THE Health Department recorded a £2m deficit over the first four months of this year but is forecast to break even by the end of 2026 – although this could be dependent on external factors – such as oil prices falling – and ongoing cost controls working.
The department, which has a £388m budget this year and is by far the biggest spending public body, updated its financial position at a recent meeting of the Health Advisory Board – which provides independent oversight of healthcare in Jersey.
Up to the end of April, Health had spent £129m against a budget of £127m – a 1.6% variance. Reporting to the board, the department’s deputy head of finance business partnering, Mark Quérée, said: “The current full-year forecast is to break even against budget. However, this forecast position includes a number of operational risks and pressures across services. These will require active management including ongoing delivery of cost-control measures and savings delivery.”
Mr Quérée added that the break-even forecast assumed that a savings target of £12.7m under a Financial Recovery Programme would be mostly met but also recognised a “risk of slippage” when it came to savings from other management initiatives.
His report to the Advisory Board said: “Demand-led budget areas – including tertiary care, high-cost placements, specialist treatments and patient travel – remain inherently volatile and highly unpredictable and therefore extremely sensitive to changes in patient volume, acuity and clinical complexity.
“Unanticipated increases in demand within these areas represent a significant downside risk to the forecast, requiring close monitoring and active management to mitigate potential in-year overspends.”
It added: “The department considers the on-going conflict in the Middle East to represent in-year financial risk. While some impacts are already evident – particularly fuel costs for the vehicle fleet and emergency aircraft transfers, utilities costs (including heating oil) – the full cost impact is expected to materialise over the next three to six months as existing stock holdings across supply chains are depleted and replacement supplies are procured.
“NHS supply chain partners are already reporting upward pricing pressure on a range of medical consumables due to reliance on the petro-chemical industry, with an increased likelihood of further cost escalation and potential supply disruption later in the year.”
The independent Advisory Board heard that some increased costs were due to a small number of patients, including those within the spinal unit, needing a high level of specialist care in the UK.
Asked if some of this care could be repatriated to Jersey to bring costs down, medical director Simon West said that the issue was as much about safety than it was about money – highlighting that, in Jersey, there was usually only one practitioner with specialist skills, so there was no back up if additional support was required.
The board supported the Health Department’s plan to carry out a detailed mid-year review of finances to see if the department would stay within budget in 2026.
Health will also set out how it should be funded in the long-term to the next Council of Ministers, against a backdrop of rising costs in medicine and an aging population.
Previous recommendations include moving from a ‘free-at-the-point-of-delivery’ model for hospital care to a co-funded or insurance-based model.
