Our Resources

The financial outlook for the next three years is very challenging. The IJB will have an outline budget of £58million for 2016/17, which will still require us to make significant efficiency savings. We are looking to find savings of £5million over three years

Budget Setting Process

Before the IJB agrees a budget, a number of steps have to be taken, beginning with the Scottish Parliament’s overall budget setting process, which determines how much money is given to the NHS and how much is given to local government.

Once that information is known, NHS Western Isles and Comhairle Nan Eilean Siar will each set their own budget for the year. That will take account of public consultation feedback and the priorities of the two parent bodies.

The IJB budget is made up of resources passed to it be the two parent bodies. These resources are intended to reflect the functions or services that will pass to the IJB. As part of that process, the Chief Officer and Chief Finance Officer of the IJB work on a draft budget, which will set out how resources will be spent over the following year. This budget then has to be agreed by the IJB on the basis that it is able to meet its statutory requirements.

2016/17 Budget

The Scottish Budget for 2016/17 includes an increase of 1.7% to the base budget of NHS Western Isles. The baseline budget of Comhairle nan Eilean Siar will reduce by 4.5%. Insofar as the parent bodies of the IJB have received a challenging settlement, so it follows that the IJB settlement is equally challenging.

At the same time, the Integrated Care Fund (circa £640k per annum) and the Delayed Discharge Fund (circa £200k per annum) have been built into the baseline budget of the IJB, which means we can sustain the capacity that flows from that investment in support of service redesign. In addition, a £1.6m integration fund has been established to support the pressures being experienced within social care. This will go some of the way to off-set the £4.5m budget reduction experienced by the Comhairle.

The 2016/17 IJB budget can therefore be profiled as follows:

Social Care

Community Healthcare

Hospital Care

Total IJB Budget

£21,464,000

£31,642,000

£5,220,000

£58,326,000

The main pressures going into the new financial years are on meeting the cost of hospital based care.Although £58m is a significant resource, we have had to respond to increasing demand for services. The large graph on page 26 outlines how we currently spend that resource.

Financial Outlook: 2017-2019

The Scottish Government has indicated that 2016/17 is likely to be the most challenging of its four year settlement. However, as only one year funding has been announced there is significant uncertainty about future years. We are assuming that the funding for the Integration Joint Board will not increase further over the next three years and hence we will need to secure £5million in savings to off-set real terms growth and increases in demand.

How we will manage costs

In recognition of our budget reduction, the IJB must find substantial savings over the next three years whilst continuing to meet statutory duties. As the graph below demonstrates, the next few years will see a gap of at least £5m opening between the available resources and the resources required to meet demand. In outline terms, the financial health of the IJB will depend on the delivery of savings from four related activities:

  • The identification of efficiencies through a workforce planning exercise carried out by service managers;
  • The identification of efficiencies that can be delivered by integrating services that have historically been run separately by NHS Western Isles and the Comhairle;
  • The identification of efficiencies that can be delivered through service redesign and strategic commissioning; and
  • The identification of savings as a result of service choices being made.

Given the predicted financial context faced by the IJB, we are seeking to save a total of £5million over the next three years. This will involve making difficult decisions; and this is especially challenging for the service areas delegated to the Integration Joint Board given the growth in demand for services.

Some of the savings will come from workforce efficiencies like cutting sickness absence, deleting vacant posts or combining management roles. Other savings will come from service redesign, including reducing high-cost care packages, long-stay mainland placements, and the centralisation of some ancillary services. Some services may be removed if they aren’t well used or delivered equitably across all localities.

Understanding how we use resources

Although we might not be able to influence the size of our overall budget, we can determine how best to use it. In order to do that, we need to develop a better understanding of how our population consumes resources. Common sense tells us that we all use different amounts of health and social care resources: for example, children and older people will visit their GP much more often than young adults. So, the amount of health and social care used by each person will vary.

When this variation is a result of higher levels of need then that is perfectly explainable. However, sometimes we see a variation in resource use which is more difficult to explain. Rather than this being driven by the needs of people using services, it can be driven by inconsistent clinical or organisational decisions about how to give people access to the right type of care.

The reason that this is important to the work of the IJB is that if we understand this variation we can do something about it, making the system more efficient.Sometimes, we know that our system of health and social care leads to people consuming large amounts of resources that they don’t need. For example, we have a particularly pronounced challenge with delayed discharges, where people are stuck in hospital because they are waiting for care packages. Not only is this very expensive and inefficient, it has a significant human cost. After just 72 hours in hospital, older people can begin to experience functional decline. This has led us to a situation where just 600 people (out of a population of 26,500) account for half of all hospital and community prescribing expenditure in the Western Isles: £17.8m.

Similarly, if we look at the way that we support people during the last six months of their life, this will often involve hospital visits which are unnecessary and which are distressing for the individual. The more we can support people in the last few months of their life at home or hospices, it will both improve outcomes and reduce costs. Currently, this varies across different localities. If all localities could achieve the same efficient use of hospital beds as Harris, the partnership would need 10 fewer beds – which we could then release resources from to support better care in the community.

The biggest opportunities for cost reductions are often with people managing long-term conditions. Chronic diseases like diabetes can be expensive if it isn’t properly managed and can result in expensive interventions in hospital. However, there is good evidence to suggest that if we invest in more technology and education to help the patient self-manage their condition, it can substantially decrease their demand for healthcare services, reducing expenditure, and allowing us to capture some of those savings.

All of this provides another good reason for moving to a decentralised locality model: it will allow for comparison about how we use resources differently and lead us to consider remedial actions. In time, we will work towards a ‘consumption budget’ for each area which provides information about the total cost of providing health and social care services for each local population. In time, we can then work towards a position of equity, where each community is given their fair share of resources.

Pie chart showing breakdown of health and social care budget

The Case for Change

Demand for services continues to increase, as a result of our ageing population and a rise in commodities, which is resulting in more complex care packages. In addition, our current model of health and social care too often relies on expensive and at times unnecessary hospital treatment when we could be using that resource differently to support people to live in the community. We now need to reduce our hospital bed capacity and transfer more of our hospital staff into community settings. This will mean our services will look radically different into the future.