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4. Financial Performance
Finance report
This section provides a summary of the key information relating to the financial performance of NHSScotland during 2007/08. The performance for the year was excellent with the key financial performance target, the Departmental Expenditure Limit ( DEL), showing a small underspend (-0.24 per cent).
NHSSCOTLAND FINANCIAL PERFORMANCE SUMMARY 2007/08
Departmental Expenditure Limit ( DEL) | Budget £000 | Actual £000 | Over/(Under) Spend £000 |
|---|
Expenditure (Revenue) |
|---|
Territorial Health Boards | 7,899,905 | 7,850,391 | (49,514) |
|---|
Special Health Boards | 1,146,691 | 1,120,773 | (25,918) |
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Central Departments 4 | 679,604 | 731,347 | 51,743 |
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Revenue Expenditure | 9,726,200 | 9,702,511 | (23,689) |
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Expenditure (Capital) |
|---|
Territorial Health Boards | 363,318 | 362,012 | (1,306) |
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Special Health Boards | 67,063 | 66,578 | (485) |
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Central Departments 5 | (32,760) | (32,969) | (209) |
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Capital Expenditure | 397,621 | 395,621 | (2,000) |
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Total Expenditure | 10,123,821 | 10,098,132 | (25,689) |
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The bulk of the above expenditure lay with the 14 territorial Boards and eight Special Boards, all of which achieved their financial targets except NHS Western Isles (which showed a significant improvement in performance). The remaining expenditure of £698 million was incurred centrally. Of the total expenditure, revenue expenditure was underspent by a total of £24 million (0.24 per cent). This was balanced between an agreed underspend by Health Boards of £75 million (£49 million by territorial Boards and £26 million by Special Boards) and a planned over commitment by Central Departments of £52 million in order to make best use of overall resources and enable Health Boards to carry forward funds from year to year.
Capital expenditure incurred was £396 million and showed a small underspend of £2 million compared with the capital budget of £398 million. The money was used to fund numerous NHSScotland projects across the country, key examples of which are presented in the following table.
KEY EXAMPLES OF CAPITAL EXPENDITURE PROGRAMMES, NHSSCOTLAND 2007/08*
Board | Project | Capital Expenditure |
|---|
NHSScotland | Ongoing programmes for investment in, and maintenance of, premises | £156.5m |
| Ongoing programmes for investment in new and replacement medical equipment | £59.1m |
| Ongoing programmes for investment in new and replacement IT | £25.7m |
NHS Borders | Borders general refurbishment | £1.6m |
NHS Dumfries and Galloway | Dumfries Dental Centre | £3.7m |
NHS Dumfries and Galloway | MRI Scanner | £1.6m |
NHS Fife | General Hospital and Maternity Enabling Works | £7.4m |
NHS Fife | Linburn Road Health Centre | £2.9m |
NHS Fife | Randolph Wemyss Hospital | £3.0m |
NHS Forth Valley | Imaging equipment | £1.7m |
NHS Greater Glasgow and Clyde | Beatson Oncolgy Unit | £90m |
NHS Highland | Kyle Health Centre | £2.0m |
NHS Highland | Dunoon Community Casualty Unit | £1.3m |
NHS Lanarkshire | Bellshill Resource Centre | £1.3m |
NHS Lothian | Royal Infirmary lifecycle maintenance | £3.4m |
NHS Tayside | Armistead Child Development Centre | £3.1m |
NHS Tayside | Community maternity units | £2.1m |
NHS Western Isles | Medical equipment | £1.8m |
Scottish Ambulance Service | Ambulance fleet and patient transport vehicle replacement | £9.0m |
State Hospital | Redevelopment enabling works | £3.0m |
Golden Jubilee National Hospital | Heart and lung facility | £2.8m |
Golden Jubilee National Hospital | Orthopaedic development | £3.1m |
* Includes capital expenditure incurred in previous years
Most NHSScotland bodies were less reliant on non-recurring funding to achieve their financial targets. In total, the underlying recurring deficit for NHSScotland bodies reduced from £92 million to £16 million (0.16 per cent) between 2006/07 and 2007/08.
This Report does not present the full accounts of NHSScotland as they form part of the overall Scottish Government consolidated accounts. The audit of the Scottish Government consolidated accounts for 2007/08 is unqualified. Audit Scotland has also reviewed the accounts of all Health Boards for 2007/08 and given an unqualified audit opinion on each. Audit Scotland also provides an independent commentary on NHSScotland finances in its Overview Report.
NHSSCOTLAND EXPENDITURE 2007/08
NHSScotland's expenditure of £10,098 million in 2007/08 represented almost £2,000 per person living in Scotland. Around 50 per cent of this funds staff salaries for NHSScotland employees. A further 9 per cent goes on prescription drugs, 11 per cent on general medical, dental and ophthalmic services,
20 per cent on services and supplies with the remaining 10 per cent funding buildings and associated running costs, medical equipment, supplies and IT.
