NHS Lothian in £70 million funding crisis

Agency staffing costs are making a large hole in NHS Lothian's finances and savings need to be found. Picture (posed by models): Tony Marsh
Agency staffing costs are making a large hole in NHS Lothian's finances and savings need to be found. Picture (posed by models): Tony Marsh
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HEALTH chiefs have warned that “radical” solutions and more Government cash are needed to tackle a massive £70 million funding gap in NHS Lothian.

A range of controversial measures including reviewing the use of some costly drugs, a recruitment freeze for non-clinical staff and selling off hospitals like the Astley Ainsley and Liberton are to be considered.

Health board chief executive Tim Davison warned cuts alone will not be enough to balance the books and appealed for Scottish Government help.

“We need radical reform in the way we do things and we need additional investment.

“The financial conundrum that we are describing here cannot be resolved with just efficiencies.”

The dire financial situation has led to new calls for the controversial PFI deal for the Edinburgh Royal Infirmary, which costs taxpayers £56 million every year to be reviewed. Union bosses have warned that patients will suffer if hospitals are forced to close as it will have a knock-on impact on the bedblocking problem and push up waiting lists.

A rising population and soaring drug prices are among the factors stretching Edinburgh’s health budget to breaking point. Finance bosses remain hopeful they can claw back a current £9.4m overspend but warned more drastic measures may be necessary to ensure patients receive the same level of care in future.

Senior board members have branded the cash crisis “alarming”. Lawyer Julie McDowell, of the audit and risk committee and remuneration committee at NHS Lothian, said the financial outlook painted a “very dire picture”.

She said: “We have a very serious deficit if we are actually required to meet our targets. We are very much in the hole and it’s an ever-worsening situation,” she said.

“Is the message that we simply cannot run a quality health service with the money that we have been allotted?” Seven months into the financial year, Lothian figures show pay is already £2m in the red and prescription drugs are nearly £3m over budget.

A further £4m investment is needed to avoid another waiting times crisis with the board admitting it was battling to meet the national 12-week target. To overcome the pressures, selling off land is likely with Astley Ainsley and Liberton hospitals long mooted for closure. Millions could be raised by selling the Sick Kids hospital at Sciennes once it has moved to Little France in 2017.

Tom Waterson, Unison branch secretary, said NHS Lothian was running out of assets to sell and urged health chiefs to challenge the draining PFI deal for the ERI.

“Unfortunately they keeping selling off more and more each year so there is very little left,” he said. “We need to stop paying money out to agencies first.

“I would assume they must be looking at the Astley Ainsley and Liberton. The problem is we still need beds. It will impact on patient care if we can’t get patients out of acute hospitals quick enough in the timely fashion they should be. What they need to do is get the step-down facilities right in the communities.”

Over the years, NHS Lothian has been able to fund a range of flagship projects by selling valuable land. More than £100m was generated in the decade leading up to 2007, including £33m for the old Royal Infirmary at Lauriston.

David Marshall business analyst for ESPC, said they could expect to do the same again if the “highly desirable” sites were put on the market.

He said: “On the face of it, these would be developments of huge potential that would be extremely attractive based on location alone. You would be likely to see a pretty high demand for anything in these areas. .”

In the coming year, the health board’s budget increased by 4.1 per cent to nearly £1.2 billion, but an Audit Scotland report found such rises only equate to a 1 per cent boost in real terms.

Financial pressures such as staff pay, the burgeoning price of treatments and rising pension contributions, are weighing heavy on the purse strings.

All the while, demands on NHS services are escalating as the Capital grows ever larger. It is predicted that Edinburgh – Scotland’s fastest growing city – will boast a population of 600,000 by 2034.

With evermore elderly residents and people with long-term health conditions, the health service will battle to deliver more with less.

Susan Goldsmith, director of finance, said the health board was in an “extremely fragile” position.

But she identified key areas for cost-cutting, including: Reducing the £1 million-a-month bill for agency nursing cover; freezing recruitment on some backroom staff jobs; reviewing the use of the costly Hepatitis C drug Sofosbuvir, which has already cost £3 million more than anticipated; ensuring money is diverted towards plugging the overspend rather than investing in new projects. With some of the highest spending on agency staff in Scotland, health chiefs intend to slash this costly practice.

However, cutting back on agency workers has been made more difficult following the review into Mid-
Staffordshire Hospital where hundreds of patients are thought to have died as a result of poor care. Now, wards must have full staff.

Health bosses will meet again in the new year to decide how to plug the estimated £70m funding gap for 2015/16 though Mrs Goldsmith warned there would be “no easy answers”.

She said they were looking at a number of cost-cutting measures. “We still have more production kitchens than we need, we will look at what we can do on procurement and on drug use,” she said.

She referred to a “Green Bag Scheme” – that sees patients bring their own drugs when they come into hospital rather than being prescribed for a second time.

“In the past they wouldn’t have brought their own drugs into hospital so we would 
have prescribed more, so we would have had waste in the system.”

And while the region struggles to afford this year’s increasing bill, members of the local NHS board said the status quo was “unsustainable” for the years ahead.

Scottish Tory health spokesman Jackson Carlaw called on the Scottish Government to do more. “The fact it is short-changed by the Scottish Government funding formula is still a major issue, and one that needs to be fully addressed,” he said.

Finding resources

A SCOTTISH Government spokesperson said: “It is appropriate for health boards to continue to be planning their expenditure and projected savings at this stage ahead of the next financial year. The budget planning process helps ensure that the NHS has the resources it needs to deliver care for the people of Scotland and all boards are expected to work within their allocated funding to meet the healthcare needs of their population. However we do not underestimate the challenges that Scotland’s NHS is facing, with an increasingly elderly population and expensive new drugs putting additional pressure on resources.

“That is why, despite Westminster cuts to the Scottish Government budget, we have protected spending on Scotland’s health service, with an overall increase of £256 million in frontline NHS resource spending planned for 2015/16. This increase will take the overall health budget to above £12 billion for the first time.

“We have already increased NHS Lothian’s budget by 4.1 per cent in 2014/15 and they are due to receive an additional £32.6m in the next financial year, bringing their total funding to £1.2bn for 2015/16.

The Scottish Government is committed to continuing to support NHS Lothian in further developing their budget plans to ensure they can continue to provide quality care and treatment for the people

in their area.”