beta

You're viewing our new website - find out more

Publication - Report

eHealth funding: independent review

Published: 23 Mar 2018
Part of:
Health and social care
ISBN:
9781788517478

An independent review by Grant Thornton UK LLP on eHealth funding between eHealth, NHS National Services Scotland and NHS Tayside between 2012 and 2018.

27 page PDF

453.9kB

27 page PDF

453.9kB

Contents
eHealth funding: independent review
NHS Tayside

27 page PDF

453.9kB

NHS Tayside

NHS Tayside received funding each year to ‘hold’ on behalf of the eHealth reinvestment fund. The mechanism for transferring the funds was through an increase in revenue resource allocation for the year. In all but one year (2013/14), where the reinvestment fund balance was lower at the year end, the NHS Tayside had a net increase in in-year revenue resources from the allocation. The Boards’ financial performance is measured against agreed revenue resource limit.

Transactions and impact on underlying financial position

We reviewed NHS Tayside's financial statements and agreed that the transferred sums are included within the disclosed revenue resource allocation. However, no disclosure has been made within the financial statements to highlight that the Board’s allocation includes sums held on behalf of eHealth Leads for a future year.

Since 2001-02, under Resource Accounting and Budgeting ( RAB), NHS Boards are provided with a Revenue Resource Limit, a Capital Resource Limit and a Cash Requirement. The RRL is not accrued in the accounts rather it is a limit set by the Scottish Government Health and Social Care Directorate, within which NHS Boards are required to contain their expenditure.

In recognising the eHealth reinvestment funds at the end of each financial year as part of the Board’s RRL, for which corresponding expenditure has not been incurred, NHS Tayside has not appropriately disclosed its true financial performance in year. The table below summarises NHS Tayside’s underlying financial position when eHealth monies being held each year are removed against the reported position.

  Reported £m under/(over) RRL £m Net in year impact of eHealth funds £m Underlying financial position under/(over) RRL £m
2017/18* (5.0) (5.238) (10.238)
2016/17 0.117 (1.891) (1.774)
2015/16 0.145 (0.109) 0.034
2014/15 0.58 1.662 2.242
2013/14 0.199 (1.33) (1.131)
2012/13 0.274 (0.87) (0.596)

*The Board financial forecasts as at February 2018, are dependent on the receipt of £2.7 million of eHealth funding in the current year and retained carry forward from 2016/17 of £3.583 million.

In 2016/17, NHS Tayside received funding of £2.582 million which the Board agreed with eHealth Leads that it would carry forward to 2018/19 rather than repaying in 2017/18. In addition, towards the end of 2017/18, the Board’s Director of Finance requested the transfer of a further £2.7 million being the eHealth surplus monies from 2017/18.

NHS Tayside (continued)

Transactions and impact on underlying financial position continued

From review of NHS Tayside’s Directors’ Group Finance Briefing paper (14 February 2018) the receipt of these monies is essential to enable the Board to deliver its targeted outturn position. The paper identifies that one of the following risks to the delivery of a £5 million 2017/18 outturn position included the following risk: £2.7 million of “eHealth funding transfer from NSS, required to support deferred spend target”. The paper goes on to note that “verbal and email agreement received from NSS. Transfer requires to be processed through SGHSCD allocations in February”.

Finding 2: NHS Tayside’s reported financial performance may be misrepresented for the past five years. The Board recognised allocations that were communicated at the eHealth working group as being ‘held’ on behalf of eHealth Leads (other health boards) to support their underlying financial performance.

Processes

The carry forward of the eHealth reinvestment fund balance was part of the overall eHealth financial strategy to meet future year financial pressures. Agreement to the receipt of transfers of year end surplus balances of eHealth funding was through email confirmation from either the NHS Tayside Director of Finance or NHS Tayside Director of eHealth, to eHealth and NSS. From review of Finance and Resources committee papers and supporting documentation, there does not appear to have been any wider consultation or approval for these transactions within the Board. The NHS Tayside Head of Finance and, on occasion, the NHS Tayside eHealth Director were also included within email trails. However, representation from NHS Tayside was through the Director of Finance.

We understand that there are currently no documented procedures around required approval or agreement to revenue allocation changes. The NHS Tayside Director of Finance made representations on behalf of NHS Tayside to agree to the receipt of additional allocations each year as well as the subsequent repayment of the amounts. There is no independent review and authorisation of these transactions.

