The north health board has slashed its overspend from £8.2million to just under £2million – but £3million of the reduction is thanks to extra funding from the government.
NHS Highland finance director Nick Kenton is still predicting that the health board will break even by the end of the financial year, despite there only being two months left in which to achieve this.
But Raigmore Hospital in Inverness is still likely to overspend by £7.8million by the end of the financial year
In a report to be considered at a health board meeting in Inverness on Tuesday, Mr Kenton says: “The position at the end of December continues to estimate a forecast of financial break even.
“This is dependent on the continued delivery of savings, together with successful management of underlying and emerging, in-year cost and service pressures, particularly within Raigmore unit.”
He points out that the position has improved by £6.2million since the figure for the end of October, reported at the December board meeting.
He says £2.6million of this is due to improvements in all parts of NHS Highland, except the north and west Highland unit, which continues to forecast an overspend of £2.4million.
And he stresses that these improvements have been made “despite significant pressures in additional activity and drug costs”.
But Mr Kenton also reveals that £3million is due to the Scottish Government’s decision to give NHS Highland an extra £6.5million to bring it within 1% of parity with other health boards a year earlier than planned.
The government has agreed that NHS Highland can take £3million of this funding in 2014/15 and £3.5million in 2015/16.
The most significant overspend still relates to Raigmore Hospital, even though it has reduced its overspend by £800,000 since the end of October.
The reasons for the saving include reductions in supplementary staffing and reviews of additional activity.
Mr Kenton points out that, this year, the board was faced with needing to meet a “challenging” savings target of £22.4 million.
And he will tell the board: “It is important that an absolute focus and attention to detail is maintained in order to ensure delivery of the final £2million required and the successful management of the underlying risks.”