should that process fail to identify offsetting savings measures that are acceptable, it will be a matter for Government to consider further funding measures to ensure a safe and quality health service for 2014." Dr Reilly told Mr O'Brien.

Mr O'Brien, in response, welcomed the provision of the extra €47 million, which was now to be included in a revised service plan.

On patient safety, he said he had previously expressed concerns about this in the context of his concern at the prospect of entering the year with an unacceptably high level of deficit risk which would have threatened a mid-year financial crisis.

This would, Mr O'Brien said have left the health service with very little room for manoeuvre and lead to measures 'that would have a direct adverse impact on the level, quality and quantum of care provided to the most vulnerable in our society'.

In that context, he said, the Minister's decision to reduce the medical card probity target and to have a verification process on the €108 million in pay savings was vital to the reduction of deficit risk to conventional levels.

In the event, the HSE service plan, following weeks of delays and revisions, was approved by Government and published on December 18, and included a €1 billion cuts and savings target, the unspecified pay savings of €108 million and delays and cuts in some health projects and services.

While the medical card 'probity target' was reduced to €23 million, continuing reviews and removals of medical cards from vulnerable and seriously ill patients caused a public furore this year and the Government was forced to abandon the review process.

It promised a new medical card eligibility system to take medical and not solely financial need into account. However, it has yet to be confirmed whether new Health Minister Leo Varadkar, currently trying to prioritise a free GP service for all, will implement an interim eligibility system based on medical need.

The latest financial performance report from the HSE showed that it was €163 million in the red at the end of May.