Urgent action is needed to tackle the worsening performance and financial problems at NHS Tayside, according to Scotland’s public spending watchdog.
Auditor general for Scotland Caroline Gardner spoke out after a new report noted the struggling health board achieved just seven out of 20 national standards in March 2018 – down from from nine the previous year.
It is also facing a potential budget deficit of £18.7 million for 2018-19 despite receiving £50.2 million of Scottish Government brokerage loans in the last six years.
In its latest report on the health board, Audit Scotland also revealed problems with a settlement payment to former chief executive Lesley McLay.
The overall sum she received included more than £64,000 – which equated to six months’ notice – but the report went on to note Ms McLay’s contract had a notice period of three months.
The payout also included more than £19,000 in pension contributions that “should not have been made”, it added.
Audit Scotland concluded: “The decision to reach a negotiated settlement with the former chief executive was reasonable, but there were several weaknesses in the settlement process and a lack of good governance.”
Speaking about the health board Ms Gardner said: “NHS Tayside’s financial position has been unsustainable since 2013 and urgent action is needed to turn around the organisation.”
Of the £50.2 million the health board has received in brokerage funds, £45.9 million has not yet been repaid to the Scottish Government.
“The board’s worsening financial position has been compounded by the mismanagement of eHealth funding and endowment fund monies in earlier years,” Audit Scotland found.
The Scottish Government was forced to intervene in the running of the board earlier this year after it emerged cash from public donations had been used to fund new technology.
Meanwhile, a separate review found NHS Tayside “misrepresented” its financial performance by “holding” £5.3 million of government funding for eHealth initiatives.
Health Secretary Jeane Freeman’s announcement that outstanding loans to NHS boards will be written off at the end of the year “reduces the pressure” on the board but “does not address the underlying financial problems”, Ms Gardner said.
Overall, Audit Scotland found the board “continued to experience significant cost pressures in 2017-18”, with spending rising to more than £900 million and overspends being recorded for staffing costs, prescribing and eHealth.
Previous reports by the spending watchdog have “highlighted the expensive operating model in NHS Tayside compared to other NHS boards”, with this described as a “main contributory factor ” to its financial difficulties.
The report added: “Despite a range of interventions, in June 2018 there was limited evidence that this situation had changed.”
With a new chief executive recently appointed – the third person to hold the post this year – Audit Scotland stressed: “It is important that the board puts in place a realistic action plan, accompanied by the capacity and resources required to deliver it, to address the issues it faces.”
Ms Gardner said: “Changing the ways services are delivered will be critical in reducing NHS Tayside’s operating model and comparatively high staff costs.
“However, to date there is limited evidence of this happening, increasing the need for effective leadership to drive home the board’s plans for change.”
NHS Tayside chairman John Brown said while the report provided a “valid review of last year’s accounts” the board was “very disappointed that the report fails to recognise the progress which has been achieved since April 2018”.
Mr Brown said: “The interim chief executive has worked closely with clinicians and managers to build a complete picture of the underlying financial problems over the past nine months and bring them to the surface so everyone has a better understanding of the challenges we face.
“He has also ensured that there is the capacity and capability to plan and redesign services in NHS Tayside and make sure the organisation is best placed to deliver real service change.
“Compared to last year, improvements are evident in financial management, leadership, governance and planning and, crucially, partnership working with our colleagues and partners in integration joint boards, local authorities, Scottish Government, universities and all our stakeholders.”
He added: “We are entering a critical period for NHS Tayside at the beginning of next year; a three-year transformation plan, developed by our clinicians, and a three-year financial plan for 2019-22 will be presented to the Board for approval in February 2019.”
Ms Freeman said: “This report refers to the previous financial year of 2017-18.
“Since then, a new senior leadership team has been put in place, making significant changes to the running of the board, including strengthened financial management and governance arrangements.
“Last week, I appointed Grant Archibald as the new permanent chief executive of the board.”
She added: “The Scottish Government is continuing to provide specific support to NHS Tayside to help it recover its financial position.”