Health Board budget woes

The Welsh Government has rejected Powys health bosses plans for a £25million deficit budget for this year, and will have to resubmit their proposal.

At a meeting of Powys Teaching Health Board (PTHB) on Wednesday, May 22 board members were told, that following feedback on their initial budget plan from the Welsh Government, the organisation would need to revise and resubmit a proposal by the end of this month.

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In March, the board agreed its annual delivery plan for 2024/2025 which includes a budget deficit of £24.9 million and a savings target of £7.9 million.

This is on a budget of £421 million for the year.

The annual budget is part of a health board’s five year integrated plan to move towards a more preventative approach and tackle the financial issues.

Nine parts of the plan had been rated as “low” confidence of delivery and the Welsh Government had said that the plan was not “supportable or acceptable” in its current form.

PTHB chief executive Hayley Thomas said: “The Welsh Government welcome the ambition set in our plan regarding the shift to a preventative approach – but as it stands needs to be looked at again.

“We need to deliver an acceptable plan that provides a material improvement in the significant deficit position that we are currently holding.”

Ms Thomas added that other Welsh health boards were in similar positions and holding talks with the government.

She added that PTHB was expected to submit a revised proposal by May 31.

Over the next few days, the board would need to discuss and agree “substantial actions” needed to respond to the Welsh Government’s feedback.

Planning, performance, and commissioning director Stephen Powell said that the original delivery plan would continue as a “baseline document” and revisions would be shown as a “change variation” to it.

Board chairman Dr Carl Cooper said: “A number of actions are described as having low deliverability.

“As a board what should we understand by that.”

On seeing that phrase Dr Cooper thought it meant: “don’t’ expect it to happen.”

Ms Thomas said: “This isn’t unusual at the start of the (financial) year.

“This is quarter one and therefore some of these things need time and consideration to actually build confidence.

“As we proceed, I expect the confidence to increase as further work and analysis and milestones are met and confirmed.”

Board member Ian Phillips said: “Our rejected plan was our best offer.

“To get that balance right to meet targets, maintain quality and ensure safety, our next best effort is going to be a considerably tougher ask for us.”

He believed the health board is in “fire fighting mode” which is not “great” for implementing long term changes.

Last autumn the Welsh Government made drastic changes to their 2023/2024 budget to find money for a major cash injection of over £460 million to bolster NHS services nationwide.

The extra funding was needed to deal with the inflationary costs, energy, and the legacy of Covid-19.

As part of the financial stimulus by the Welsh Government PTHB was given £18.3 million in additional funding.

Ms Thomas said that without this funding the situation would be “far worse.”

She also said that the board is discussing financial challenges in “May rather than August” as it had in the past.

Board vice-chairwoman Kirsty Williams asked: “What will be the journey to an acceptable plan.

“Are we simply focusing on financial resource, will we also be looking at our commissioning arrangements.”

Mr Thomas said that the changes would need to be a balance of “financial improvement and performance”.

She conceded it will take “some time” for the health board to get back to a balanced position.

Medical director Dr Kate Wright assured the board that “clinical safety” would be at the forefront of any changes to the plan and that the approach would be “to do things better.”

The board unanimously agreed the plan which will be the subject of quarterly reviews at future meetings.

Health boards have a statutory duty to balance their budgets over a three year rolling period – they can’t borrow money and do not hold cash reserves.