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Finance plan for cash problems at isles’ health board                            27/4/09

A crunch plan to desperately tackle the cash problems of Western Isle health board will be aired at a special meeting this week.

In a report Finance director Marion Fordham warns of the high risk if the body does not operate within its means.

It is pointed out that the "recurrent financial balance is essential to the ongoing stability of service provision and must be restored as soon as possible and maintained thereafter."

The organisation has a £ 3 million loss after the haemorrhaging of massive amounts of cash started five years ago.

It has now devised its latest plan to stem losses.

Crucial to the strategy is a promised £ 3 million loan from the Scottish Government to "clear" the accumulated deficit.

But Scottish health minister Nicola Sturgeon has imposed a condition against the loan requiring satisfactory progress from the health authority board and its commitment to pay it back in the future.

Though the body believes it will break-even within the last accounting period it faces more financial woes by having to make £2.9 million of savings and cutbacks in the new financial year to cover an immediate funding gap in its £68 million allocation from Government.

£100,000 savings are to come from better use of locums while freezing 27 vacancies is expected to win £610,000.

Improved prescribing by GPs should gain £400,000. More effective placements for patient treatment at mainland hospitals could achieve £250,000.

The body's money troubles emerged in 2004 amid allegations of bullying and mismanagement by senior bosses.

Nurses and staff passed a vote of no confidence in top executives and the relationship with Western Isles council broke down.

Staff were furious that the then Labour health minister Andy Kerr refused to intervene until he was forced to fly in a hit-squad in a belated effort to sort out the chaos in 2006.

The hit squad said they discovered a catalogue of dysfunctional management, poor leadership, feeble communication with staff and public, low staff morale, over-spending of budgets and weak control of accounts.

Finances were then in a very serious condition with "great concerns" over an inadequate financial recovery strategy which was said to have "no basis of sound action plans.”

Projected savings had been double-counted, budgets were not notified until close to the year end, and an action plan to tackle the crisis did not appear.

But former chief executive Dick Manson claimed that problems in management and financial control existed before his arrival.