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RCN Briefing Note - 1 May Health Board Finances

RCN Briefing Note - 1 May Health Board Finances

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Published by Patrick McPartlin

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Published by: Patrick McPartlin on Apr 30, 2012
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For more information:www.rcn.org.uk/scotland 
REPORT ON NHS
BOARDS’ SURVEY ON BUDGET PLANS
2012-13
The Royal College of Nursing (RCN) Scotland hasbeen monitoring the fourteen NHS territorialboard
s’
financial plans and performance for thelast three years, beginning with the datapresented in
Taking the Pulse of NHS Scotland 
inDecember 2010
1
.Financial pressures are clearly impacting onpatient services and staff locally. As both aprofessional body and trade union, the RCN hascommitted to monitoring NHS territorial boardbudgets to help us engage with employers, theScottish Government, MSPs and our members inan informed, constructive and timely manner.This briefing sets out some of the issues emergingfrom our ongoing analysis that may be useful for
the Health and Sport Committee’s meeting on 1
May.
Comparability and variation
Similar to the experience of the Health Committeewhen surveying health boards, we have found itdifficult to source reliable and comparable data tohelp us understand local pressures and the impactof variations in approach and performancebetween boards. Whilst the annual Audit Scotlandperformance review of the NHS
2
is an importantsource of audited finance data, it is published
 –
 inevitably
 –
nine months after year-end. We arealso interested in understanding and comparingperformance against plans at a time when we canwork to negotiate positive change for patients andour members.Our regular review of financial plans and activityacross the territorial boards is based on thefinancial annex to the Local Delivery Plan and thefinancial Monthly Monitoring Returns supplied byboards to Scottish Government. We obtain thesedocuments by regular Freedom of Informationrequests to boards. Whilst, if taken in isolation,these cannot provide us with answers to all ourquestions, they do provide the only top linecomparable finance information on key areas ofin-year expenditure and savings delivery that wehave been able to source.
Efficiency Savings
As highlighted repeatedly by the RCN and others,there is still no means for us to verify that the
totality of “savings” planned and made are indeed
true cash efficiencies (providing the same orgreater service for less money), rather thanstraightforward service cuts. Our commentsbelow are made in this context.
Pay 
We would urge a particular note of caution onthe possible interpretation of the statement onpage 16 of the report on the health boardsurveys
that: “it is notable that pay pressures are
not a factor that boards place in the top three[risks to the financial plan for 2012-
13]”. Clearly
whilst the public sector pay freeze is in placeand workforce numbers continue to drop (withnursing numbers now lower than at any timesince 2006) pay may not be highlighted as aparticular budgetary pressure. However, in
responding to the Committee’s survey, twelve of 
the fourteen territorial boards list concerns aboutmeeting their efficiency plans during 2012-13 intheir top three financial risks.Pay remains the largest single outlay of anyboard
3
and it is our understanding that boardsare still intending to reduce their pay bill in orderto make the efficiencies required for financialbalance
4
. As such, many of the savings boardsare planning
 –
and which nearly all say are asignificant risk to meeting their financial plan
 –
 are likely to affect the workforce and pay costs.
Increased 
 
pay costs 
(including Agenda forChange incremental increases) may not be asignificant pressure in the way that prescribingcosts are, but the drive to instigate
reductions to the pay bill 
to break even through savings, is avery real pressure on boards, on staff and on thequality of services.Even in formal returns made to the ScottishGovernment, the impact of savings plans on theworkforce is not always clear. We believe that
the Scottish Government’s categorisation of 
efficiency saving schemes is interpretedvariously across the territorial boards,particularly with regard to savings under the
“workforce” and “clinical productivity” headings.
The Scottish Government Local Delivery Plansand financial monitoring returns now requireboards to report savings plans and performanceagainst broad headings alone, and not onindividual savings plans. However, in previousdetailed iterations, it was clear that many
“clinical productivity” saving schemes included
significant reductions to workforce costs by, forexample, changing skill mix to deliver services.
 
