 charity leaders and gentlemen and I can I welcome members of the press in public to the third meeting of the public audit committee in 2015 we are delighted to be here in Inverness and can we take this opportunity to thank Hilling Council for their hospitality so far This is the second time that the committee have visited Inverness. I think a last visit here was in 2005 so thank you for making us feel so welcome. Can I ask all members of the public present here today to ensure that the electronic items are switched to flight mode or turned off. First of all, we have apologies from Drew Smith and Shirt McMillan in advance of today's meeting. I move to agenda item number one and that is a decision on taking business in private. The question is that we take agenda item number three in private. This is to allow the committee to discuss the evidence received and to seek any technical advice from Audit Scotland. I will agree. Thank you colleagues. Agenda item number two is evidence from NHS Highland on the Auditor General report for Scotland's report entitled the 2013-14 audit of NHS Highland financial agreement. I'm delighted to welcome our panel this morning. I welcome Gary Coots, the chair of NHS Highland. I welcome Elaine Mead, the chief executive of NHS Highland, Nick Kenton, director of finance of NHS Highland and Chris Brown, chief internal auditor of NHS Highland. I understand that we have an opening statement from Mr Coots. Thank you very much indeed and can I thank you and the committee for welcoming you to Highland. It's great to see you up here and I'm particularly pleased that you're going to be able to spend time with us this afternoon and come and see some of the great work that we're doing here. I'm immensely proud of a lot of what we're achieving. I think there are groundbreaking work going on from our partnership with the Highland Council where we've integrated health and social care to our absolute commitment to quality improvement, working with acknowledged world leaders to transform our services by putting the individual service user a patient at the heart of all that we do. I hope when you have the chance to hear about some of this work this afternoon you'll share my excitement about the future. However, I'm aware that this morning we're not looking at the future but rather looking back at our performance last year. I was as disappointed as anyone that we required an element of brokerage from the Scottish Government to achieve financial balance and was also very disappointed that the auditor general saw sufficient weaknesses in our planning and controls to table this section 22 report. NHS Highland values the audit process. We work closely with both internal and external audit and use their findings to help us to improve what we do locally and I can assure you that we have reflected long and hard on last year's financial outturn and on the section 22 report. We'll be able to report to you today positively on the measures we have put in place and the work that is ongoing to try and ensure we have more effective planning and better controls as we go forward which I hope will give you confidence that we have indeed learned. However, I do think it's important that we look at our performance in context. In the 11 years I've been chair of NHS Highland we've never before required brokerage. In the last five years almost half of all Scotland's health boards have required some brokerage at one prime or another so that in itself is not an unusual occurrence. In fact, because boards have no capacity to keep reserves and will always seek to spend all of the resource that's allocated to them I think it's sensible and if not inevitable the NHS Scotland will want to retain some flexibility to support boards who may have slight overspends at the year end. The alternative would be for us to be far more cautious and have far higher underspends with money being returned to the centre not being used for the benefit of patients and the public locally. The amount of brokerage we required was also relatively small 2.5 million represents not 0.3% of our total budget. I'm not making light of it, it's not desirable and it's not something I ever want us to repeat but from a 3 quarter of a billion budget it is a relatively modest amount. Of major concern to the board was the suggestion that it was not aware of the financial position and not involved in decisions about seeking support from government. NHS Highland prides itself in its openness and the level of detail we report in public. We webcast our board meetings not only as our board held in public but our committees are as well which is not standard practice in all public bodies. The extent of our public reporting can I think be evidenced by the press cuttings we've seen. I've got a selection of them here which go back to August last year which are reporting our underspend so if we were trying to be secretive we weren't very good at it. On the back of the section 22 report we commissioned our internal auditors from Scotland grief to review aspects of this section 22 report including our response to it and we're joined by Chris Brown who's our chief internal auditor today. He'll be able to give his independent view of what he's seen and I hope that also will give you confidence about us going forward. However I want to be absolutely clear the board was fully aware of the financial situation. We made a judgment on the management actions that were being proposed and came to the view that these were sufficient to bring us back into balance. Our financial position deteriorated because of unforeseen circumstances late in the year and we were aware that there were ongoing discussions with government about the position. This happens routinely and was not the subject to specific reporting but it was of no surprise to board members. Indeed it was referenced at public meetings. While the possibility of seeking brokerage was always a possibility it was not agreed until the 6th of March and even then not signed off until the 12th of March. It was then made public upon the publication of board reports and press briefings less than a fortnight later and formally reported that the next public board meeting six days after that. Again when this was reported there was no surprise for board members. We knew the system and the process and the formal board and committee papers had kept us fully up to date. The suggestions that executives kept members in the dark is just not true. Our top team are among some of the most values driven and transparent professionals I've ever worked with in 30 years in public life. I have 100% confidence in their integrity and I know they could no more keep us in the dark than fly in the air. Again I hope the internal audit report will give you confidence in this. Just let me reiterate we're not complacent about the position we found ourselves in. We do not underestimate the seriousness of it. We've learned the lessons and I've been working since the start of the financial year to make improvements in our planning financial controls and reporting. We have a team of execs clinicians and managers committed to our quality approach for delivering services. We still have a way to go but I'm confident that we're on track. We're working in a very difficult environment. Our view is we have to develop a culture of continuous quality improvement led by staff on the ground who are empowered to work with communities, patients, service users, carers and families if we're going to deliver the type of health and care system we all aspire to. It won't be easy but I genuinely believe we are well placed to deliver and we'll use the hard lessons of last year to help us. Thank you. Thank you Mr Coutts. Can I begin by first of all thanking you for your presentation and I'll begin with first question. Can I ask you, you advised us earlier that you're not complacent. Can you confirm that you accept the report, the section 22 report, its findings and its conclusions? Absolutely. With the section 22 report we've discussed it with our auditors and they've given a fair report of what they saw as auditors do and we are working hard to make sure that the areas of weakness that they identified that we are learning from so we are content with that. Can I just ask you to comment on the comments in the press and journal today where you were using concerns and connection with some of the comments from the audit committee and you advised that some of the conclusions were unfounded? I think that there's two things here, there are three things actually. There's the audit, the section 22 report which today I'm absolutely saying that we accept what that has reported and we're acting upon it. In that report there is not any suggestions that the board was unaware of the financial position. There was some issues about the timing and I hope that the internal audit report which we've now provided as evidence gives some clarity around that. There were comments made at the last audit committee which we felt were not representative of what was said in the section 22 report and that we did feel was unfair about the way that my board had been informed and discussed the issues. Of course we weren't at that committee so we heard we didn't get a chance to speak to you and your colleagues about what was being said at that time and I think if we had and if we'd been able to provide the evidence that is contained within our timeline and within the internal audit report I think you'd have got some assurance that far from being kept in the dark we were absolutely open about the way that we were working there. If I can make one further point. If it's possible in the responses please. I will as much as I can that we the auditor had looked at our board meetings. I don't believe that I personally had spent enough time with the auditor to make sure that they were completely aware of all of the scrutiny that took place at all of our committee meetings which was vital to our governance and if they had been I think that they would have been able to give you different advice at the committee. Some colleagues will have questions in that later. Ms Mead can I just ask you can you clarify for the record who the accountable officer is for NHS Highland? Yes for the record I am the accountable officer as Chief Executive of NHS Highland. Okay so just you know for the record I think we all want to be clear about this. Reporting to the board is your responsibility and your responsibility alone as the accountable officer. It is absolutely my responsibility to report to the board. So can you advise me how your heads of department which you'll have a number of I have absolutely no doubt how do they report to you? So I meet with them regularly we also meet on a weekly basis as a leadership team and we meet formally as a senior management team and that's an audited meeting. And do they keep you informed of all the all aspects of the the board's activities including financial reporting? They do I keep very close convener to the detail particularly around the financial activity. I meet with my chief operating officer who in turn meets with the director of operation on a regular basis and so I'm very close to the financial position. So how would you expect them to keep you informed? Would you expect them to keep you informed informally or would you expect formal papers to advise you on a regular basis what information that you you'd wish to receive in respect of the financial arrangements within the board? So we we have more recently strengthened that reporting through a performance board that I'm now chairing but up until that time they were less informal and more informal discussions meeting with my colleagues as I've said already on a weekly basis but there'll be papers that go through to our senior management team and then onwards to the board and my executive colleagues contribute particularly the director of finance draws up the finance report for the board and the improvement committee. So just for clarity again for the record if you find yourself in a position or your heads of department find themselves in a position where perhaps there are some financial challenges facing their departments you would expect to receive that information quickly wouldn't you? Unformally. Absolutely I would expect to meet very quickly. So in terms of the position that the board found themselves in the board were facing significant financial challenges there was a brokerage being negotiated would you not find yourself in the position as an accountable officer that you should formally provide that information to the board members in the same way that you would expect your managers to provide that information to you? I would convener and I did my best to do that by making sure the chairman was aware of our final decision to secure brokerage. Just to be clear here though we're actually talking not about the final decision we're talking about the negotiations that will take place with the Scottish Government and this is referred to in the