NHS Fife have always known they would be in the red at the end of this financial year but the board were told this week it's worse than expected.

Since March, health chiefs been warning the Scottish Government they can’t balance the books and they're anticipating a £55 million budget gap by March 2025. 

However, the latest report from Margo McGurk, director of finance, revealed that NHS Fife are already spending even more than they expected, they overspent by £7m between March and May of this year – £2m more than anticipated.

It’s all due to continuing cost pressures and unachieved savings brought forward from previous budgets. 

Regardless of the reasons, board members took only “limited” assurance from the financial position at Tuesday's meeting. 

“The overspend to the end of May 2024 is £7m and includes a continuation of the underlying and new cost pressures described in the financial plan,” Ms McGurk said in her report. 

“At the end of May, the board retained budget is approximately £2m more overspent than anticipated.” 

“Taking all of the issues noted in the report,” she added, “the level of assurance at this stage is ‘limited’”.

She said there was “some assurance” that risks can be controlled but “there remains a significant amount of residual risk, which requires further action to be taken”. 

On the bright side, Ms McGurk told the  board  that the rate of overspend is slowing down as the year progresses. 

But the bigger picture is NHS Fife faces an expected £55m funding gap by the end of the 2024-25 financial year. 

The board has known about that predicament for a while now, and it has been working with the Scottish Government to try and get costs under control. 

According to Ms McGurk, the gap will be addressed with a “range of cost improvement schemes and efficiency initiatives” to offset £25m, which would still leave a £30m black hole. 

To avoid that would involve an additional four per cent of 'savings' - or cuts - through a 'Re-form, Transform and Perform' framework.

This will involve 'immediate' changes across the organisation. 

The health board say this will be across about 15 areas of medicine: continued medicines optimisation – that means effective purchasing, prescribing, supply, administration and waste reduction.

NHS Fife also hope to make savings through the major private finance initiative contract review for phase 3 developments at Kirkcaldy’s Victoria Hospital. 

They're also planning to 'rationalise' their estate and infrastructure as well as reductions in surge bed capacity – moving beds into alternative parts of Victoria Hospital - and reviewing models of care.

Cutting spending on supplementary staffing, on external healthcare providers and examining procurement schemes and contracts for savings opportunities are also on the cards. 

So far this year, the board has managed to make £3.2m worth of savings, exceeding the £2.5m year-to-date target.