NHS Fife reveals near £8m overspend – significantly higher than forecast

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NHS Fife has reported a £7.9 million revenue overspend only two months into the fiscal year. It has also outlined the major reasons behind it.

The figure was put down to the continuing level of spend on supplementary staffing, medicines, and surge capacity - the NHS’ ability to handle patient/care influx. Other factors included legacy Covid costs which the government will not be reimbursing the authority for, and cost of living increases across the board

Maxine Michie, deputy director of finance, presented the board with a financial performance report on Tuesday with details of the overspend.

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“The financial position at May 31 shows an overspend of £7.985m which is significantly in excess of the anticipated £1.811m overspend for May,” the report stated.

GV of Victoria Hospital, KirkcaldyGV of Victoria Hospital, Kirkcaldy
GV of Victoria Hospital, Kirkcaldy

Alistair Morris , acting chair of the board, said: “I think it’s clear that after only two months we’ve started off more slowly than we had anticipated. I know there is work going on at the moment as to why that is the case and that will come back to the board when there’s more of a handle on it.

"But I think it’s equally clear and fair to the board that we should expect to get a financial report that is concerned if this trajectory continues and that will drive us to look into planned expenditure.”

The health board’s Acute Services Division is responsible for a big portion of the overspend - nearly £5 million, driven by supplementary staffing across both nursing and medical budgets, coupled with significant overspends in medicines. Service Level Agreement charging models have also changed, adding just over £1 million to NHS Fife’s costs.

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There are plans in place to reduce costs going forward. Medicines optimisation work to ensure clinical and cost-effectiveness is ongoing, a major contract review is underway to deliver recurring cost reductions, and the Scottish Government confirmed additional recurring funding to be allocated through the national NHS National Resource Allocation formula (NRAC). NHS Fife will receive an additional £8.3 million under the formula.

Carol Potter, chief executive, explained: “NRAC funding is a complex formula that takes into account demographic. It absolutely reflects a growing population and an older and frailer population. That’s why we need to be mindful and we need to use that funding in a thoughtful way.”

Mr Morris added: “I would be reluctant to see the funding swallowed up in the general overhead. Our aim must be to try and use that as a bonus to make a difference on performance rather than supplement under performance somewhere else.”

Ms Potter assured board members that overspend scrutiny will absolutely happen, and more analysis of the financial situation is expected at the next board meeting in September.