Auditor General report so if we can be clear your responsibility as accountable officers to provide that information on an ongoing basis as you would expect your managers to do. It is and I was discussing with the board our financial pressures throughout the year so my board were quite clear both formally and informally and that's available in the board papers in respect to the brokerage position. The brokerage position was only formally agreed on the 12th of March. I understand it was agreed but for clarity again and this is in the Auditor General report discussions concerning board members being aware of that a brokerage was being discussed at what stage was that advice to the board? So that advice to the board was let me just look at the detail here so I was about to take you through the timeline convener would that be helpful to take? No I think we've already got the timeline. If we just be clear though in terms I mean I think we just we just want to be clear here what you expect of your managers your heads of department is what the board members would expect of you am I correct in that? It is and I've done my best to be able to keep the board informed both formally and informally. Do you accept it's informal though? Advising board members at a development session that we're looking at the possibility of brokerage is unacceptable do you accept that? I would accept that was in an informal situation on the speech board about the challenges of our financial position. Yeah so you have significant responsibility as a accountable officer you pay the salary of £120,000 a year plus pension benefits and that those benefits are available to you because of the significant responsibility that's expected of you surely your board members would have expected you to provide formal information and connection with the financial management of the organisation as you would expect your managers to do. And I did my best to give that information to the board? I appreciate you did your best but it didn't happen though did it? It did happen as soon as we secured brokerage? No I appreciate it was secured but do you accept that there was negotiations taking place and that information should have been provided as you would have expected your management team to do to you? Yes I do accept that. Thank you. Colin Beattie. Thank you convener. Good morning. I'd like to explore one or two the points that have been raised in the Auditor General's report. The convener has already touched on brokerage and in 2013-14 the brokerage was £2.5 million. Is there a prospect that brokerage will be required again this year? I certainly do not anticipate that there will be brokerage required this year. We have publicly reported our position. We still have a gap in the last quarter to make up to ensure that we do break even and I'm confident that we'll be able to do that. So that is the position and I would certainly not expect there to be brokerage required this year. So at this moment as reported to the board as far as the board is aware there is no requirement for brokerage? The board is working on the assumption that our management plans to be able to break even will come to fruition. As always we are reporting our monthly position regularly to Scottish Government but there is no plan in place to require brokerage. The brokerage of £2.5 million is obviously repayable over three years so that has to be factored into your plans. Comment is made elsewhere that the current savings of the savings that are highlighted by the Auditor General two thirds of them are non-recurring. How are you going to manage to reconcile that with non-recurring savings? You can't have non-recurring savings every year otherwise they're not sustainable. How are you going to tackle that? We want to get into recurring balance and indeed if you turn the clock back to 2010 we've managed to get the board into recurring balance and that is where we want to be. What we need to do is to get sustainable service redesign to make sure that we get the balance of our activity correct to take out to make sure that we get back into that position. You can't do that overnight. A lot of our redesign takes many years to get the full benefits from with the level of public engagement that we have to get involved in to get service change agreed so we will require to rely on elements of non-recurring until we get these recurring elements coming back out but we are as a board absolutely aware that requiring high levels of non-recurring funding is not sustainable and so therefore we want to convert that to recurring as quickly as we can and that's what our target's on. Is there a plan in place for this? Indeed, in fact our board meeting meets tomorrow and we'll be looking not just at the plan for the next coming year but for a 10-year period which has got very significant levels of service change that we will need to be able to deliver. Obviously we won't just work a 10-year plan, we've got a one-year plan, a three-year plan and the 10-year more strategic elements but that is fully discussed in our board meeting tomorrow and is available. The papers for that are available online. This 10-year plan does that replace an existing plan? Is it an update of an existing plan? Traditionally, and I've been around for a while, people have been looking very much year to year. We have moved more in the last few years and certainly when resources are tighter it's more important to make sure and there's less availability to use existing resources to fund change so the reliance on longer-term plans is essential. We've got a number of longer-term plans for parts of our business whether it's the adult social care element, whether it's acute care, whether it's primary care and we just need to make sure that those are refreshed so this is a refresh of those plans but it's building on the work we've been doing in the past. Isn't it going to be very challenging to achieve the non-recurring savings? I mean I'm looking at paragraph 12 of the Auditor General's report where in 2013-14 11.4 million were non-recurring. How sustainable is that? It's far more sustainable to get recurring savings and therefore you get into financial balance off a budget of three quarters of a billion pounds. There's always going to be elements of non-recurring elements that arrive. What is the acceptable level of non-recurring off three quarters of a billion budget? I think it's probably about five, six million personally and if that's being achieved I think that it's probably a level that would be recognisable. We certainly want to half at least what we're currently using and that will be our plan. And that is our plan going into next year so we're looking to reduce our dependence on our non-recurring savings in line with the Auditor General's advice. We think that's good advice, we absolutely need to do that and that will help us into the next financial year. Okay moving on to through the Auditor's report. When I come to the section on financial management paragraph six NHS Helm was forecasting it would break even at the end of the financial year and the monthly reports to the board forecast break even but the actual figure was showing significant overspends. How can that be? I think this is where some of the confusion or some of the board is absolutely clear about this. We know that at the start of the year what our financial position is and if we're going to achieve break even what level of savings we have to find in that year so we report that we anticipate to break even but that is assuming that we will make savings of a certain amount during that financial year. We also have plans in place to achieve those savings. Those plans get crystallised during the year so we'll know what we want to achieve. Certain level elements of saving for example within the acute hospitals will want to make certain elements of savings within primary care and we will know what those plans are and our operational units will be scrutinising those plans to make sure that deliverable and acceptable is that we go as we go on. So what we're reporting is here's the scale of the the challenge that we face in terms of the saving that we have to make to break even and here are the plans that we have in place to achieve that and here is what we've delivered in relation to those plans. So for example in August last year we reported to the board that we still required to make around £10 million of saving in the remainder of the financial year. Publicly reported absolutely clearly stated and we had plans in place to do those and indeed they were carefully scrutinised not just by ourselves but were reported widely in the local press. This was not something that was being done in any way secretively by the board. But the auditor general says that there were insufficiently detailed plans about bridging the gap between the deficit and the forecast break even. I accept if they had been sufficiently detailed and robust then we wouldn't have required brokerage at the end of the financial year so I accept that as a statement. What I also have to say however is that you know if you look at the history of NHS Highland we have delivered break even historically year after year after year after year. This last financial year is an exception for us it's the first time as I say in 10 years at least I don't know what I don't know if even if we have required brokerage but certainly in the 11 years I've been chair it's the first time so we believed that we had robust plans in place. We were making ourselves as board members looking at those plans we were making the judgment as to whether those were robust enough to deliver. Now clearly on that occasion in that year they were not or we would not have required brokerage however I don't think that you wrote that again the scale of it having started the year with over £20 million worth of savings to make sure we broke even and requiring £2.3 million of brokerage a lot of our plans worked. Just moving on to paragraph 8 of the auditor general's report there's a statement here that poor financial management was a major factor in NHS Scotland needing brokerage. Regmore hospital was part of it but it does appear that poor financial management generally was an issue would you agree? I have to agree I mean we would not have required brokerage if we'd had sufficient financial management we were looking at a budget of over three quarters of a billion pounds with hundreds of cost centres with lots of independent contractors and lots and lots of individual managers managing budgets. It's our responsibility as a board to make sure that there are sufficient plans and controls to make sure all of those deliver so that we deliver overall break even. Last year that was not sufficient and I am absolutely certain saying telling you that that's not acceptable to my board we're revising our controls and our planning to make sure that that doesn't happen again and so we have but we I can do nothing else other than accept that they weren't sufficient in the last year. The responsibility for that lie it lies with the board. The board is charged with the responsibility of making sure that we break even and that we have controls in place. I don't want to go into your micro detail over all of the but I will and I'm kind of happy of where the under and overspends across our whole budget were during that period of time but can I also just in connection with that there was a follow-up report by the internal auditor in May 2014 highlighting a lack of progress with the recommendations of the 2013 report how did that come about? We asked for those reports why weren't they implemented We had a change in the management team within Regmore which allowed us to we believe we've got much more robust management in Regmore but during that period of change it was not possible to implement the full level of management actions that we would have wanted to do so it wasn't until January 14 that we managed to get that new team in place who had really worked out themselves and with the support of the director of finance, chief executive and others the extent of the controls that were required and put in place the new management regime which we are confident will deliver the performance that we require. The auditor in paragraph 15 reports that NHS Highlands financial position will remain challenging for the next five years that's assuming that you get your breakout even situation where you're going to get your recurring savings and even then there's other challenges to face. Are you satisfied that the planning process you have in place the financial controls you have in place at this moment are sufficiently robust to take you forward given all the challenges and I'm specifically referring to paragraph 15 of the auditor general's report here I yes I mean I meet regularly with all of my colleague chairs in NHS Scotland and there's none of them telling me that there's anything other than challenging it's going to be challenging for us. I am confident there's been good news in relation