Scottish health services ‘not financially sustainable’

25 Oct 18

Health services in Scotland are not financially sustainable in their current form, and immediate change is needed in how healthcare is accessed and delivered, the Scottish Government has been warned.

In her annual overview, auditor general Caroline Gardner said the NHS was struggling to break even against a financial backdrop which had seen budgets fall in real terms by 0.2% in 2017-18.

Health boards had achieved unprecedented savings of almost £450m by relying on one-off savings, but these were not sustainable given workforce challenges, rising drug costs and a significant maintenance backlog, she said.

Three boards had been forced to seek loans from the Scottish Government, and most relied heavily on short-term measures to balance their books.

Earlier this month, health secretary Jeane Freeman announced that boards were to have their debts written off as part of a new, more flexible three-year financial framework which would allow them to break even over a three year period instead of on an annual basis.

Further work would be carried out to understand the implications of that decision, said Gardner.

However, she said projected funding increases were unlikely to be enough to keep pace with rising health costs and the need for investment in the NHS estate.

The report also found that performance against the eight key national performance targets continued to weaken while the number of people on waiting lists across Scotland rose.

“The performance of the NHS continues to decline, while demands on the service from Scotland's ageing population are growing,” said Gardner.

“The solutions lie in changing how healthcare is accessed and delivered, but progress is too slow.

“The scale of the challenges facing the NHS means that decisive action is needed now to deliver the fundamental change that will secure the future of this vital and valued service.

“Alongside longer term financial planning, this must include effective leadership, and much more engagement with communities about new forms of care and the difference they make to people’s lives.”

Among the report’s recommendations was a “robust and transparent” financial management system for monitoring boards’ new year-end flexibility and three-year break-even arrangement, as well as a national capital investment strategy to ensure capital funding was strategically prioritised.

It also called for the publication of clear and easy to understand information on how the health funding system worked, including how much funding was provided, what it was spent on, and the impact it had had on people’s lives.

Ms Freeman welcomed the report’s recommendations, which she said the Scottish Government was already taking forward, and defended the government’s record.

"NHS funding has reached record levels of more than £13bn this year, supporting substantial increases in frontline NHS staffing, as well as increases in patient satisfaction, reductions in mortality rates, falls in healthcare associated infections, and Scotland’s A&E performance has been the best across the UK for more than three years,” she said.

Eleanor Roy, CIPFA policy manager health and social care, said:  “This is a reflection of the challenges being faced by NHS everywhere in the UK, and strengthens the case for more sustainable, longer term, financial planning.

“We have previously welcomed the Scottish Government’s medium term financial framework, and the new flexibilities for health boards, as a positive step in the right direction to achieving sustainability, but as this report indicates much more work must be done.

She added: “We support the auditor general’s call for a capital investment strategy, which we understand is currently in progress, and agree that a ‘robust and transparent financial management system’ is essential to manage and monitor the new financial arrangements for health boards.”

Did you enjoy this article?