For more information:www.rcn.org.uk/scotland 
Pharmacy 
The significant pharmacy cost pressureshighlighted in the report to the Committeecorresponds with the data we have analysed forthe past three years. By December 2011, nine ofthe 14 territorial boards had overspent on their2011-12 GP pharmacy budget to the tune of£13.4m (including overspends in Dumfries &Galloway, Greater Glasgow & Clyde andLanarkshire). This is despite an average upliftassumption to the GP pharmacy budget of 5.2% in2011-12. Further, the same 2011-12 plans show acombined savings figure for prescribing last yearof £34.8m. It is not possible to monitor hospitaldrug spend from the data we have, but thisprimary care prescribing pattern is reflective of
previous years’ positions.
Our concern is not just the spiralling costs toboards to meet prescribing bills, but the impact ofthis ongoing pressure on other budgets. Whereprescribing budgets are overspent and/orprescribing savings are not made, the money willhave to be found elsewhere to meet the boardsoverall financial plan as agreed with ScottishGovernment. It is often not possible to track whereany budgetary adjustments are made during thefinancial year to compensate for these drug costpressures. It would be interesting to know whatadditional measures boards have had to take inthe past, or contingencies they are planning, toattempt to stay in financial balance in the light ofthese very real pharmacy pressures.
Identification and delivery of savings 
Of the territorial boards’ £226.
8m declared cashsavings for 2012-13, only £153.2m (67.6%) isdetailed in the response to the specific questionasked by the Committee to list the top threesavings plans. Though we cannot assume this isthe case for 2012-13 from this report, we haveseen that in previous years many boards havecontinued well into a financial year with significantamounts of savings remaining unidentified.Where this is the case, even those identified plansdeclared may become inconsequential, asadditional cash savings must be found fromexisting activity.From the boards giving evidence, it may be worthunderstanding what percentage of their planned2012-13 savings remains unidentified at this point.In their 2010-11 LDPs, the four boards givingevidence declared £27.2m of unidentified savingsstill to be found at the start of 2011-12: 29.4% oftheir combined planned savings for that year.This was not an unusual position among theterritorial boards.In addition, even categorised savings plans areonly as good as their eventual delivery. Usingthe latest monitoring data available to us for2011-12, it is clear that half of the 14 territorialboards were some way short of achieving 75%of their planned efficiencies by the three-quarters point of the year (December 2011).Achievement rates in seven boards ranged from just 50% to 65% of planned savings. Whereachieved savings are falling this short of plansby the ninth month of the financial year, it ishighly likely that boards will implementemergency measures to source non-recurring(one-off) savings to meet the shortfall.Historically, this has included potentiallydamaging activities such as vacancy freezes,bans on the use of bank staff to fill rotas andcuts to training budgets. Of the boards givingevidence, Dumfries & Galloway and Lanarkshirewere on, or ahead of target, but GreaterGlasgow & Clyde and Western Isles werebehind target at December 2011.The information supplied to the Committee inthis survey does not always make clear thebalance between planned recurring and non-
recurring savings in boards’ plans.
To ensuresustainable financial balance we would expect tosee the vast majority of savings planned anddelivered on a recurring basis
 –
this may be anissue worth exploring further.
Shifting the balance of care
Notwithstanding the different interpretations ofwhat should have been included under theheadings provided at question 2, if taken at facevalue, boards are increasing their combinedcommunity budgets by around £10m more thanthey are increasing their combined acutebudgets. However, this difference represents just 0.13% of the total core revenue resourcesgiven to boards in 2012-13
5
and acute budgetsdo continue to increase in all but four boards(these four include Dumfries & Galloway andWestern Isles). Recent cost book data
6
did showa slight shift in funding from acute to community,with a small drop (-0.9%) in acute operatingcosts between 2010 and 2011. However, giventhe long term policy drive to shift the balance ofcare, a wider discussion on the barriers boardsare facing in making the financial shift ofresource would be helpful, particularly givencross-party support for additional investment inpreventative spend.

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