NHS needs to increase its focus on long-term financial planning

An Audit Scotland report, NHS financial performance 2011/12, provides an overview of the financial performance of the NHS in Scotland in the last financial year, as well as financial sustainability and the challenges and cost pressures the NHS faces.

All the boards met their financial targets for the fourth consecutive year, ending 2011/12 with a small combined surplus of £13.4 million against total spending of £10.9 billion.

Auditor General for Scotland, Caroline Gardner, said:

“The NHS in Scotland continues to manage its finances within its total budget, and has achieved this for the fourth year in a row. The annual accounts show a picture of good financial performance, but this doesn’t reflect the pressure boards faced in achieving this. Money was moved between boards, several relied on non-recurring savings, and some needed extra help from the Scottish Government to break even in 2011/12. The requirement for boards to break even each year encourages a short-term view, and the NHS needs to increase its focus on longer-term financial planning.”

Due to on-going cost pressures, boards say they will need to make a total of £271.7 million of savings in 2012/13. All currently predict they will meet their savings targets, but this may become harder to achieve; across the NHS 20 per cent of savings plans are deemed ‘high risk’ by boards themselves, and this proportion is much higher at some individual bodies.

Capital budgets are also falling, which reduces boards’ ability to invest in new ways of working and maintain buildings and equipment.