to the acceleration of the bringing us up to the level that we should be getting with our NRAC share which will be good news for us which is additional resources which will help us and but I am absolutely confident that the approach that we are taking to eliminate waste to focus on the quality of care for individual patients and the public that require our services will deliver the sustainable NHS Highland in the future. My last question just one specific agency staff 83% increase in the cost of agency staff between 2012-13-13-14 we still relying very heavily on agency staff clearly it's a substantial element in the budget it is we still do and we look to eliminate it as much as we possibly can by getting substantive positions in place there are times when agency staff are very useful to help you with through peaks and troughs there's times if you are making change it's good not to fill posts on a permanent basis until you reconfigure the service the way you want it but that level is far too high it is not a good place to be I know it has come down and it's something that we're managing I don't know if you've got any specifics on that yes the if I may the locum cost particularly as part of the agency costs were full year effect in 1314 the year we were talking about of 9.7 million we recognise absolutely that we have some of the highest costs on local locum and agency staff in Scotland and that's really due to three areas one is that it's difficult to recruit some specialized doctors and I welcome the opportunity to discuss that in more detail with the committee this afternoon so those are particularly hospital doctors and some links to training numbers in the UK the generalist jobs in our rural general hospitals also are not as attractive as they were there is a one in three on call for those posts and those are very difficult to sustain so we are still now having to replace those posts with locum doctors and there is a role for the board to take on and we have to take on responsibility if we're unable to recruit GP's general practitioners to practice and therefore we've had a number of practices in the last 12 months where we've had some difficulties so for example nearly half a million pounds costs for maintaining a salary GP in a team up in Thurso so all of those things we're working on absolutely to try and reduce our reliance on locum costs and the vast expenditure on that but there are some challenges for us thank you by the way there's not a court of law although it may feel like that we normally at all at the same level so I know you're you're next or cricking here but that's just the way it is um I wonder if I could just ask a number of factual questions in relation to the to the auditor general's report firstly in relation to the financial challenges you had in the financial year we're discussing these were as as the report suggests mainly due to an overspend on the operating cost for rigmore hospitals that true it was a significant proportion of it yes what's significant in that sense mr cuts a percentage a percentage for rigmore was probably about uh i'm actually they were spent at rigmore for the year 2013 14 was 9.6 million yeah but but when it says significant was it 75 percent of the problem was it 90 percent of the problem what what's in terms of the costs of the rest of the board the overall overspend was if you ignore the brokerage 2.5 billion so it was in the excess of the brokerage figure so in effect the rest of the board was collectively we've done the spend so it was rigmore was the problem yes it was the the key problem the pressure but yes that's correct and mr cuts has already accepted that as the auditor general says the weaknesses in the financial management at the hospital so it was like hospital where the problems were rather than the rest of the board is that fair to say or rest of the board's functions yes largely yes um and as mr beattie's been asking internal audit report in April 2013 about rigmore highlighted several weaknesses in governance including budgetary control that's fair correct absolutely uh and a follow-up report on may 2014 highlighted a lack of progress again as mr beattie's been asking that's correct and fair not sufficient progress there had been progress but not sufficient okay do you want to just say what that what you think is that i mean when we got the the report from the original report there was a lot of training that was put in place with individual budget holders around their individual budget management and that is work which is paying off and there were other issues i mean the board had called the one of the committees of the board the improvement committee which is also held in public which scrutinises under performance had regularly asked for the management actions that were proposed in relation to rigmore to make sure that we were going to be able to see the improvement we're looking for and there were management plans in place these did not turn out to be as well founded as we had anticipated we have seen as I said changing the senior management team within rigmore and we are now seeing we I believe and we will continue to use internal audit to back up our assumptions I believe we now got a much better regime and a much better process in place to make sure that we've got over that problem but in hindsight given we are discussing a report that's about something that happened in a previous financial year do you feel particularly as a chairman that the board the board members the non-executive board members really challenged your executive team hard enough on all these factors yes I think I think we did I mean we've got three committees sorry two committees plus the audit committee plus the board that scrutinises it and we do get the plans that are coming in and around each of the areas where savings are being tended and they are challenged when we see whether the impact of that management action is on it is as predicted then if it's not sufficient and indeed in rigmore's case we saw during the year management actions that were being detailed for us they were not delivering the scale of the savings that we wanted and we were asking for those to be realized we did have particular issues in rigmore which made it harder for us to put in the strength of management actions that we would have wanted and we would have done in other areas I don't want to go into details about that here that we did in May 2014 was a report that was requested by the audit committee of the of the board so it was the non-execs who were asking us to follow up on the actions from the previous report that's all right that's entirely fair what I then can't understand is if the challenge was good enough why the the wider public because as you've said quite a lot you're reporting all this in a wider public sense why the wider public were constantly being told that you were going to break even everything was fine and yet actually the position was that you weren't at all you were running a deficit and you were going to run a deficit right through the whole year we absolutely did and we reported clearly to the public that we believed we would break even with sufficient management actions to close the gap to to to make sure that that deficit was closed and that is what we've said all of the way from August and it's it's in August editorial in the P&J saying that we would have 10 million gap if we didn't have the management actions that were there you know and you know even in this one Mary commenting on the fact that you know that we had to make those savings and Mary was quite rightly concerned that she didn't want to see those savings impacting on patient care excuse me sorry so so you know we were absolutely public that we still needed significant management action to be taken to make sure that we bridged that source of some regret then that the auditor general found that there were no significantly detailed plans to support the the contention you've just made I have to accept that they were insufficient now again I would ask you to to bear into account about that this was two and a half million gaps that we had at the end of the financial year compared to the 20 that was the opening position so a huge amount of effort was made to close it that the rest of the board managed to close that despite said specific problems at rigmore which resulted in nine million overspend there so there was an awful lot of very good action by an awful lot of dedicated and committed execs to do that but you're right I wish we weren't here I wish we had bridged that last two and a half million no I get that mr Coats I really do get a point about the rest of the board what I am again slightly struggling with this if rigmore was such a key problem for your board then that to me as a chairman or as a board member would have been a standing item on the agenda I'd been in on that every single board meeting all over the top of that because you knew that's where the problem was didn't you and it did appear on every single operational committee meeting every single improvement committee meeting and every single board meeting that the the figures in relation to rigmore reported and all of those were in public yeah okay so when the chief executive and the director of finance met the government to discuss the brokerage I presume that was to discuss the fact rigmore was the financial hole in your plans and therefore you needed the brokerage money to to square that one off I think as mr Kenton's already alluded to indeed we've made it absolutely clear to the Scottish government we had some concerns around the financial management in rigmore hospital but when we met on the 13th of December and that would have been our half-year review we were discussing the risk of the Scottish government around our break-even potential but at that point we'll we had a potential deficit of 6.5 million and that position improved when we got to month nine so we did have plans in month nine we did not wish to secure brokerage at all because we understood that would cause us more difficulty as mr Beattie alluded to in future years having to pay that back so when we got to month nine that's the December 13 figures we were then forecasting a 5.6 million pound forecast deficit and we reported that to the February board with some elements to close that gap and I think mr Scott that's what you're trying to ask me and if I can just identify where those were we expected in the last quarter of the year for rigmore hospital to be able to show an improvement of a million pounds in the event that wasn't the case but that was our plan at that point we were securing an additional million pounds from at that time the Highland Council we expected a benefit of two million pounds from asset lives that my colleagues can discuss in more detail and the remaining 1.6 million we were looking for from further management actions looking at vacancies or additional procurement benefits so we were comfortable on the 4th of February that we still had plans in place which would deliver the financial break-even when we then had the month 10 figures that was January 14 published on the 18th of February then we found and I was expecting us to be around a forecast position then of about 4 million pounds we found that rigmore had moved to its detriment of 400 000 rather than improved its position and that clearly then proved to be a significant risk to our financial balance plan okay and just in terms of my last point here you said very helpfully that you reported that discussion from December to the February board meeting to the February board meeting about a discussion that happened in December no time prior to December was the board formally told you were entering into negotiations over a brokerage we were not entering into negotiations around brokerage at that time we did not enter into negotiations until much after the i'd received then the month 10 figures so when did brokerage negotiations formally begin discussion around brokerage i asked the director of finance to open the discussions with the Scottish government after those month 10 figures became available put your January so that would have been after the 18th of February mr scott into march into march right okay thank you i can i just i'll just just briefly just to be clear that although the figures weren't of the board meeting they were at the committee meetings within the cycle so the the improvement committee and the operational committee units would have had those figures okay may this go on can i first of all say section 22 report is a very very serious report the last one there hasn't been one in my four years on this committee this is a very serious situation this committee has not been in in furnace as the convener said for 10 years and that was when the college uh was overspending can i go back to the convener's opening point NHS Highland agreed to the factual accuracy of this section 22 report agreed with the auditors from audit scotland sitting behind you the report states and this