NHS financial overview 2007/908 – Podcast transcript
What’s this report about?
The report provides a summary of the financial performance of the NHS in Scotland in 2007/08 and examines the financial challenges and risks for 2008/09 and beyond.  It also comments on the cost pressures within the NHS in Scotland in 2007/08 and looks at NHS bodies’ financial management and governance arrangements.
What have you found?
We have found that:
•	The NHS in Scotland spent over £10 billion in 2007/08. All NHS bodies, except NHS Western Isles, met their financial targets and NHS bodies were less reliant on one-off funding in 2007/08.
•	The main cost pressures facing NHS bodies in 2007/08 were pay modernisation, rising drugs, fuel and energy costs, and the cost of reducing waiting times and redesigning their services. New cost pressures and challenges for 2008/09 include fully implementing the European Working Time Directive and the abolition of prescription charges.
•	NHS bodies will receive reduced increases in their funding allocations in the next three years, while being required to make two per cent efficiency savings. Despite this, and the cost pressures they face, all NHS bodies are forecasting to break-even in 2008/09, except for NHS Western Isles.  
What is the impact/importance of this report on the public?
The health service’s financial performance and the governance and management arrangements have a direct impact on its ability to provide efficient, effective and sustainable services for patients. We have summarised the financial performance of the NHS in Scotland in 2007/08 and examined the financial challenges it faces in 2008/09 and beyond. This allows the public to see how well the NHS is managing its finances and to understand the pressures it faces.  The report also helps the Scottish Parliament to hold NHS managers to account for their performance.
You’ve mentioned some cost pressures there. Could you expand on that and explain what’s happening there?
Two of the main cost pressures that we’ve identified for 2008/09 and onwards are the European Working Time Directive and the abolition of prescription charges. 
In the first one, the European Working Time Directive, this will be fully implemented from August 2009 and what this will mean is that junior doctors’ maximum working week will be reduced from 58 hours to 48 hours. This may well have an impact on staff rotas and associated costs such as the use of locum doctors in the NHS.
In terms of the abolition of prescription charges, the Government has agreed to fully fund this but of course it may well have a financial impact on the NHS itself.
Those two examples show some of the increasing cost pressures that are due to come about. That’s all within the framework of smaller percentage increases in funding allocations over the next three years whilst at the same time being required to make a larger efficiency saving.
What do you want to see happen now?
We would like to see those NHS bodies that have good financial health maintaining their good financial positions and those that are struggling continuing to strive for improvement.  All NHS bodies should be seeking to strengthen their financial management and governance arrangements. This is especially important given that NHS bodies will have to deal with a tighter financial settlement over the next three years, while at the same time having to make greater efficiency savings.