Finding 3: There is a lack of controls in place at NHS Tayside around the approval for amendments to revenue resource allocations to the Scottish Government. In addition, due to the lack of transparency in financial reporting arrangements, there has been a lack of challenge or effective monitoring of allocation adjustments in year.

NHS Tayside (continued)

Processes continued

During 2017, the NHS Tayside Director of Finance made a specific request for the year end allocation of funding to be split across four different funds. Due to the lack of detailed records to support and authorise the Board’s agreement to revenue allocation adjustments, we have been unable to confirm the rationale as to why the revenue allocation was requested in this manner. From consideration of NHS Tayside’s financial monitoring reports we cannot find any rationale why the funds would require to be split. We do not consider this activity as indicating anything untoward as the Board reporting (as noted below) was not sufficiently transparent to allow the reader to easily identify the £2.582 million balance.

Oversight and review

We have reviewed NHS Tayside’s year end outturn financial monitoring reports presented to the finance committee since 2012. We have also reviewed internal management reports summarising the financial performance in year presented to the Directors Group. The reports do not detail the nature of individual adjustments to revenue allocations each financial year. We found that the eHealth funding is not specifically referenced. The balance is included within ‘earmarked reserves’ and deferred expenditure. As NHS Tayside will never incur “expenditure” in relation to this revenue allocation as it will be returned to NSS via negative allocations in future years, we consider the recognition of this inappropriate.

Finding 4: The financial monitoring reports presented to the Directors Group and Finance Committee / NHS Tayside Board do not detail the eHealth transactions. Given the significance of the transaction values (£2.582 million in 2016/17) on the Board’s reported outturn position we would have expected greater transparency in monitoring reports. Given the transaction was not explicitly reported in financial monitoring reports it would be difficult for other members of NHS Tayside senior management or the Board to be aware of the arrangement.

NHS Tayside (continued)

Earmarked reserves / deferred expenditure

NHS Tayside financial plans recognise amounts that are earmarked for the financial year. This includes amounts defined as ‘deferred expenditure’ relating to funding received from SGHSCD but for which the costs will not be incurred for future years. The Directors’ Group Finance Briefing paper (14 February 2018) outlines the projected financial position for the year ended 31 March 2018. This paper is signed by the Strategic Director of Finance, the Director of Finance and the Head of Finance. From our review we have identified that the eHealth monies subject to our investigation are included within a wider reported balance of deferred expenditure.

NHS Tayside have “over many years” had a process whereby its financial plans incorporate an element of deferred expenditure i.e. costs incurred in delivering projects that may have slipped where funding from SGHSCD was received in the prior year. This would be partly offset by assumed levels of SGHSCD receipts that would not incur costs in the forthcoming year. This process resulted in the Board recognising SGHSCD funding without incurring the costs involved in the programme. This inconsistent with principles of annual resource allocations, whereby if boards are unlikely to incur the expenditure that the funding is for it should either be returned to the Scottish Government or an agreement to utilise in the current year.

Finding 5: The investigation of eHealth monies including review of financial budget and monitoring papers as well as discussions with the NHS Tayside Head of Finance, raises concerns around NHS Tayside’s financial management arrangements. There does not appear to have been any challenge from across the Board around the accounting treatment of eHealth monies as well as other monies recognised in year but for which expenditure was deferred to future years. This, in our view, demonstrates a lack of understanding around the principles of resource accounting within the NHS.

The NHS Tayside Strategic Director of Finance is undertaking a strategic review of the Board’s underlying financial position and rebasing financial plans which is due to report by 23 March 2018. While this review is ongoing, we would anticipate that there will be a significant increase in the forecasted budget gap and required levels of savings as the Board look to establish more robust financial plans. This will include the reliance on deferred expenditure, including eHealth, to manage the financial position.

Finding 6: The eHealth money transactions were not visible across either internal senior management financial reports or the Board / Finance and Resources Committee papers. While not in the scope of our review, we have significant concerns around the practices being followed by NHS Tayside in relation to the use of funds to offset expenditure to which the funding had not been provided. This process has been embedded into the Board’s financial planning and financial reporting processes for a number of years and therefore has partially masked the underlying operating position of the Board.


Contact