NHS Highland risks missing its target of breaking even at the end of the year by £16.4million – and the situation could get worse.
Finance director Nick Kenton will reveal at next Tuesday’s board meeting that the board has overspent its revenue budget by £4.3million in the first quarter since April.
He is also expected to say that an additional £6.1million of further financial risks may crystallise during the rest of the year.
Revenue generally relates to day-to-day costs such as staff salaries, drugs, surgical dressings and represents the majority of expenditure.
Analysis in Mr Kenton’s report shows that there is an overspend of £2.7million to date – and a projected £10million by the year end – which is entirely due to overspends in Raigmore Hospital. This is made up of recovery plan actions that did not materialise in previous years, and other pressures such as net spend on waiting times.
North and West Highland shows a current overspend of £1million and a projected year end overspend of £5.5million, mainly due to out of hours medical locums, underachieved savings and vacant practice costs.
Argyll and Bute is showing an overspend to date of £0.5million and a |£1.5million projected position due to a savings shortfall and ongoing pressures with medical locums.
His report states that “The effective management of pay budgets in delivering our services remains a key challenge”, with locums or agency staff being used in several hard-to-fill vacancies.
It adds that costs have tended to exceed the salary budgets available – often by a “significant amount”, meaning savings have had to be made elsewhere.
Mr Kenton is expected to list a range of actions being introduced to achieve break-even, including a review of commitments in non-clinical areas which could save £2million, and cost reduction programmes in north Highland saving £2.4million and £1.5million in Argyll.
But successfully applying these measures will still leave a £7million shortfall.
