NHS Fife finances: things are getting worse with £55m budget gap early in 2025

Since March, it has been warning the Scottish Government that it can’t balance its books.

At the start of the year, the health board announced that it expected to see a £55 million budget gap by March 2025. However, the latest financial report from Margo McGurk, director of finance, has revealed that NHS Fife is already spending even more than it expected to.

The health authority has overspent by £7 million from March to May 2024 - more than £2 million higher than anticipated. It’s all due to continuing cost pressures and unachieved savings brought forward from previous budgets.

Regardless of the reasons, board members took only “limited” assurance from the financial position on Tuesday.

“The overspend to the end of May 2024 is £7 million and includes a continuation of the underlying and new cost pressures described in the financial plan,” Ms McGurk said in her report.

“At the end of May, the board retained budget is approximately £2 million more overspent than anticipated.”

“Taking all of the issues noted in the report,” she added, “the level of assurance at this stage is ‘limited’” – Meaning that there is “some assurance” that risks can be controlled. However, “there remains a significant amount of residual risk, which requires further action to be taken”.

On the bright side, Ms McGurk told the board that the rate of overspend is slowing down as the year progresses.

>The Bigger Picture

On a bigger scale, NHS Fife is staring down an expected £55 million funding gap by the end of March 2025.

The board has known about that predictament for a while now, and it has been working with the Scottish Government to get things under control.

According to Ms McGurk, the gap will be addressed with a “range of cost improvement schemes and efficiency initiatives” to off-set £25 million worth of the financial black hole.

Even with that, NHS Fife is predicting a £30 million deficit by next March. In order to avoid that chasm, it will be forced to make an additional 4% of savings.

“The remaining £30 million will require to be addressed through further service change initiatives, all of which will be delivered by our Re-form, Transform and Perform framework,” her report explained.

This framework will include immediate changes across the organisation; evolving NHS services, structures; and driving sustainable improvements throughout the organisation.

The health board is looking to make these changes across about 15 areas of medicine:

This includes the continued medicines optimisation - that means effective purchasing, prescribing, supply, administration, and waste reduction.

Aspects of Fife’s unscheduled care bundle - previously managed by the Health and Social Care Partnership - will be re-incorporated into NHS Fife’s Acute Services Division for efficiency and effectiveness.

NHS Fife also hopes to make savings through the major private finance initiative contract review for phase 3 developments at Kirkcaldy’s Victoria Hospital. It is also planning to rationalise its estate and infrastructure.

The board is also looking at reductions in surge bed capacity - moving beds into alternative parts of Victoria Hospital and reviewing models of care. It proposes reducing the amount of spending on supplementary staffing, on external healthcare providers, and examining procurement schemes and contracts for savings opportunities

That savings framework is already partly in motion. So far this year, the board has managed to make £3.2 million worth of savings — which has exceeded its £2.5 million year-to-date target.