is a report that you have agreed to the chief executive and the director of finance Elaine Mead and Nick Kenton discussed the board's financial position with the Scottish government in December 2013 but did not formally advise the board at that time about the possibility that NHS Highland might not break even at year end do you agree with that because i think what i'm hearing what you're saying to my colleagues you tend to be muddying the waters from that point do you agree that you discussed the financial position with the government in december 2013 but you did not formally advise the board at that time that NHS Highland may not break even so i did absolutely discuss with the Scottish government on the 13th as as i've described to mr trafish we were not discussing or seeking brokerage at that point miss scanlon at all what were you discussing we were discussing our plans and the risk to our plans for a break even at the end of the year as part of our half year review with the Scottish government do you think you were overconfident in your recovery plan audit scotland tended as calling bt said found insufficient recovery plan weaknesses in your recovery plan were you confident with the government but perhaps not so confident with your own recovery plan we were confident with government and we were confident with our own plan should it have all gone to plan why were you confident in december but you'd to ask for money in february it's only eight weeks because of the changes in the month 10 position that was then reported from particularly rakemore and there was a difference there were two items that were different to us at that point one was a 400 000 pounds deterioration on the rakemore position which we had anticipated would be an improvement and in addition we'd also had a reduction on the expected amount we would get from the asset lives work and those two things together made me recognise that we were unlikely then to be able to deliver break even without support and you did not anticipate either of these spending requirements at that point we did not and we also had invited an independent sessor to come in and review our position douglas griffin who was the previous director general sorry director of finance for greater glasgow and clide who looked at that point over december time who looked at our plans interrogated us discussed with us our position spoke to colleagues who were now the new management team in rakemore hospital and was able to give us confidence in the way forward and he himself felt that if the way forward went to plan then we would break even and that was at that point various health boards in scotland most of the opening statement was about brokerage other health boards have received brokerage but not other other health boards apart from orcney have not been told so often that they are poor financial management so is that the reason that you're sitting here today and do you feel that you have overcome all the criticisms and that you're now on a path forward with a recovery plan and not requiring brokerage in future for this year absolutely accept the comments from the officer general and fully accept the section 22 report miss gammer okay well let's go back to the press and journal who have been very diligent in covering this and elaine made third of december and this is before the government intervention elaine made was absolutely confident at breaking even at the end of the financial year the government money came forward on the 12th of january and the board papers for tomorrow following an injection of six million you were confident on the third of this absolutely confident third of december you would break even six million government money i think you're using three million this year and three million next and the board are only only just two million short that's the paper for tomorrow so what this committee is looking for we want to be confident that you are in control and we no longer have poor financial management at nhs highland i'm certainly still very very concerned i'm not confident at this point that you are in control i think it's very important that we recognize that nhs highland has got a very very very good track record of delivery now last year in terms of our requirement for brokerage is the first time in over 10 years that we've looked for that i don't know when the last time was that we had to do it and i don't think it's accurate to to look at just one snapshot which is important we're not complacent about it we are absolutely not complacent about it but we're putting everything in place to make sure that we get this right for the people of the highlands point is that brokerage is not the point and enrack is not the point there are other health boards that have been underfunded so other health boards require brokerage other health boards have been funded below their target funding what is important here and the reason that we're here today is because audit scotland saw fit to draw nhs highlands accounts to the attention of the audit committee in the parliament because of poor financial management so the brokerage is not the point the brokerage was to fix a problem the main point is the poor financial management i want to leave here today hoping that we don't have to come back and see what you're doing this year next i'm looking for that confidence i've not got it yet perhaps it'd be useful if i explain some of the things that we've put in place since last the end of last financial let me just give you one example i will give you one example which is the programme board which was established to look at specific pieces of work across nhs highland in the past these were reported at a very high level to us now we have these reported in significant detail with non-executive directors who have got project management experience sitting on that programme board with our executives and them coming back to the board that is a significant improvement in the way that we we do it and they've been reporting all year and will continue to do so so i think we have learned the lessons we have put these in place and if you want details about how we have learned that we can do that well i think one of the points is the completely and utterly unfounded claims of of this committee we would be failing in our duty as a parliamentary audit committee where we not to respond to audit scotland section 22 report can i convener just highlight one or two points from your internal audit from nhs highland sorry a recommendation to improve the timeliness of financial information so that wasn't being done secondly financial management issues directly caused the need for brokerage could have been avoided so that wasn't done within the report nhs highland yeah you're going to make financial reporting more robust going forward these are promises made by you issues partly due to poor financial management and you could have been clearer about the assumptions made and related risks so you know what i'm looking for is an acknowledgement of that the section 22 report on poor financial management is accurate that these have all been remedied going forward and can i just say gary you've been chairman for 11 years well i've been in here since 1999 and i remember discussing with your predecessor caroline thompson the high percentage of non-recurring savings that cullen bt raised that was an issue over 10 years ago and you are still the highest by far in the whole of scotland so i'm trying to find this confidence of addressing poor financial management and i need that from you today okay um if you want details of all of the steps that we have taken i can do that but i can't do that briefly i'm also quite happy to ask for the director of finance and others to to come forward with details that i can just in terms of that it would be really helpful to get information and if we can respond in correspondence that would be really helpful we'd be very happy to in relation to the non-recurring element when you had those discussions at the time that i became chair of nhs highland we'd had extraordinarily high levels of non-recurring and we brought it down to zero as a board we brought it down to zero 62 percent isn't it currently sorry we brought it down to zero in 2010 2009 2010 we had it down to zero it has increased again and that is something which there are a number of reasons for it trying to make the changes that we are doing requires us to use elements of non-recurring but the board knows that that is not the position that it wants to be in and has plans to reduce those as well so uh it is not true to say that for all of that period of time we've had the highest level of of non-recurring because we did bring it down to zero and it has accelerated again it was raised in nhs overview uh audit scotland's overview of the national health service in scotland it was raised come here thank you you know good morning um i'm actually intrigued as to how you decide to uh what to decide which items go on to formal board papers and what's acceptable to be discussed at informal board meetings of the board the the board will make all decisions so any requirement for decision making will be made fully and publicly at a board meeting or at its what delegates to its committees which are also public meetings the board will also have the formal performance reporting whether it's in financial or whether it's in activity it will also have the clinical governance reports around health infection control etc so we'll have all of those that are absolutely raised at the board meetings in public the board will meet in at the board informally meets uh as is advised by good governance practice uh to make sure that it has its own training its own development that it understands fully new initiatives that are taking place in healthcare uh so that it's it's enlightened there and they will look at things that are not requiring decision but may well become issues in the next six months nine months five years so that we can uh be appraised of things that are in development uh but i can assure you and i've been around committee meetings for a heck of a long time in the public sector there are no secret meetings private meetings that are making decisions about the activity of NHS Highland so it's both that makes decisions as to as to what is on the agenda oh yes the agenda is the ultimately the agenda is the chairs yeah okay well allowing for that do you think there really doesn't meet expected standards of public accountability particularly in terms of discussing financial arrangements in the position at informal meetings when there's no opportunity for public assurance that effective scrutiny is taking place all of the financial reporting goes to our public meetings whether it's the operational units or the board so i'm thinking in terms of the the comments in the that we've heard earlier from the lights of the convener and i think it was mr scott as well about about the fact that the at the informal meetings the the the difficulties that have been shown by those people who have asked questions earlier it didn't come across very clearly at public meetings there was very little in the way out we wouldn't be here if we didn't think it was a problem and i've sat on boards before so i know exactly what i would expect and there is criticism of your board for the actions that you've taken last i've i've met with the auditor general and with our auditor and i think that you know i'll take responsibility for us entirely myself last year we had a change in the audit team in audit scotland if it had it went from one team within audit scotland to another team in audit scotland previous team we'd been working with them for years they had worked with us about our governance reviews and the way that we planned our governance if we'd had a complete change of order if it had gone to another firm of accountants to become our external auditors then i would undoubtedly have got very close to them to make sure that they was absolute understanding about the way that our governance worked and the interrelationships between all of our committees in the board and the way that they were had delegated responsibility i didn't do that when there was the change of the audit team within audit scotland i have now spoken to the auditor general and indeed steven our internal auditor and i want to make sure that we have those meetings so that there is clear understanding about the way that all of our committees and our governance work together and it may well be i certainly believe that we have as transparent and as open governance and reporting of financial matters as any organization that i have worked with and i am confident in that as the case and i'm more than happy to discuss that further with our auditors and if there's improvements to be made we will always meet them well given the fact that you appear to have accepted there was some problems why would any member of the public sitting here if they were in here today um take your word that things are going to