Whilst the NHS has a degree of protection from next year's spending cuts, this report confirms our analysis that the NHS is not exempt from cuts. Funding is at best at a standstill while demand and cost pressures continue to rise. As a consequence services will have to be cut or the NHS will have to exceed its so called 'efficiency' targets - in effect the same thing.
Some health boards are already balancing their budgets by using non-recurring income to meet recurring expenditure. Not a sustainable medium term financial strategy for any organisation. Boards are planning to make savings totalling £274m this year, that's £72m (36%) more than last year. With capital spending going down the prospects for savings from service redesign will be constrained.
The increasing demands and cost pressures come from:
- Increasing elderly population leading to more long term conditions, GP visits and pressure on acute beds.
- Drug costs rising above inflation. Estimates vary from 4% to 11%
- Whilst a pay freeze will reduce some staff costs the consultant and GMS contract continues to exceed allocations. Locum doctor costs have doubled since 1997.
- The VAT increase from January will cost NHS Scotland an additional £23.3m.
- PFI contracts are a fixed cost that don't reflect funding changes. They already cost £136m per year and the Scottish Government has announced a return to this wasteful method of funding.
- Universal service provisions including free prescriptions, personal and nursing care and eye tests have rising demand costs.