NHS Highland currently has no plan to deal with a £42 million funding gap blamed on inflation, pay rises and pre-existing financial pressures with 'very turbulent waters' predicted
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NHS Highland currently has no plan to deal with a £42 million funding gap being blamed on a combination of inflation, pay rises and pre-existing financial pressures.
The health board hopes a Cost Improvement Programme (CIP) worth £26 million can be agreed with the Scottish Government to reduce the gap, but the government’s director of health finance and governance, Richard McCallum, previously told all health boards that further funding “will not be forthcoming” this year.
Less than a year ago NHS Highland’s finances were believed to be on the road to recovery after a difficult period, but it is now having to strive again to identify possible cuts to spending and investment to make ends meet.
Previously chairman of the board Professor Boyd Robertson praised the “scale of our financial recovery” but has now warned that clawing back the deficit may be more difficult than ever before.
“We are entering very turbulent waters I suspect when it comes to funding,” he said.
“We have shown in the past three years that we can deliver financial savings but there comes a point where it becomes increasingly difficult to arrive at these savings.”
The board’s finance director, David Garden, also admitted there are “limited opportunities for brokerage” – the Scottish Government term for a short-term bailout at the end of the financial year so boards break even, as they are legally required to do.
“After the first quarter the government is going to review current financial plans and further discussions will be had at that time,” he said.
He said the year ahead would be “very challenging” given the current £42 million budget gap and a £26 million savings target, along with uncertainty around how much expenditure would be required to deal with Covid-related pressures.
Budget pressures from previous years total £49.2 million while a pay uplift amounts to £16.8 million and inflation accounts for £23.8 million.
Anticipated Covid-related spend totals £31.5 million with additional adult social care investment amounting to £20.5 million.
The budget also includes post-Covid remobilisation costs (£11.9 million), anticipated allocations of £133.9 million and and other pressures totalling £869,000.