change if they have if there have been problems before what what can you say to the general public not just this committee that actually says things will change accountability will change financial problems will be seen and discussed fully at the board reported at the board and they can have some degree of uh happiness that you're on top of the game i am saying that through our publicly reported board meetings and publicly reported committee meetings that the boat that we are absolutely transparent about our position and i think that the timeline for reporting and i think that the report from our internal auditors about the way that we report in public should give you a lot of confidence about that if there are improvements to be made then we will be more than happy to continuously look at them in the last 18 months we've started webcasting our board meetings so that more people get the opportunity to be able to scrutinise what we do and that and we are always going to look for ways to improve it i'd also ask members of the public to look at our performance over time we have i believe in NHS Highland a very very good track record over a long period of time of delivery and we have a very very good satisfaction rates looking at the people that actually use our services and to comment on the way that we the way that we deliver i am absolutely committed to working with our local public to give them what assurance and what comfort we can and we'll look for ways that we continue to do that okay david torrance i'm sorry briefly please i'm just going to add a point one of the main issues one of the main reasons we did our most recent review internal audit review was to look at this whole aspect of how well informed were the board the board kept by management on the financial position and it was it's it came through very clearly from our and we met with a lot of the non-exec board members from our reviews of the board papers and from discussions with the non-execs that they were kept fully informed of the financial position all the way through 13 14 and continue to be kept well informed of the financial position one of the one of the issues that was raised was about these informal board meetings what we're really talking about in terms of informal meetings are board development sessions so these these are meetings of the full board where all of the non-execs are there all of the exec members are there senior management are there but they're not official board meetings but they're pretty formal meetings it was accountability and public accountability i'm interested in i'm not doubting perhaps that the information wasn't before i'm talking about the public accountability and how public can have confidence that the information that goes in the board agendas are discussed fully in the board agendas i'd think it's going to be unhelpful for panel members to recycle comments that have already been made can we keep them as succinct as possible when i want you to have opportunity to respond and i want questions as well okay may we scan them very briefly and then David talks i just wanted to uh to say that the when the auditor general came to the audit committee in the parliament uh when this report was presented i quote from the auditor general one of the reasons why the report on NHS Highland is before the committee is that the way in which the situation was handled means there is no formal record of papers to the board or minutes of decisions taken that is not acceptable audit practice would you agree that's auditor general's comments from official report no formal record of papers to the board or minutes of decision taken so you can be as informal as possible but as calling care said you are accountable to the public for three quarters of a million pounds and the effective delivery of a high quality health service so secrecy is not acceptable here and there isn't any secrecy i accept no formal record can i finish my comment please i accepted entirely what mr martin said earlier on that we accept the report in the section 22 report the comments that you've just read out are not in the section 22 report they were auditor general Mary i understand that i accept was the scanlin that that is what the auditor general said i do not agree if you look at all of our public agendas and minutes and discussions that took place go back and look at the webcast that are still available online you will see that those issues were fully discussed at our public meetings absolutely categorically can we just clarify i think it's important for the record that actually is included the statement that Mary read out is in the report that's in the the record of the can you refer me to that please yeah paragraph seven paragraph seven um if you just did not formally report the brokerage agreement exactly to the board until the end of the final year we've already discussed that the brokerage was only discussed in march so the you know that it would that was when it was discussed with government so that specific comment about brokerage and the discussions took place in march what was being questioned by mr care was around the routine reporting and the routine insurance that performance was properly scrutinized by the committee by our board and it was okay david tawns thank you convenient and good morning panel i think Mary scanlin covered most of this section i was going to ask questions on there but um referring back to the board development sessions do you think it's good management practice that um there is no records there is no minutes for the boards for these uh development sessions i think there's probably two or three things i would say there is that um i would following the publication of this report i will now ensure that every board meeting uh the topics that have been discussed informally will be minited in our formal meetings um and a note of what those topics are so we'll make sure that is the case um they we recently as a board about 14 months ago we had a an expert on corporate governance uh who ran a training session a development session which we do continuously within the board and they were very clear that there is very good practice to make sure that the board can get together informally and just in terms of team dynamics and making sure that they operate effectively together as a team and we will continue to do that but in terms of publicly reporting that that's taking place then yes i will make sure that happens um thank you mr coose could you reassure me in the general public that in a word you used yourself transparency will now take part um for everything that you cover absolutely i i i i am i am confident that we are transparent and have been transparent about the publication of our performance to date and about whether it's financial or whether it's activity performance we do publish that in public and decisions and discussion around that takes place in public i'm sorry that there is a perception that important things take place out with those formal board meetings they don't they take place at those meetings and i give an absolute assurance around that and i will make sure that by formally record recording the other occasions that boards the board meets informally whether it's for training whether it's for development whether it's to take advice from some of our clinical experts or whatever we will record that can i say thank you no further questions can you can i just ask on the issue the informal development sessions that were referring to and the advice that you were given from corporate governance did they suggest that an issue such as serious is you know negotiating possible brokerage with the scottish government was a recommendation that you received from the corporate governance organisation of the advisors that we should discuss something like that on an informal basis didn't we didn't the the decisions first of all we were having a training session about general governance principles and how yours which is something that i think all boards refresh themselves on regularly so we had that regular session which again and we had a discussion about the the development sessions and how they were applied there was no specific discussion about particular items but the there was no the board is fully aware of the process that if towards the end of the financial year there is a an increased risk that you're not going to close that gap then there's going to be discussions between our chief executive and directors of finance and scottish government we don't have an option not to break even so that you know so that if so we were absolutely the board was fully aware that those discussions would be taking place i understand the board were consistent obviously as you're advising there was some issues concerning the budgetary challenges that faced those discussions probably take place with boards across the country but the word brokerage was never discussed to that informal session so none of the board members will write to us informally or formally or you know nobody will provide any evidence to us from the board to suggest that there was any discussion at that informal discussion about the possibility other than the negotiations that were taking place in connection with brokerage there was discussions taking place not negotiation at the time that we we met as bridge was mentioned yet the and one of our board members who had previously served on a board in another part of the uk which had regularly required brokerage asked whether it would not be sensible at that stage to to look to to brokerage rather than continuing to try and find the savings in year in the last financial year so that was at a session that was so that that suggestion was put forward at the session that's the only recollection that i have of a discussion that specifically was on the brokerage rather than on the requirement to break it so can i just before i bring Nigel Donnan just on that point about i mean because we're trying to picture this disinformal development session it took place and the kind of discussions that took place because we understand the development will take place we understand that good governance is that you should have on some occasions informal discussions but was there any reference to that informal development session at any further point when the board would discuss in the possibility of brokerage so did anybody say well we actually discussed this at the informal session so that means that we've debated that and we've discussed that with the board then so it was never used as a reference point of yeah we've discussed this issue with the board and it wasn't not in not in that terms as far as i can i mean i'm trying to be very careful here because i don't want to do anything that misleads the board the discussions that took place about our wish our desire our activity our efforts to achieve breakeven during the financial year were all substantially the substantive discussions took place at our board meetings and at that stage and at no time was the board discussing the requirement to break it for brokerage until we got the january 10 figures in febru and we had told our chief executive in a retro finance at the january meeting that they had to take whatever action was required to make sure that we broke even that was both in relation to finding savings and inevitably at that stage in the financial year the formal discussions with the government over brokerage in the march okay thank you very much convener i'm good morning colleagues i'd like to address the issues around regmore hospital if i may i note that your internal report mentions a figure of eight and a half million over spend i have some other figures here from the orders general which suggests in october we were talking about it point two for the financial gap for the whole board and six million for regmore i don't want to fight about those numbers because clearly they come and go from month to month but it's clearly a significant operation it has been identified as being a very large part of the deficit which caused you a problem which we're talking about i'm just wondering given that any large operation has three costs which are people buildings and consumables and people of the staff buildings you know about and consumables are often medicines and and and these kind of things in this context how can your budget be anything other than fixed how can you vary that in the context of a running medical operation given that you need the staff you need the buildings and you need the medicines how is that susceptible to financial management i think there's a number of things which do provide opportunities to generate efficiencies in the way that we work so that we can spend more of that money and direct patient care and care generally and if you look at things like the way that rotors for our consultant colleagues are developed to make sure that they are focusing on the work that only consultants can do rather than on work that perhaps other professionals who are not as