NHS Grampian is wrestling a £60 million budget gap this year – and will not be able to rely on the “one-offs” that helped balance the books in March, the finance director has warned.
The “significant” black hole has been forecast by senior officials, even with plans to slash 3% – £16.5m – from spending plans.
Scottish ministers have returned NHS Grampian’s financial plan for 2023-24 to north-east chiefs, asking for extra clarity on the proposals.
Tasked with “re-examining” the proposals, Mr Stephen warned it would still have to entail “striking a balance between financial constraints and operational pressures”.
The north-east health board managed to meet the three key financial targets set out by the Scottish Government last year.
One-offs won’t balance NHS Grampian budget this year
But a “challenging” year ended with a “very challenging” month, before the budget – £60m short – was agreed in April.
In March alone, NHS Grampian spent £4.76m more than planned due to inflationary pressures in several departments.
“This is higher than the monthly overspends recorded earlier in the financial year,” Mr Stephen will tell board members on Thursday.
In April, he revealed the organisation had been operating at a £2m shortfall for many months in 2022-23.
But despite worsening inflation, last year’s books finished less in the red than was feared.
Last-minute funding from Holyrood, addressing specific Grampian troubles, helped reduce the projected £14.9m overspend feared only a month before.
This covered planned care, staffing costs and the drug costs of the NHS Grampian vaccination programmes.
Another £5.6m was saved by staff using up leftover leave carried forward from 2021-22.
But Mr Stephen warned: “Both of these items are one-offs. The underlying financial position continues to be very challenging.
“It highlights the financial challenge facing the board – we have achieved a balanced position in 2022/23 thanks to a combination of non-recurring measures and funding from the Scottish Government for Grampian-specific system pressures.”
NHS Grampian expecting budget gaps for years to come
The NHS Grampian books are not expected to be balanced in any of the next five years.
As the financial plan was agreed, Mr Stephen said in April: “The scale of the saving required and the challenge of delivering these in the current operational context should not be underestimated.”
It comes as minutes of a meeting of the health board’s finance committee reveal their specialists’ hefty wishlist – and the lack of available budget to bring what’s needed to Aberdeen Royal Infirmary.
Health chiefs agreed that as a teaching hospital, there is a need to maintain up-to-date equipment to continue innovation in the area.
NHS Grampian keeps a list of kit needing replaced, ranked by its condition and need.
There were hopes for £15m worth of the very latest equipment being brought in this year.
But the minutes reveal the “extremely tight” funding will likely total between £3m and £4m – though this could go up depending on Scottish Government funding.
Chief executive ‘grateful’ for continued government support
Ahead of Thursday’s board meeting, NHS Grampian chief executive Caroline Hiscox said: “Our financial position is “important context for the challenges we face.”
Last year was the first time the board approved a financial plan that was not balanced. It is expected to remain the norm until 2028 at least.
Prof Hiscox wrote in a report: “Both the NHS Grampian chairwoman [Alison Evison] and I have had helpful discussions recently with the Health Secretary and the senior NHS Scotland leadership team from the Scottish Government.
“These discussions were about the actions being taken by NHS Grampian to improve our system’s ability to cope with the sustained high level of demand, and increased acuity of patients, in both unscheduled and planned care.
“[All acknowledge] the scale of the challenge to recover and transform health and care not just in Grampian but across Scotland, and the resource shift required for early intervention and tackling inequalities.
“I am grateful for the continued support from Scottish Government colleagues.”
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