Top-up payments were being made to staff at the country's main children's hospital as a financial report warned that the hospital's future financial viability may be under threat, it has emerged.

The most recent directors' report and financial statement filed from Our Lady's Children's Hospital in Crumlin contains a warning that the hospital may no longer be able to continue as a going concern due to the large 'rollover' financial deficits it had accumulated in recent years.

Asked about this, the hospital told irishhealth.com it was was satisfied it met the necessary criteria to continue as a going concern.

Crumlin is one of a number of hospitals currently under fire over top-up pay to senior staff. It was recently revealed that the hospital's CEO, Lorcan Birthistle, was receiving an extra €30,000 on top of his basic salary of €110,000, with the top-up allowance funded from the hospital's on-site commercial activities.

The hospital's directors' report and financial statements, submitted in August of this year, and seen by irishhealth.com, warned that the hospital may not have sufficient resources to continue as a going concern 'over the period from the signing of these financial statements until the receipt of the next scheduled revenue allocation in January 2014'.

The auditors, in the accounts for 2012, pointed out that at December 31 last year, Crumlin's cumulative revenue deficit stood at €20 million. The hospital had built up this 'legacy deficit' since 2007.

The auditors said the deficit in 2012 predominantly arose due to the revaluation of the hospital site, which resulted in an impairment loss of €12.4 million. Crumlin received a €3.2 million supplementary allocation from the HSE last year to ease its legacy deficit, but its rolling debt remains substantial.

The hospital directors' report points out that attempts have been made to ensure that Crumlin operates within its HSE revenue allocations and the hospital has sought to reduce the cumulative revenue allocation deficit through cost reductions and increased efficiencies, 'without curtailing the quality or level of services offered to its patients'.

"However, in assessing going concern, the directors have identified that the hospital may not have sufficient resources to continue as a going concern over the period from the signing of these financial statements until the receipt of the next scheduled revenue allocation in January 2014," the report states.

It adds that the directors of the hospital are currently in discussion with the HSE on the funding of the cumulative deficit and the finalisation of the 2013 revenue allocation to ensure no curtailment of services is required.

The report, lodged with the Companies office in October, says Crumlin recognised that the continued support and funding by the HSE in relation to its annual allocation and the funding of the cumulative deficit is critical in ensuring that the hospital continues as a going concern.

It points out that notwithstanding the legacy deficit, Crumlin had operated at or near breakeven on its everyday spending since 2008, despite an annual decrease in its HSE funding, while incresing the level of services it provided.

It added that the directors were confident that the negotiations with the HSE would be successful and that sufficient revenue allocations would be provided in a timely manner to ensure that the hospital continued as a going concern for a period not less than 12 months from the signing of the financial statements.

"The financial statements do not include the adjustments that would result if the hospital was unable to continue as a going concern," the report states.

A number of hospitals, including Tallaght in Dublin and Crumlin, at the start of this year received funding from the HSE to alleviate to ease some of their cumulative debt burden built up over the years. However, these deficits have not been cleared and some hospitals still have substantial 'rolling' debts.

A Crumlin Hospital spokesman told irishhealth.com that 'going concern' was a standard test applied by auditors in the preparation of financial statements of account.

"The hospital's auditors and the Board of Directors are satisfied that the hospital meets the necessary 'going concern' criteria. The reference to 'going concern' has been in the accounts for a number of years in light of the significant deficit incurred in the accounts of 2007. It is likely that a version of 'going concern' is in every set of hospital accounts where an historic deficit exists."

The spokesman added that the legacy deficit did not impact on the delivery of services in line with the funding provided by the HSE. "As the accounts note, the hospital has been operating at or near break-even each year since 2008."

"As noted in the accounts, the directors are currently in discussions with the HSE in connection with the funding of the cumulative revenue allocation deficit and the finalisation of the 2013 revenue allocation to ensure no curtailment of services is required."

The hospital said while these discussions continued around specific issues, it was not envisaged at this point that patient services woulod be curtailed in the remainder of 2013.

Crumlin was last week named as one of many hospitals that had confirmed pay pollcy compliance on top-ups but its letter on compliance to the HSE had indicated exceptions to official pay policy, and the HSE said it was therefore not fully compliant.

A HSE audit has identified six senior Crumlin staff receiving allowances from HSE funds and one payment, the CEO's top-up, from non-HSE funds.

The hospital has stressed that no charitable donations have been used to top up its CEO's salary. The basic salary is below the rate of that of many hospital CEOs, and Crumlin had topped it up to bring it nearer to this rate. It says it is seeking approval for a more appropriate basic remuneration rate for its CEO.

The HSE says it is now undertaking further process of verification and clarification from agencies categorised as pay compliant where there is recorded deviation from pay policy, and until this is completed none these agencies can be deemed fully compliant.

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