expensive can be doing so that modernisation work to make sure that that's happening is taking place all the time we are continuously looking to try and make sure that all of our prescribers are using generic drugs and we've got initiatives where it's possible and is advisable and we've got initiatives across all of that and against other procurement as well we want to make sure that all of our professionals whether it's nursing or ahp's or doctors or healthcare assistants are all working to the top of the top of their license rather than doing things that could be done by other people so the workforce planning is absolutely essential we want to eliminate waste that's that's the whole ethos of the way that we want to improve services in highland is focused on eliminating waste and that includes things about like making sure that we don't have uh over provision that we're not reordering tests uh the number of times that we have heard in the past where people come into hospital and just routinely a series of tests are carried out on them without referring back to whether those same tests were done in time before so all of that stuff is stuff which creates efficiencies the fact that we've seen a dramatic reduction in bed days because we've reduced infections within hospitals all make savings that we can redeploy elsewhere um and so that's that's the way that we want to do okay now forgive me you've given me some of the practical medical answers by my management answers which i accept okay and i'm conscious this is not the health committee and i'm not trying to turn it into that but what i'm still unsure about is how those issues are subject to financial management because what you're actually going to do is add up the costs of the things that you've done financial management has to be proactive in deciding what you are not going to do in order to save money but all the things you've talked about are things you're going to do anyway yes and you're going to work out what the costs were afterwards we're going to financially plan with our management to do them more efficiently and that is what we have done over significant areas of our work over the last five years and we will continue to do we are we are the if you look at the increase in activity that we are doing as an nhs board it far outstrips any increase in financial resources that we have received because we are doing things more efficiently and more effectively and that's what we will continue to drive down and we manage that financially as well to make sure that when we do make changes that we get that cash out and it's reinvested elsewhere right but i'm going to forgive me convener but i'm going to press this point because whilst i accept everything that chief said i don't see that myself as financial management all you're going to do is to add up the costs afterwards of what were good management decisions but that's not financial management that's people and buildings management actually the costs are going to be whatever the costs are one of the aspects of the internal audit review we did was was to look at how that whole issue is dealt with in the hospital so how do budget holders and service managers translate the activity that's going on in the hospital into a financial budget and financial position and one of the difficulties is that we found was that there can be huge fluctuations in the cost base at the hospital because drugs some drugs are very very expensive and it's almost impossible or very difficult to predict how much of those drugs are going to be used from one year to the next so actually developing a budget for that for those drugs is a difficult thing to do and in addition to that the demand for services in general within the hospital is is hard to predict but where there's an increase in demand that has to be met within additional staff costs so the hospital has to employ more consultant time to keep waiting lists down but waiting lists are dependent on the demand for services within the hospital so all of those those things are the key kind of financial management skills that budget holders need to be able to predict what that kind of demand is going to be and translate that into a financial budget but there can be huge fluctuations in the costs of drugs and the costs of staff time because of those demand issues yeah I entirely accept that I think I'm still going to stick to my point that that's not financial management that is practical hospital management and the finance is just the costs when you add it up and there's no financial management anything that you've talked about no the two things are absolutely they can't be taken apart really they are inextricably linked you know that the management of operations or activity has to be inextricably linked with financial management because there's no way that budget holders and service managers can make decisions on an operational basis without understanding what the financial implications the budgetary implications of those those decisions are they have to link them together that's absolutely financial management can also add to that that at the start of every year each of our operational units and each of our each of our managers cascading down to budget holders knows exactly what their budget target is for those for that financial year um so we we and we we train them and support them and expect them to be able to manage their budget within that and what we've seen in a number of areas where there is increased expenditure increased activity and we then have to be able to manage that from other areas so that financial management is taking place on a day in day out and Elaine's team leads that my final question then is are you therefore confirming that there are things you don't do because you haven't got the money to do them if you want to give us a lot more money there are things that we would do but what we want to do is to make sure that we deliver the health service that's that government wants us to be able to to deliver for our people we we are not i do not i believe that we can achieve that within the resource that we've got but it does mean that we've got to completely redesign the way we do things and continuously improve the service that we're working on and that's what our highland quality approach is all based on okay i'm going to look for a brief suspension till 10 55 no about which 10 witnesses can come back and we'll be here until 11 30 okay thank you just a brief suspension till five two again ladies and gentlemen can i reconvene for my earlier session and can i start with Mary Scanlon thank you one of the risks looking forward in the section 22 report from audit scotland it's actually paragraph 14 the auditor has highlighted that the cost of delivering adult social care services in highland continues to pose a financial risk to the board and i thought we had a few highland councillors in the gallery today it was probably worth asking i appreciate we're taking evidence later on but that's just a private session this one's on the record i was very supportive of the lead model in fact nhs highland and highland council have led the way in scotland as far as integrated health and social care if it's a risk going forward i think that's something many people would be worried about can you explain what the risk is and what's being done to address it i think there are risks in any change that you embark upon if you want to make transformational change in the way you do things it is a risky process sometimes i feel that the easy thing to do is actually just to keep your head down and don't make changes and be very conservative in the way that you run organizations and that way perhaps you don't end up in this position here today however i believe that we've got to change dramatically if we're going to have the sort of health and care system that we want for the future that i want for myself in the future and so therefore i unashamedly i'm a huge supporter of the work that the Highland Council and ourselves have done to bring about that that level of change and it is showing results as a lot of people in this room will know that a couple of years ago one of the biggest challenges that we were facing was about getting care at home services for people we had an awful lot of people that were assessed as requiring care at home and we're not getting packages of it and the last couple of years working as an integrated team of healthcare professionals with social workers and social care professionals we've now managed to reduce that deficit hugely including by going to paying the living wage to all home care workers in Highland whether they work for us or whether they work for the private sector or the voluntary sector that's made recruitment and retention so much easier now we pay an increased fee for that but that gets directly passed on to the workers that are doing that work and therefore we have managed to turn that corner but that takes time and the work that we now want to move on to working with our care home providers which will mean that we'll be able to get people who are currently blocking beds in their hospitals out much more easily into to care homes once we get that working effectively I think we'll be able to really show dramatic change when we embarked on integration the council and ourselves were quite clear that we would not see the full benefits of that for at least five years that's been the lessons when we've looked at other places around the world that have tried this scale of change that they're looking at five ten years to get these real benefits we're at least three years down that path the rest of Scotland's got to start as yet so it is challenging we're managing it very closely but we think we'll get the benefits from it right well it is it is a serious risk and can i just go through some of the figures Scottish government's allocated additional funding of one million in 2012-13 towards the integration another million we're 12-13 and 13-14 the council and the board have agreed the council will provide 4.5 million this financial year 4.3 million next financial year and 4.7 the following year so that's huge transfers from the council now i've personally always very much been in favour because i thought it would be the end of delayed discharge in fact delayed discharge is a serious problem here finding home carers is a serious problem and i've raised with the director general of health about Debbie Meekie and Nethy Bridge one year in a hospital because they're in Ian Charles and Granton because there's no home carers and i've recently visited a care home over the newly birth and they get seven phone calls a day asking for replacement so what i had hoped would happen through the health and social care integration and i'm still a huge fan i'm now concerned about delayed discharge the lack of home carers not enough residential care home places and the fact that Audit Scotland are highlighting this as a risk going forward and to be honest you could take this and apply it to almost any health board in Scotland but i was hoping for better from NHS Highland and in your answer can you ask i've heard what's coming from the council but i thought the whole idea was taking resources from the acute sector out into the community so perhaps in your answer if you could address that i'm glad to do that i'm going to bring Elaine in to talk about some of the specific numbers around delayed discharge and what it is people are waiting for to get them out of hospital but let me just you're you're absolutely right what you're describing in relation to increased costs for social care it's happening across the country we can clearly identify the increase in resources that the Highland Council is giving in relation to adult social care in Highland but if you actually look at local authority spending across Scotland on social care it is also increasing now i saw figures recently that was showing that there was very very substantial increases in social care to the detriment of other services that local authorities are running so we're seeing cuts in other services but social care is increasing so it's not unique to us i don't think that anyone in Scotland yet is able to be in a position to really talk about what is the appropriate level of spend for social cares we're going forward that's work that we're looking for the jit and others to to work with us on in terms of a delayed discharge sorry in terms of what we're taking out of hospitals one of the major things we're taking out of hospital just now is geriatric care we've just appointed an additional three geriatricians who are working in the community with gps so that people don't end up in hospital all the medical reconciliations all of the medical care is given to people in their own homes or in care homes rather what would have happened would have been admissions now the big pressure point we've got in Highland is actually care homes as you know or as many people in this room will know is that we've lost a lot of capacity