Priority 4: Managing our resources effectively
In a climate of increasing need for services and continuing pressures on budgets, it is vital that we make best use of available resources.
Financial information is a key element of our governance framework. Each year we produce a financial plan which sets out how we ensure our limited resources are targeted to support delivery of our strategic plan. Our financial plan for 2022/23 was agreed by the board in March 2022. An update was presented in August 2022.
Regular updates on financial performance against this plan were provided to the Performance and Delivery Committee as well as to the EIJB itself. Included in these reports were details of the financial impact of the pandemic and progress with the savings and recovery programme.
Budget monitoring of delegated functions is carried out by the finance teams in the City of Edinburgh Council and NHS Lothian, reflecting the EIJB’s role as a strategic planning body which does not directly deliver services, employ staff or hold cash. However, the board needs oversight of the in-year budget position as this highlights any issues that need to be accounted for when planning the future delivery of health and social care services.
You will find a comparison of costs against the budget for the year summarised in the table below:
| Service | Budget | Actual | Variance |
| £m | £m | £m | |
| NHS DELIVERED SERVICES | |||
| Community services | 66 | 65 | 1 |
| General medical services | 97 | 99 | (1) |
| Prescribing | 81 | 84 | (4) |
| Reimbursement of independent contractors | 68 | 68 | 0 |
| Services hosted by other partnerships/NHS Lothian | 115 | 114 | 1 |
| Hospital ‘set aside’ services | 114 | 120 | (6) |
| Other | 72 | 63 | 9 |
| Sub total NHS | 612 | 612 | (0) |
| CITY OF EDINBURGH DELIVERED SERVICES | |||
| External purchasing | 207 | 215 | (8) |
| Care at home | 34 | 30 | 4 |
| Day services | 17 | 17 | 1 |
| Residential care | 22 | 21 | 1 |
| Social work assessment and care management | 19 | 15 | 3 |
| Other | 11 | 12 | (1) |
| Sub total Council | 310 | 310 | 0 |
| Net position | 923 | 923 | 0 |
A break-even position was reported against the budget for the year. This was predicated on the value of vacancies across Council and NHS services, slippage on investment funding and the use of reserves. Whilst this is clearly a positive outcome for 2022/23, it should be noted that we relied on one-off measures to achieve balance. Despite this, the underlying deficit remains and, indeed, increases when we move into 2023/24.
The underlying financial pressures facing us have not materially changed; these include:
- Externally purchased services where demographic factors continue to drive demand for these services; this is also evidenced in the continuing growth in direct payments and individual service funds. As in previous years we saw significant growth during 2022/23
- Medicines prescribed by General Practitioners cost £81m in 2022/23. This is an area where, although Edinburgh has one of the lowest costs per head of population, we see costs rising year on year as volumes increase and costs fluctuate; and
- Expenditure in set aside which continues to be one of the main financial issues facing NHS delegated services. NHS Lothian agreed a one-off additional allocation to reflect this.
These pressures have been offset in year by high levels of vacancies across a number of services in both the City of Edinburgh Council and NHS Lothian. We continue to face significant challenges in recruiting and retaining staff, and given the impact on service delivery, operational staff continue to prioritise recruitment.
It is clearly extremely positive that we are able to report a break-even position against our in-year budget. However, the continued reliance on one-off measures to achieve financial balance remains a concern. As a board we face a number of material and long-standing financial pressures and a baseline gap in our financial plan which we struggle to address on a recurring basis. Our medium term financial strategy (MTFS) begins to set out what a path to financial sustainability could look like and this will continue to be developed in the coming financial year.
The pandemic clearly had an impact on our finances, and this was closely monitored during the year. We incurred net additional costs of £19m as a direct result of COVID-19. The main categories of associated expenditure being: sustainability payments made to support providers during the pandemic; purchase of additional capacity; additional staffing; and increased prescribing costs. In line with their commitment, these costs were met in full by the Scottish Government and are summarised below:
| £m | |
| Costs incurred by City of Edinburgh Council | |
| Staff costs | 1.1 |
| PPE | 0.4 |
| Provider sustainability payments | 5.8 |
| Loss of income | 1.0 |
| Shortfall on funding for interim care beds | 2.9 |
| Total earmarked reserves | 11.2 |
| Costs incurred by NHS Lothian | |
| GP prescribing | 1.9 |
| Additional FHS contractor costs | 0.1 |
| Total general reserve | 1.9 |
| Total | 13.1 |
The chart below shows costs in key areas for the last five financial years:
Although many of the delegated services are delivered directly in localities, a significant proportion are run on a city-wide basis. Showing how the associated costs are incurred within each locality requires a degree of estimation and assumption. This exercise shows that the cost of services is relatively consistent across the four localities, although the majority of spend is associated with services which are run on a city-wide basis. This is evidenced in the diagram below:
The bed-based review is ongoing and seeks to redesign bed-based services across the city, taking into consideration demand and capacity to ensure provision of sustainable services. The project covers a selection of services which provide overnight accommodation to support people in both the short or long term, including medically led services in hospital settings, and beds located in the community, such as care homes.
An enhanced model of care is being introduced into our larger 60-bedded care homes to include registered nurses to provide nursing cover seven days per week. Recruitment to this model is well under way and one care home is nearly at full establishment, while the other two larger care homes in the estate are actively recruiting. The new model of care will allow the Partnership to provide much needed nursing and dementia care at local authority funded rates to meet existing and future demand and support flow from hospital into the community. This has also removed the requirement for District Nurses to attend these care homes during the day so their residents have all been removed from District Nursing caseloads increasing capacity in the community for the service.
Edinburgh continues to have an imbalanced bed base and doesn’t have the right type of beds in the right place to meet existing and projected demand. Phase 1 of the Bed Based Care Strategy was approved by the IJB in September 2021, but due to a number of issues this has not been implemented as planned. Significant adaptations are required to the former Drumbrae Care Home in order for the facility to be compliant with recently updated healthcare standards. This has meant that progress has yet to be made with the building-based redesign of bed-based services outlined in phase 1 of the bed-based care strategy. This has affected the Partnership’s ability to relocate bed-based services from the Liberton Hospital site and has meant that hospital-based complex clinical care (HBCCC) needs to continue to be provided from the existing facilities until a resolution can be found. Work is planned in 2023/24 with our partners City of Edinburgh Council and NHS Lothian to revise the bed-based modelling and support us to move this work forward to ensure we have the right bed base to meet the needs of Edinburgh’s population.