Health board “is acting” on auditors’ concerns

The chair of NHS Highland says the health board is taking action to address concerns raised in a new audit report.
The chair of NHS Highland says the health board is taking action to address concerns raised in a new audit report.

NHS Highland, the health authority which covers Bute, says it is acting on the issues raised in a report on its financial management by the Auditor General for Scotland.

The report, on the 2013/14 audit of NHS Highland, was prepared for the Scottish Parliament’s Public Audit Committee.

Published on Friday, the report states that there were weaknesses in financial management and reporting to board members in NHS Highland during the financial year.

Garry Coutts, chair of NHS Highland, said the board took the report “extremely seriously” and stressed that actions were being taken to tackle any failings identified.

He said: “NHS Highland has had a sound track record of delivering financial targets alongside other key performance targets. We therefore take this report very seriously and are taking steps to address the issues raised.”

The report states that, in giving her opinion on the board’s accounts, the auditor highlighted that weaknesses in financial management were a major factor in the board requiring brokerage of £2.5 million from the Scottish Government to break even.

Throughout the year, the report states, finance reports to the board continued to forecast a break-even position at year-end, and did not sufficiently detail plans for resolving NHS Highland’s financial difficulties.

Mr Coutts commented: “Our finances were scrutinised at various committees which were chaired by non-executive directors and which were held in public. These include the Improvement Committee and the Highland Health and Social Committee. In addition, our finances were raised in various board briefings throughout the year.

“Furthermore two non-executive directors sit on a newly-established ‘Delivering Financial Balance Programme Board’, and are able to receive as much detail as they feel they need to help to ensure that the executive team is held to account in terms of ongoing financial management.”

The report raised a particular issue relating to the health board not having been advised in December 2013 that NHS Highland might not break even at the year end, and that officers did not formally report the brokerage agreement with the Scottish Government to the board until the end of the financial year.

Mr Coutts stated: “We accept that the board should have been formally notified of the situation earlier. The report pointed out that officers updated board members about the extent of the financial challenges at informal board development meetings.

“It is a recognised part of good governance that it is sometimes entirely appropriate for the board to have in-committee sessions and have private briefings.”

The report also points out that the need for brokerage was mainly due to an overspend in operating costs at Raigmore Hospital. This, NHS Highland Mr Coutts said, had been highlighted to the board’s Audit Committee during the year.

Mr Coutts stated: “We note that it is reported that we advised the auditor that the full extent of overspending and weaknesses in financial control at Raigmore Hospital did not emerge until late 2013/14, following the appointment of a new management team in December 2013.

“We are confident that the hospital’s new management team is working assiduously to address budget management issues there with – as the report points out –training is being organised for all budget holders and our establishment of a Delivering Financial Balance Programme Board, which includes two non-executive directors, to address the delivery of savings.

Mr Coutts added that NHS Highland welcomed the fact that the report acknowledged the financial pressures it faced and the costs associated with hiring agency staff, mostly locum doctors, and with meeting national waiting time targets contributed to the need for brokerage.

He said: “NHS Highland is currently being supported by the Scottish Government through the Being Here programme, with £1.5 million invested in testing innovative ways of recruiting to healthcare professionals, and particularly GPs, in rural areas of Scotland. We hope that, in time, this will help us to reduce on expensive reliance on using locums.”

The report alludes to NHS Highland’s reliance on non-recurring savings to help achieve financial break-even.

“Such savings will remain an important part of our financial management planning, but we are determined to make more savings on a recurring basis: in other words, effect savings that we will make every year,” said Mr Coutts.

“As well as all the day-to-day improvements and efficiencies which our staff are working very hard on, we continue to develop strategies that will result in significant recurring savings over time.”

These include a range or work programmes which have significant recurring benefits such as:

* Working with doctors and pharmacy colleagues to reduce unnecessary expenditure on drugs (expected to yield savings of £2 million)

* Reducing expenditure on medical locums by providing safe and effective alternatives (£1.6 million)

* Redesigning out-of-hours services to increase the range of skills and professionals providing them, thus ensuring that these services are less dependent on doctors (£1 million)

* Making better use of high-cost surgical skills and services which are delivered across four main sites in Highland (£1 million)

* More effective procurement of goods and equipment (up to £1 million)

* Ensuring better management of orthopaedic referrals by making sure agreed pathways are followed (around £0.9 million).

Mr Coutts continued: “The report is right to point out that we recognise the significant challenges we face in identifying and delivering savings.

“Through a range of initiatives, all underpinned by our adoption of the Highland Quality Approach, through which we will deliver better health, better care and better value, we are continuing to work on delivering the savings we require.

“But I wish to assure the people we serve that we will do so without compromising on the quality of the services we provide and on patient care. We are determined to continue to do better and to continue to improve our services within the resources made available to us.”