in care homes in other parts of the country we've seen significant new developments significant increase in numbers of care home provision we've actually seen a reduction the people who are currently delayed in rigmore and our other hospitals are not people for looking for care at home but it's care home places now they are difficult to turn on and off you've got to build the facility you've got to staff it up get it registered etc we're working with the providers to try and get that much more in balance and I'm confident in years to come we will we've never pretended that we would turn around this position in a year or a couple of years we've always said it would take time and I'm confident that the track that we are on will deliver benefits but Elaine do you want to talk about the specific numbers and delay discharge John please I can also just ask you know we're not the health committee as Nigel Dawn said but you know one of the main reasons has been the shortage of home carers we're looking at freeing up capacity in the acute sector but I need you to address the point that Audit Scotland made in the section 22 report continues to pose a financial risk going forward that would be a worry to many people in the highlands and I'm just looking for an assurance today about what you're doing to address that rather than it's a problem elsewhere in Scotland you just step ahead of elsewhere in Scotland and we've also brought in legislation in the parliament to make sure all health boards do what you're doing I had covered a lot of the things that we're doing to minimise that risk by the the work that we're doing to ensure that we've got the care at home workers that we need that by the work that we've done with the sector to make sure that they're getting paid that way you've got enough care at home workers and we have increased the hospital for a year again we've increased it dramatically and the big pressure point that we've got is actually care homes not care at home but Elaine can you give us the figures I can give you the figures for today with Scanlon and that's that we have 33 patients waiting as a delayed discharge in Rheigmore hospital and a significant proportion of those now will be waiting for care home placements and as the chairman describes that now is the pressing need for us indeed we need to develop the sector for care in the community and we have invested an additional that has resulted in quite a few hundred patients from the highlands having to go to Glasgow and elsewhere in Scotland because of those beds are taken up by delayed discharge patients so today there are 61 in total if I include the numbers in the community hospitals and what we're doing is increasing and developing that sector by supporting additional care workers working with schools as well as working with university to develop vocational training for that sector and I think that will be necessary across the whole of Scotland but importantly to answer your question we have invested from health money and additional one and a half check me one and a half million pounds this year into that sector to make sure we can support the flow of patients out of hospital into the community and that's the critical transformational part of integration. Try a different line of questioning I just want to understand internal audit in the context of how this has all gone on and the year in question that we're actually asking about I wonder Chris Brown if you could firstly say how long you've been the internal auditor for Highland Council and who do you report to the board the chairman the chief executive who? We're in our fifth year now as internal auditor at the Highland Health Board and we report to the audit committee so that's a non-executive committee of the board and on a monthly basis on a monthly basis we have monthly liaison meetings with Nick Kenton director of finance and the chief operating officer okay and those meetings include an assessment of the monthly financial position of the of NHS Highland? No that's not what we're doing as internal auditors we don't monitor the financial position on a monthly basis okay and they wouldn't raise with you the deficit of surplus position month by month as to what's happening not routinely they wouldn't but they have raised that issue in the past so it was management who asked us to do the first review of Regmore Hospital because they were concerned about the financial position within Regmore which was an issue that came up at one of those monthly liaison meetings. So it's not in your remit then forgive me but it's not it's internal audit not about assessing month to month what's financially happening within the within the NHS Highland? No not in a month to month basis no what we're doing is looking at the control frameworks so the controls that are in place within the NHS Highland to monitor the financial position but but so what gave rise to the no thank you for that what gave rise to the to the April 2013 report i mean did you as an internal order decided commission that or were you asked to commission it? We were asked to do the review by director of finance so um so this is going back now a couple of years obviously but no one of our monthly liaison meetings um Nick raised concerns around the financial position at Regmore so you know i'd been known for a for a year or two i guess by that point that the hospital was overspending yeah and there was a recognition by management that that was unsustainable and they wanted to understand why that was happening yeah and from a new produced report which highlighted governance and budget as the two main i guess the two don't know who it was in your mouth but the two main significant issues that needed to be addressed yes it was it was around um the main issue was really a the culture within the hospital there wasn't a strong culture of um of very tight financial management within the hospital and that was partly because i think um up until fairly recently the hospital had enough money to continue and in 2010 as the chairman said the hospital was in recurring balance so that you know there hadn't been a up until fairly recently a need for very tight financial management but there you know there has been over the last few years an increasing need because of increasing demand and increasing cost within the hospital a a need for tighter financial management than than existed so things have just got a bit lax just got a bit a little bit easier because money was okay and i think that people were making decisions they were making decisions for the best interests of of patients in the hospital without taking enough recognition of the financial implications of some of those decisions it goes back to the point that Nigel don made earlier that you know there are there can be major fluctuations in cost depending on the decisions that clinicians make within the hospital and clinicians weren't being i don't think uh weren't monitoring the budgetary implications of some of the decisions that were making as closely as they could have been but your report really found out that therefore there wasn't enough challenge of that from above by which i guess the operational executive team and the board from the hospital management team primarily but who's challenging the hospital management team who are they accountable to well they'll be accountable to the central management team within the health board and then ultimately the health board and did you find that that process just wasn't working effectively because between me that's one part of your recommendations that you mean yeah i mean i think the governance and accountability wasn't as strong as it could be absolutely so so we had quite made quite a few recommendations in that report to improve that yeah now i'm grateful for that and you then went on and found a year later and they hadn't made enough significant progress i mean there's an internal order you must have been pretty fit up with that won't you well we're again we're the audit committee asked us to do the follow-up review because they were concerned about the the issues it would raise in the the initial review yes and i think one of the challenges that the hospital management had was we're talking about a cultural change so you know it's not just a case of changing a few controls and improving the situation it's about changing the actual attitude of mind that the budget holders had and you know these are these are budget holders who are primarily clinicians yes we're making clinical decisions and that's what they're trained to do and they're used to doing yeah and we had you know the management the hospital management had the challenge of trying to make them you know understand the financial implications of the decisions as well okay so that takes a bit of time to do now that's very helpful and can i just ask you also um did you or were you asked at any stage to to give a view on the need to go to the Scottish Government and ask for more money because we call it brokerage but basically it's a it's a bung of money to basically allow any health board to get through a position where they're at deficit were you involved in any of that in those discussions no i wasn't and do you think internal audit should be i mean given that you're there to internally audit what's going on um i mean what we're what we're asked to do is is to look at the controls that are in place in the health board to manage the financial position um and so we wouldn't be we wouldn't expect to be asked for you know what tactics should management take that's an operational management decision in terms of how to bridge a gap so do we just stop you know we do we just reduce services to stop spending money or do we ask for some more money to continue services at the existing level that's an operational management decision and i guess a decision for negotiation with the Scottish Government that management took and we wouldn't expect to be consulted on that kind of decision no but just so i can be clear during the course of that year the year that we're we're looking at um the internal audit function wasn't asked to keep a monitoring view on the financial position given all these financial pressures that are now so evident from the section 22 report um no we weren't asked to do that no and and that's not we wouldn't expect to be asked to do something like that because that's that's a that's basically a management job yeah so what we're doing is looking at the controls that are in place within the health board to do that job yeah okay that's great thanks very much so me just can on advisement she's a 30 second question so i was just sort of concerned that uh you're concerned about clinicians making decisions in the best interest of the patient but not taking into account the cost so do you feel that managers know best about what the budget should be and know best what would be in the best interest of the patient rather than the clinicians no no i'm not i'm not saying that at all no the the clinicians and the managers need to work together i think to to make decisions that are in the best interest of the patient but but then to understand what the financial implications are and did you feel that the clinicians and the management were not working together was that one of the issues that you addressed that was one of the issues that we identified okay and you feel going forward that that's improved that's that has improved i think dramatically within the hospital yes okay Colin Beattie thank you very much several members have touched on the the question of these informal meetings and I feel it's maybe a little bit obscured by reference to training and development meetings which which are a little bit different i feel that the point that's trying to be made the question is is it right that discussions on financial position should be taken at an informal meeting of the board members does that comply with the expected standards of public accountability you're looking at me Mr Beattie no not not if it was exclusively in informal meetings no absolutely not so if your question is should those kind of discussions only take place in informal meetings absolutely not but i think the only reason from our review of the of the papers that went to the board into those meetings that that discussion happened at an informal meeting was because a board meeting hadn't come round yet so the board meetings all you know happen every couple of months yeah so you know until the next board meeting if there is an opportunity for management to inform the board members at an informal session of the financial position then they'll take that opportunity rather than rather than wait until the next formal board meeting given the gravity of the situation would it have been appropriate to have some sort of an emergency board meeting rather than wait for the normal cycle the board had met in december and it was following that position that meeting that the deterioration in the position which led to the view that brokerage