NHS Ayrshire and Arran’s financial deficit will more than double to £56m over the coming year.
Pay deals, medicines and even the cost of paper towels have put significant pressure on the health service’s budget.
But just £9m in cuts and savings have been identified ahead of the budget meeting on Tuesday. However, little detail has been revealed.
Funding from Scottish Government increased from £833m last year to £850m in 2023/24.
The service has already spent £26m more than it brought in during 2022/23.
In his report to the health board this week, NHS Ayrshire & Arran finance chief Derek Lindsay said that it would now have to find £33m simply to avoid worsening the existing deficit.
The main financial pressures include:
- £11.89m in pay related pressures
- £12.495m in additional primary care prescribing
- £4.85m in acute prescribing
- £5.7m in non-clinical pressures
- £6.2m in ‘unavoidable’ clinical cost pressures.
The service also faces having to pay out £6.1m on 165 unfunded hospital beds put in place as a response to covid, although it aims to close the majority of these by June.
Mr Lindsay states: “During the pandemic many additional services were introduced. The only ones they will support in 2023/24 and beyond are the vaccination programme, test and protect and PPE.”
Despite this, the board will decide on recommendations to maintain other covid programmes that will not receive funding – namely £822k on cleaning enhancements and £1m on a scheme related to acute respiratory issues.
The board will hear about plans to allocate more of NHS Ayrshire & Arran’s budget to primary care, the new medicines fund, and the Child and Adolescent Mental Health Service (CAMHS).
Inflation has hit every part of the health service. While 98 percent of gas and electricity was bought in advance to protect against continued inflation, it will still cost an additional £2.4m.
There have also been significant rises in infrastructure maintenance costs, while cleaning materials such as paper towels have doubled to £300k.
PFI contracts have also increased alongside inflation, at the Ayrshire Maternity Unit (£377k increase), East Ayrshire Community Hospital (£256k) and Woodland View in Irvine (£113k).
Mr Lindsay said: “Pay will be the biggest cost pressure. An Agenda for Change national agreement of 6.5 per cent average has been offered for 2023/2024.
The general allocation funding uplift of two percent is expected to cover a two percent pay increase, therefore a further allocation to cover the remaining increase is anticipated in 2023/2024.
“Inflation is a major factor in supplies cost pressure including energy and medicines.
“The projected deficit budget for 2023/2024 is dependent upon the timing of the closure of the 165 unfunded acute beds.
“Factors in ability to close them include reducing the average length of stay in hospital which is affected by delayed transfers of care to social care.
He described the three percent savings target as ‘challenging to deliver for all corporate directorates’.
Ayrshire and Arran Health Board will consider the budget on Tuesday, March 28.
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