A CASH crisis at its flagship hospital has forced NHS Highland to ask the Scottish Government for a £2.5million bailout.
A massive overspend at Raigmore in Inverness has plunged the health board deep into the red.
Forecasts of a break-even position at the end of the financial year have failed to materialise and savings of £21.9million will have to be made in 2014-15.
The biggest single factor in the battle to balance the budget is the £9.5million overspend at Raigmore Hospital. It has worsened in recent months, mainly due to increases in theatre costs, orthopaedic lists and cancer drugs.
Health board chairman Garry Coutts admitted yesterday he was “disappointed” NHS Highland had been forced to ask the government for a loan for the first time in the decade he has been at the helm. He said: “It has been a difficult year for us for a variety of reasons and we have had difficulty getting control over all of our budgets.
“However, if you look at our total budget of more than £750million, it is a relatively small overspend and I’m confident that we will be able to repay this loan shortly. I would much rather ask the government for a loan than even contemplate reducing services for patients.”
Mr Coutts said the overspend was caused by a number of factors, including paying for locums because the board had been unable to fill consultant posts, expensive new drugs and equipment becoming available and the need to run extra clinics to meet waiting times targets. He added that NHS Highland would not be in its current predicament if, like local authorities, health boards were allowed to hold reserves.
Mr Coutts said: “The NHS bodies are expected to break even every year, but we are not allowed to carry reserves.
“We are not allowed to overspend and we don’t want to underspend because we want to spend every penny we have on patient services. We have to get this huge machine to break even every year. It’s a bit like trying to land a jumbo jet on a postage stamp.
“It is disappointing that we have had to borrow money. I wish we had broken even and it means we have to redouble our efforts to be as efficient as possible next year and in future years and I’m confident we will achieve that.”
Members of the NHS Highland board will consider the situation at a meeting in Inverness on Tuesday. Director of finance, Nick Kenton, will report: “The need to obtain brokerage is clearly disappointing and emphasises the need for robust savings plans and controls, which deliver recurrent savings, and reduce the board’s reliance on non-recurrent resource, which has grown in recent years.”
The £2.5million is expected to have to be repaid over two years starting in 2015-16.
Mr Kenton will tell members that the most significant overspend of £9.5million is at Raigmore, where the financial position has deteriorated by £300,000 since February.
He says: “While interim management arrangements have now been put in place at Raigmore, it is too late in the financial year to expect any further improvement.”
A Scottish Government spokeswoman said: “We expect all health boards to manage their finances within their allocated resources and they must prioritise in order to provide high-quality services for patients.
“However, on some occasions, some boards may require additional resources within that financial year to deal with specific financial pressures.
“Where this does happen, a clear plan is put in place for health boards to repay the funding over subsequent years to ensure long-term financial balance.”
Independent Highlands and Islands MSP John Finnie said last night he understood the difficulties facing health boards in the current economic climate.
He said: “These are very challenging times and I’m pleased the Scottish Government is going to be able to help with these challenges.”
He added it would be very difficult for health boards to build up reserves – if they were allowed to do so – and pointed out it was better to have “a system of ongoing financial management” which meant it was not necessary to borrow money, except in exceptional circumstances.
Labour Highlands and Islands MSP Rhoda Grant said: “I’m not entirely surprised NHS Highland has had to go to the Scottish Government for a loan.
“I’m glad they are going to get the money as it’s important for patient care in the Highlands. Unless care is funded, the people who should be receiving that care – those who are the most vulnerable in our society – are going to lose out. However, my concern is that it will have to be paid back and that means more money will be coming out of future budgets.”