Manx Care ended the past financial year £8.8m over-budget – and is forecasting a £14.9m overspend for the current year although that shortfall could reduce to £9m.
Earlier this year, the healthcare provider identified a £40m funding gap between what it is mandated to do and what cash is available.
Manx Care was set up in 2021 as part of a move towards making the island’s health and social care system more affordable and financially sustainable. But it ended its first year £9.9m in deficit and required a supplementary funding vote from Tynwald to cover the shortfall.
Finalised figures for 2022-23 were outlined by finance director Jackie Lawless at Manx Care’s public board meeting on July 4.
She said it was disappointing not to achieve the target of a balanced budget in the year but pointed out that the deficit was reduced from £9.9m (4%) last year to £8.8m (3%) this year.
‘In light of the significant financial pressures felt during 22-23 this is still significant progress towards our aim of a financially sustainable system,’ she said.
Savings of £9.9m (3.5%) were delivered during the year but these mainly served to hold the funding pressures in check rather than significantly reduce the overspend, the finance director said.
Tynwald also approved funding of £18.3m to reducing waiting times in key areas such as cataracts, hip and knee replacements and psychological therapies for young people. Of this £9.9m was spent in 22-23 with the remainder due to be spent this year.
Staffing costs continued to be the main area of pressure with high vacancy rates being covered by the use of agency staff.
Members of the Royal College of Nursing have voted in favour of strike action, having rejected an offer of a 2% consolidated pay increase,in addition to the 4% pay award which was applied to October 2022 salaries and a £1,000 lump sum.
The pay award of 6% represents an additional cost of £8.9m but will be funded separately by Treasury.
Another area of cost pressure during the year was drugs costs which rose by up to 24%.
The current projected position is a £14.9m overspend. This assumes savings of £4.5m but if hoped for savings of £11m are realised there will still be a shortfall of about £9m.
Manx Care’s projected spending for the 2023-24 is £317.9m which is a £26m increase on 2022-23. Of this figure the 6% pay Increase for 2022-23 represents £11m. It said many of the increases are largely outside the control of Manx Care and reflect inflationary pressures on pay, contract services and supplies.
Funding for 23-24 has increased by £20m from £282.9m in 22-23 to £303m this year.
Spending is projected to rise faster than funding due to continuing pressures on staff costs and above inflationary increases in drugs and contract costs. The additional funding of £20m partially addresses the £9m overspend from 22-23, leaving less to cover funding pressures during the year.
Financial plans for 2024-25 are expected to be submitted to Treasury by August 4.
Likely funding is £310m but this will fall far short of the projected spend for this year, Manx Care’s finance director warned.