was desirable took place now the discussions now the board at its public meeting knew that we what we had to do we had instructed our chief executive and director of finance to that break even was essential and that they were working on that there was no and so when the discussions took place when we saw that those month nine figures that came out and board members get circulated the month nine figures at the same time as the executive management team get them the financial monitoring pack comes out and gets circulated to everybody those discussions started with the the scottish government and it was only a matter of a week 10 days sorry i was about fortnight before the formal papers came out formally reporting that position to the board and indeed in public so it to call it an emergency a special meeting i've got members that come from mall down the mallic and tyre from sky to get them all together at short notice is difficult but also we did not and even with hindsight i don't think i would have called an emergency board meeting for that looking at the overall position of the board and the scale of the brokerage that was being looked at as a proportion of our budget just sorry may i just come in there if i may because we did have some discussion as we've said at an improvement committee and those that improvement committee is a subcommittee of the board as well the minutes do go to the board but it is one of the things that we've taken heed of in the Auditor General's report and we're working now with our colleagues in order to try and change the timing between the publishing of the in-month and your the in-month figures so that we can then be reporting to a board in a more timely way so we're trying to concertina that down that was one of the difficulties that we had around this crucial time was the timing of the improvement committee in the board meetings and the publication of the in-month figures and hopefully now we'll have those tied much more tightly together just one last quick question about the internal audit summary of findings from the section 22 review on page 2 top paragraph it says one of the key actions relates to accountability of budget holders i mean i'm astonished that they weren't being held accountable to their budgets already but it says here that the regmore head of finance has developed a budget holder register and implemented several new controls doesn't sound doesn't sound very positive in it what it's doing what's happening several new controls there'll be a lot more controls and a budget holder register i would hope there'd be a process already in place that held budget holders to account can you maybe comment on how effective these new measures are going to be this is this is one of the key issues as i said that we raised in the internal audit report was that there was a lack of accountability with budget holders within the hospital and if budget holders had been held fully to account for not overspending on their budgets then the hospital wouldn't have gotten the situation of overspending by millions of pounds your 2013 report yes the results which of course were not implemented the so that they have been gradually being implemented since April 2013 so when we did the follow-up review in may 2014 we found that there had been progress in implementing the recommendations albeit it was slow progress because as i say you know there's a cultural change required there in terms of holding people to account but but you're right these are these are these are fairly fundamental management controls which should should have been in place at the hospital and weren't in place and what management are doing now financial management is much stronger in the hospital than it was when we did the review in April 2013 and they're putting those controls in place that should have already been there as internal audit to what extent did the non-implementation of the 2013 recommendations contribute to the problems of course it came out in 2013-14 if they had been fully implemented promptly would that have ameliorated the impact financial impact um yes it would have ameliorated the financial impact yes because the the hospital wouldn't have presumably wouldn't have overspent by as much as it did but the hospital had been overspending for a while on an annual basis at a round about the same level and that position had been managed internally so that so the rest of the health board effectively was managing that position because there was you know managing the overspends within the hospital by making compensations elsewhere within within the health board and so you know that the fact that they hadn't been addressed those controls hadn't been improved didn't mean that there was no way the health board could have could have managed this situation because they had been doing that on an annual basis up until then but it definitely would have made it easier because it's a real challenge and and i think right at the end of the year what happened was there was a bit of additional activity commissioned internally within the hospital without a recognition of the financial implication of that decision so so the and the financial implication came through the following month by which time it was too late to make a any amendments to the budget this is right at the very end of the year and so and and if the improvements that we recommended in april 2013 had all been implemented that kind of decision wouldn't that kind of situation wouldn't have arisen they might have still made the same management decision which is basically to treat more patients but it would have been they would have recognised the financial implication more clearly and reported that more clearly internally and so they could have made you know hopefully quicker decisions about what you know what to do in terms of brokerage okay i'll just conclude with a couple of questions uh and firstly to your cell mistecutes and connection with the discussion we had earlier about the signing off of the brokerage arrangement you presented that to your board what was the date that you said that you presented the month that that was formally announced to the board in first of april the papers were published for that fortnight before then so and board awareness of it was was clear so can i ask him how many board members they have uh the total boards about 25 but there's about 10 independent members i don't have the figures it's a large sort in response to that paper being issued in the two weeks prior to the board did you receive any informal or formal responses from the board members saying why have we signed off this brokerage deal it's surely we should have been informed um i got numerous discussions with uh board members yeah there's a difference between the discussion but i just did somebody call you and say why were we not specifically said why were we not informed every single one of my board members knew that if we were not going to be able to break even it's never out of seeking it's not a question no i think can i just be clear the question is did anybody phone you and say you know i mean i would have expected one member of that board at least uh i would have expected a board member to phone me up if they hadn't known that that was the inevitable consequence of what we're doing so absolutely no i'm good to know just be clear but i think and can we be fair i've given you an opportunity to answer all the questions you have i think you've been very open and some of them and some of them need for require further clarity and i think the question here is when the board members were advised the prior notice of the two weeks prior to the committee committee the board made its take place did members of the board call you and say i'm concerned that we were not informed yes or no no so none of them called you to say that we're concerned not not to my recollection for the reasons that i've explained not to my recollection not one member for the reasons that i've explained not to my recollection okay and miss meet was there any members of the board called you or the mr kenton anybody call you to say you know we're concerned that we weren't informed that we're signing off this brokerage no convener they did not ask me that okay so there's no correspondence exchange emails exchange anything like that that would present anyone saying nobody emailed you to say why would why we're doing this what are the consequences of this i have no recollection of any emails or correspondence around okay thank you for that just finally miss me so one of the issues in our internal audit review was to ask board members if they felt they were kept informed and they all said you know very clearly that they were so none of them said that they it was a surprise to them okay finally in terms of the obviously discussions that took place and there was an agreement to sign off this brokerage arrangement with the scottish government must be can you advise me what would happen if what would have happened in the position of the scottish government said that they would refuse that arrangement would the potential job losses a loss of service we we have a statutory responsibility to break even so we would have had to look at how can we then look at services in order to reduce activity between that point in time and the end of the financial year now that wouldn't have resulted necessarily in job losses if but we would have we could have though we we would have had to look at how we could have reconfigured our services in the short term in order to reconfigure means possibly job losses some of the expenditure would have been on additional payments so that would have reduced our cost on supplementary staffing so for example if we wouldn't have increased award area if we would not have kept award area that may not have resulted in job losses that may have resulted in some people not doing extra hours and therefore doing being paid for extra duties which would have been different can i simulate this thank you play this out then of course you've had to consider the possibility that scottish government would say no we're not going to sign a brokerage agreement where the papers developed to discuss to see the possibility of job losses as a result of this arrangement not been signed off so our documents that exist to say let's look at the possibility that the scottish government says we can't give you a brokerage arrangement because they could have said that they could have said that mr martin but we have a no redundancy policy in the nhs so we wouldn't have been in a position to take jobs out and make people redundant to if that's the question but it would have been a reduction in services across the board there would have inevitably have had to have been a reduction in services and that paper was a paper presented to to present the kind of loss of service that could exist not a paper in that way no we were looking why not because at the point that point of time we were looking to deliver break even through the management actions that we'd asked people to take and we were confident that we would have delivered those until such time as we saw the deterioration in the ragmore position that made us have to go back and reconsider our financial end point okay but you had to let me just in conclusion no i think we need to accept the scenario could have been that the scottish government could have says very sorry but we don't have this money to provide to you you would surely have had some kind of position some plan b it was a no plan b there always has to be a plan b so so what so was it then that would have had to have been to reduce services in the short term okay so you have you had a paper prepared for that scenario we would have had some background papers where we were considering what would have been the impact on our other statutory requirements to deliver targets so as a result of poor financial management there could have been a loss of services and that's the kind of discussion that you had to have only in that last month of the year yeah so the scenario could have been that people the kind of services that we all take for granted could have been at risk in that last month of the year where we have established a requirement to financially break even that could have been a risk so give me just before we can put one example then of the kind of service that could have been lost during that period in that period we may have not been able to continue to do additional waiting list initiatives which would have allowed us to see more patients needing their operations and those patients may well have had to wait and they could have an appointments cancelled or anything like that or the associated appointments with those operations may well have needed to have been not appointed in the first place okay can i thank the panel for the time this morning i appreciate it's been a long session and thank you very much and thank you ladies and gentlemen we're now going to move into private session as a great ill of