Spending watchdog’s concerns as two Scottish health boards may need to be bailed out

By The Press Association3rd October 2018News ScotlandAyrshire, Business / Funding / Finance, Finance, Government / Politics, Highlands, Hospitals, News Scotland, NHS

Scotland’s public spending watchdog has expressed “serious reservations” about the finances of two health boards which could both require to be bailed out with £22 million of government cash.

Auditor General Caroline Gardner spoke about the “significant financial challenges” that both NHS Highland and NHS Ayrshire and Arran face.

NHS Highland needs to make more than £50 million in savings, but has an increasing number of high earners amongst its staff, Audit Scotland said.

It could need a brokerage loan from the Scottish Government of between £19 and £22 million to balance the books for 2018-19, while NHS Ayrshire anticipates it will require £22.4 million in brokerage – although the spending watchdog warned it might require more.

Ms Gardner (pictured) said: “Both NHS boards face significant financial challenges, and I have serious reservations about their ability to make the changes needed to achieve financial balance in future.”

The Audit Scotland reports were published days after senior medics in NHS Highland complained of a “long-standing culture of bullying”, although the medical director there insisted he did “not recognise” this.

The report said NHS Highland had eight clinical staff employed with a salary of more than £200,000 a year, including two earning in excess of £400,000.

Annual reports and accounts showed “the number of clinical staff earning a salary of greater than £200,000 per annum has risen to eight individuals (previously four) and of these eight, two are earning in excess of £400,000,” Audit Scotland said.

The health board board needs to make cuts of £52 million in 2018-19, with the report warning of a “significant risk” that bosses will fail to meet this target, with only £30 million of savings having been identified by August this year.

As a result it said NHS Highland would need brokerage cash of between £19 and £22 million in 2018-19 – adding it was “increasingly likely” further assistance will be required to help it break even over the next three financial years.

“The board faces continuing challenges that the savings identified and delivered will be one-off in nature contributing to the long-term difficulties in ensuring financial sustainability,” the report said.

Meanwhile NHS Ayrshire and Arran anticipates it will need a £22.4 million brokerage loan from the government this year.

This was after it came under financial pressures in 2017-18, when it also required £23 million from the Scottish Government.

Audit Scotland said “key cost pressures” which led to this situation were “keeping hospital beds open to manage demand that was not budgeted for”, along with unachieved efficiency savings and “underlying financial pressures” which were carried forward from 2016-17.

The board needs to make savings totalling £26.1 million this year, but almost £10 million of these have still to be found or are classed as “high risk”.

Spending on hopsital services was £11.5 million over budget last year, “mainly as a result of meeting the demand for unscheduled care arising from increasing emergency admissions as well as a high number of patients who are fit for discharge remaining in acute hospital beds”, Audit Scotland said.

The watchdog warned: “There is a high risk that NHS Ayrshire and Arran will not achieve its financial plans for 2018-19 and will require more than the anticipated £22.4 million brokerage from the Scottish Government.”

John Burns, chief executive of NHS Ayrshire and Arran, stressed the board was “committed to delivering safe, sustainable services”.

He stated: “Financial sustainability has been an increasing challenge over recent years. This has been due to increasing unscheduled care demand, which has required extra hospital beds to be opened, as well as cost pressures, including new drugs and agency medical costs to sustain services. However, 2017-2018 was the first year we received financial brokerage.”

Mr Burns added that the board was now going through a “transformational change programme” which would redesign services, but said it could take “several years before the benefit is seen in terms of operating costs”.

A spokeswoman for NHS Highland said: “NHS Highland’s financial challenges have been widely reported and we continue to work closely with the Scottish Government as we develop plans to return to financial balance.”