What can NHS Grampian do to fix its £82.5m budget deficit?

In a somewhat unusual move for a health board, NHS Grampian issued a press release to journalists on Tuesday warning that it is facing an "extremely challenging" financial position.

NHS bosses across Scotland are angry that their already stretched budgets have been squeezed even further after health and social care bore the brunt of public spending cuts to the tune of £116 million.

With the board of NHS Grampian due to meet on September 12 to discuss its current financial position, a projected year end overspend of £82.5m, and the "further measures that will be required to improve" it, attempts to draw attention to the situation might be best interpreted as a cry for help.

Those in charge of the NHS want the public to know that it is struggling, why, and how much.

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Out of balance

Up until the pandemic, NHS Grampian had succeeded in balancing its budget every year.

In 2020/21 and 2021/22, it incurred additional costs as a result of Covid but this was covered by extra funding from the Scottish Government.

Thereafter it has struggled: in 2022/23, it run up a deficit of £20 million, rising to £24.8m in 2023/24.

The expected deficit of £82.5m 2024/25 - made up of £67.8m for NHS Grampian services and a £14.7m contribution to social care overspends by the Aberdeenshire and Moray Integrated Joint Boards (IJBs) - is the "largest by value of any health board and the fourth highest in percentage terms".

The finance report notes that even after adjusting for the "positive impact" of possible mitigations - from reducing spend on locum doctors and agency nurses, to switching from branded to generic drugs wherever possible - the health board is still heading for a total overspend "of between £65-70m".

It adds that the "deteriorating financial position" may result in NHS Grampian being escalated to the Scottish Government for "enhanced monitoring".

The cost of agency staff is contributing to the overspend (Image: Getty)

Pressures

While the Scottish Government has provided extra cash to cover pay uplifts, non-pay pressures (medicines such as expensive new cancer treatments, paying for new technologies such as insulin pumps or TAVI cardiology procedures, increased energy costs, inflation, and staff shortages resulting in "high usage of expensive agency staff") can only "be covered by making new savings".

The pay overspend for the four months to the end of July alone was £12.2m, despite a 42% year-on-year reduction in agency nurse spending.

The finance report also refers to "changes in our population, with a greater proportion of elderly people and patients presenting with greater acuity and co-morbidities" and "significant service pressures relating to patient flow" - that is, costly hospital beds filled with patients ready for discharge but waiting for social care.

NHS Grampian already has one of the lowest bed-to-population ratios, but more could be closed to save money (Image: Getty)

Solutions?

As NHS Grampian's chief executive put it ahead of the board meeting, the situation "will require some challenging decisions to be made over the months ahead".

Buried towards the end of the report are some of the less palatable options for dealing with the deficit - although the likely cost savings are small. 

These include stopping all overtime which would save an estimated £500,000 but "will increase waiting times for urgent referrals".

It stresses that "cancer activities will be protected".

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Another proposal to cut the overspend on healthcare support workers (HCSW) would save an estimated £1m but result in a "loss of capacity to deliver planned and unscheduled care" since fewer beds would be available for patient admissions.

While this "could be achieved in short term for some areas", the report notes that other services "would require significant redesign to be able to operate without current levels of HCSW input".