by EWAN LAMB
There is a significant risk over NHS Borders' financial stability as it continues a struggle to balance its books while relying on millions of pounds of 'brokerage' from the Scottish Government, according to a report from its external auditors Audit Scotland.
The annual audit report for 2019/20 - before the full impact of Covid-19 hit health services - appears to have been virtually unnoticed since it was posted on the Audit Scotland website earlier this month. It outlines a list of daunting financial issues which are bound to be brought into even sharper focus by the current pandemic.
According to the report, expenditure on the Covid-19 response had reached £4.5 million by the end of August 2020.
Audit Scotland warns: "NHS Borders required brokerage [extra cash] of £8.3 million in 2019/20 from the Scottish Government in order to balance its revenue budget. The board remains at Escalation Level 4 in the NHS Scotland Performance Framework. The board must prioritise re-starting the Financial Turnaround programme and quickly assess the financial impact of Covid-19, if financial balance is to be restored."
In the NHS Scotland Performance Framework. Level 4 is described as ‘Significant risks to delivery, quality, financial performance or safety; senior level external support required’. The board therefore received tailored support in 2019/20 in the form of external expertise and scrutiny to attempt to return to financial balance.
Referring to the board's financial sustainability, the report states: "The board has developed a three-year financial plan (covering 2020/21 to 2022/23), but this reports an unbalanced position and forecasts additional brokerage of £7.9 million will be required in 2020/21. Brokerage funding will be subject to repayment if a balanced position is not achieved in this three-year period. NHS Borders will not achieve efficiency savings targets in 2020/21 based on the current assessment of its financial position".
And so far as Value for Money was concerned, Audit Scotland concludes: "Service performance continues to be variable in 2019/20. Only five out of the 13 key performance indicators were achieved, with some waiting time targets missed. Performance will continue to be challenging in 2020/21 due to the Covid-19 response and progressing remobilisation plans."
The report outlines cost pressures during the financial year covered by the audit. Those pressures continued in Integrated Joint Board (IJB) set aside budgets, particularly at its main acute site at the Borders General Hospital. This was due to the requirement to provide surge beds to support delayed discharges. An additional funding contribution of £6.3 million was provided by NHS Borders to the IJB, to allow the IJB to reach a break-even position.
In 2019/20, NHS Borders was required to make efficiency savings of £21.7 million due to deficits brought forward from previous years. This was partly achieved, with the board reporting recurring savings of £7.1 million and nonrecurring savings of £2.9 million. Due to unachieved savings and continued financial pressures, management are reporting a £13.1 million deficit was carried forward in to 2020/21.
The audit report explains: "Scottish Government have indicated that brokerage required to support financial balance in 2019/20 and thereafter will be subject to repayment, with terms to be agreed with the board as part of ongoing financial planning discussions. The financial stability of the organisation remains a cause for concern.
"Scottish Government have tasked NHS Borders to produce a balanced 3-year financial plan covering 2020/21 to 2022/23. However, the plan will not be balanced. Instead, the financial plan will aim to reduce the board’s recurring deficit to an estimated £2-3 million by the end of the 3-year period. There is therefore a significant risk regarding the board being financially sustainable."
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