Comment / Scotland: focused on transformation

The publication of a medium-term financial framework for health and social care in Scotland articulates the challenge facing services in Scotland over the coming years. And new flexibilities announced alongside the framework – around breaking-even and brokerage – will undoubtedly help. But finance professionals gathering for the HFMA Scotland Branch annual conference on 25-26 October know that health and social care still face a huge transformation challenge over the coming five years and beyond.

The branch has advocated for a detailed assessment of the cost pressures arising from demographic and demand change and from the increasing use of new technology – most recently in our submission to the Scottish Parliament Health and Sport Committee’s inquiry into the 2018/19 draft budget. We have not been alone in calling for some form of forward financial view.

Last year Audit Scotland, in its annual review, also called for a clear and long-term framework showing how funding will be used differently to change services.

So, the Scottish Government’s publication of the Medium term health and social care financial framework, which covers 2019/20 to 2023/24, should be welcomed. It analyses the pay, price, demographic and non-demographic cost pressures over the period and clearly identifies the £1.8bn gap between costs and funding that will open up if the system does not adapt or change its model of provision.

It further suggests where the savings could be found to close most but not all of this gap and deliver a financially balanced and sustainable health and social care system. The government has also nailed its colours to the mast in identifying how it thinks the balance of funding between hospital and out-of-hospital services needs to change as a result of, and alongside, these efficiency programmes. Crucially it spells out the clear aim for hospital services to consume less than half of frontline spending in five years’ time – currently it is 51%.

Alongside this, the government has also delivered a financial flexibility that NHS boards have argued for – the ability to break-even over three-years rather than annually as is currently the case. It will also not recover boards’ outstanding brokerage from the last five years – giving boards a clean start.

The break-even change – allowing a 1% flexibility on the annual resource budget for each board as long as it delivers balance over the three years – is sensible. The service has committed to a Health and social care delivery plan that is targeting a much greater focus on prevention, early intervention and supported self-management.

This is the right direction of travel and widely supported. But moving from the current set-up to new models of care with a greater emphasis on community provision cannot be delivered overnight. They will require upfront investment and potentially involve some double running costs until new models start to deliver a parallel reduction in hospital care. So, a little financial headroom has to be helpful.

Transformation and reform now have to be our focus – and finance’s role in that transformation is exactly what the HFMA Scotland conference will cover, including a keynote address from Christine McLaughlin.

Scotland has some key building blocks in place to support the transformation and integration agenda – with integration authorities already bringing together NHS and local government funding for primary, community and social care. Our structure provides us with a good starting place for deciding how services can be best delivered across whole systems. But we also need to consider how services can be planned across regions as well as within boards – and that’s something we’ll be looking at during the conference.

There is also a lot we can learn from other systems as we all strive to meet common challenges. So, we will also hear on Thursday afternoon from a number of HFMA trustees about how whole system working is being taken forward in England and on Friday morning about integration in Manchester.

The recent financial framework helps to spell out the scale of the challenge facing health and social care in Scotland and points us in the direction of where some of the required savings may be found. The new flexibility on break-even helps – and would be further enhanced if it was accompanied by multi-year budgets for boards. But the challenge is significant and the work starts now.