Efficient Government
The Efficient Government Initiative was launched in June 2004 and set a three-year overall savings target of £531 million by 2007/08 for NHSScotland.
NHSScotland exceeded its targets through a three-year programme which ended in March 2008. A total of £610 million in efficiency savings have been reported to date - an overachievement of £79 million. Of the overall savings achieved, £471 million was classified as cash releasing, and £139 million was classified as time releasing. Details of the savings are as follows:
Project Title | Planned Savings £000 | Outturn Savings £000 |
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Cash releasing |
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NHS procurement | 62,700 | 73,000 |
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Shared support services | 10,000 | 1,410 |
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NHS logistics reform | 7,500 | 5,420 |
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Improved prescribing | 20,000 | 79,640 |
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NHS efficiency savings | 208,000 | 231,300 |
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Facilities management systems | 800 | 0 |
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Drug purchasing | 42,000 | 73,700 |
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Care Commission | 1,600 | 3,000 |
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Countering NHS fraud | 3,200 | 3,480 |
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Total Cash Releasing Savings | 355,800 | 470,950 |
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Time releasing |
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Reduction in absence | 54,800 | 42,300 |
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Scottish Primary Care Collaborative | 6,500 | 6,620 |
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Speciality redesign projects | 900 | 3,290 |
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Patient focussed booking | 2,600 | 840 |
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Electronic transmission of lab results to GPs | 12,000 | 290 |
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Digital X-Rays/ PACS | 23,500 | 8,540 |
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Supporting Day Surgery as the norm | 7,300 | 7,300 |
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Improving review to new ratio in acute outpatient attendances | 14,600 | 14,600 |
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Reducing the average length of stay of routine inpatients | 14,600 | 14,600 |
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Reducing the average length of stay of non-routine inpatients | 36,500 | 36,500 |
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NHS shared support services | 0 | 1,490 |
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NHS logistics (ward product management) | 2,000 | 2,670 |
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Total Time Releasing Savings | 175,300 | 139,040 |
|---|
TOTAL SAVINGS | 531,100 | 609,990 |
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Some figures are provisional.
Source : The Efficiency Outturn Report 2007/08 (The Scottish Government)
Better Health, Better Care emphasised that NHSScotland, as an organisation that spends over £10 billion of public money every year, must strive to become ever more efficient in everything it does. It established the NHSScotland Efficiency and Productivity Programme ( EPP) to drive forward national improvement programmes, service benchmarking projects and the measurement of output and quality. The National Benchmarking Project delivered 'a whole system scorecard', which allows Health Boards to compare themselves with others on a range of measures and helps identify areas of best practice and opportunities for efficiency improvement. It also included separate projects to support NHSScotland in achieving greater efficiency in operating theatre usage and in improving in the delivery of mental health services.
As part of the EPP a high level steering group from across NHSScotland has been established to assist NHSScotland achieve improvements in efficiency; in particular, to identify specific actions to achieve the 2 per cent cash-releasing efficiency savings per annum which are expected of Health Boards and the wider NHSScotland. The steering group has also been tasked with monitoring and reviewing the effectiveness of existing HEAT targets, and producing recommendations for new targets.
Since 2005, the Scottish Government has been working closely with other UK-wide Government Departments, with other parts of the public sector and with academic bodies to improve the measurement of the productivity of Government-funded services, in line with the recommendations of the Atkinson Review 6. For the health sector, the result of this work will be to revise the way in which output, input, productivity and quality are measured, including the consideration of a health output index being used in the Scottish Gross Domestic Product ( GDP). Government Departments across the UK are still consulting widely on approaches to the measurement of quality - an essential component of overall productivity measurement.
NHSScotland Resource Allocation Formula
2007/08 saw the completion of the NHSScotland Resource Allocation Committee's ( NRAC) review of the Arbuthnott Formula which allocates funding for Hospital and Community Health Services and GP prescribing to the 14 territorial Health Boards. NRAC's Final Report made a series of recommendations to refine and improve the Arbuthnott Formula to ensure that funds are allocated on a fair and equitable basis across the whole country.
The revised Formula was accepted by the Cabinet Secretary for Health & Wellbeing in February 2008 and will run from 2009/10. The Cabinet Secretary was keen to ensure that the changes to the Formula would not cause financial turbulence and as such decided that no Health Board should receive less money than it currently does and that the movement from Arbuthnott to NRAC will be phased in over a number of years as has been the practice under previous allocation formulae.
NRAC made a number of recommendations concerning the future development of the Formula. In response the Scottish Government Health Directorates set up the Technical Advisory Group on Resource Allocation ( TAGRA) to ensure that the Formula is kept up to date. The Group includes technical representatives from the Scottish Government Health Directorates, National Services Scotland Information Services Division ( ISD) and NHSScotland Health Boards plus representatives from NRAC and academics with expertise in health resource allocation.
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