'Serious reservations' over finances at two NHS boards

The reports on the health boards come ahead of one on the overall performance of the NHS in Scotland

Scotland's auditor general has said she has "serious reservations" about the ability of two health boards to balance their books.

Audit Scotland reports on NHS Highland and NHS Ayrshire and Arran warn they may not deliver services within budget or meet all savings targets.

The watchdog said the health boards required millions of pounds in loans from the Scottish government.

The report said significant challenges were likely to remain in coming years.

NHS Ayrshire and Arran said it was "committed to delivering safe, sustainable services", and NHS Highland said it was working with the government to develop plans to balance its finances.

'Significant challenges'

NHS Ayrshire and Arran has required £23m in loan funding, known as brokerage, from the government in 2017/18 to cover cost pressures.

The auditor general's report said additional loan funding would also be needed this year, as it faces a projected shortfall of £22.4m.

The report said the board would not be able to balance its budget by 2020/21, and that it has no plans to repay the loans to the government.

NHS Ayrshire and Arran needs to implement its transformation change improvement plan and act on the recommendations of an external review, the report said.

Recovery plan

NHS Highland required a loan of £15m from the Scottish government in 2017/18. It faces an expected funding gap of between £19m and £23m in 2018/19.

The board is producing a longer-term recovery plan, but the Audit Scotland report expressed "serious concerns" about its ability to deliver planned savings and achieve a balanced budget by 2020/21.

Auditor General Caroline Gardner said: "Both NHS boards face significant financial challenges, and I have serious reservations about their ability to make the changes that are needed to achieve financial balance in future."

The auditor general will report on the overall financial health and performance of the NHS in Scotland later this month.

An NHS Highland spokeswoman said: "NHS Highland's financial challenges have been widely reported and we continue to work closely with the Scottish government as we develop plans to return to financial balance."

'Unscheduled care demand'

NHS Ayrshire and Arran said it recognised the requirement on it to achieve sustainable services through best value and within its budget of more than £800m.

A spokesman said: "Financial sustainability has been an increasing challenge over recent years.

"This has been due to increasing unscheduled care demand, which has required extra hospital beds to be opened, as well as cost pressures, including new drugs and agency medical costs to sustain services."

The health board said 2017/2018 was the first year it received financial brokerage.

"In recent years we have needed to achieve higher levels of cash releasing efficiency savings. These savings have been difficult to achieve and 40% of the £24.8m savings made in 2017/18 were non-recurring," the spokesman added.

NHS Ayrshire and Arran said it established a "transformational change programme" two years ago to co-ordinate service redesign proposals.

It said many of these redesigns will take several years before the benefit is seen in terms of operating costs.