eHealth funding: independent review

An independent review by Grant Thornton UK LLP on eHealth funding between eHealth, NHS National Services Scotland and NHS Tayside between 2012 and 2018.

Key Findings

Our investigation identified a number of findings relevant to NSS, NHS Tayside and Scottish Government. From 2012 NHS Tayside were “holding” money related to future eHealth programme activity, which was given to NHS Tayside by the Scottish Government, as directed by NSS via Revenue Resource Allocations ( RRL). No one during the course of our review was able to articulate why NHS Tayside were holding monies but it coincides with when NHS Tayside started to receive financial support through brokerage. In addition, it also aligns with slippage in the eHealth programme and more recently reductions in eHealth funding. From 2012 up to 2015 the money “held” by NHS Tayside was returned the following year, through RRL transactions. From 2016/17 the money being held became a larger sum, and we understand that NHS Tayside were informed they did not need to pay back the 2016/17 monies during 2017/18 due to overall eHealth slippage. In 2017/18 NHS Tayside requested a further sum of 2.7million, in addition to the sum they were still “holding”.

In 2016/17 NHS Tayside effectively used the money they were holding (circa £2million) to offset general expenditure in year, which supported them in showing a more favourable financial position. As a result this misrepresented NHS Tayside’s financial position. For 2017/18 NHS Tayside were planning on having eHealth monies to hold within their RRL of £5.3million (the 2016/17 balance plus an addition £2.7million which was requested in February 2018 but not processed). This £5.3 million was required in order for NHS Tayside to achieve the forecasted £5 million deficit in year, which was being reported to Scottish Government.

Ultimately this arrangement supported NHS Tayside given their financial challenges but also the eHealth programme administrated by NSS, as slippage could then be carried forward for future use eHealth programme use.

Overall, there was a lack of openness, governance and wider transparency over these transactions between 2012 and 2017, in particular between the two Health Boards and the Scottish Government. We did not identify specific evidence which demonstrates a clear intent to mislead the SGHSCD. However, we did identify instances where there could have been greater clarity through reporting, both how these funds were held and used by NHS Tayside; within the eHealth Strategy Board updates where only “retained funds” are referenced rather than the nature of the funds and how they were retained; the reporting of the transactions within the eHealth leads group, and within the eHealth allocation trackers.

Significant findings from our investigation are noted below:

NHS National Services Scotland:

  • Based on the various email trails and requests to transfer money via RRL allocations, although this is processed (approved) by the Scottish Government, it appears after approval by eHealth Leads Group NSS eHealth actively directed the money to NSS eHealth to NHS Tayside via the Scottish Government considering the language used.

Key Findings (continued)

NHS National Services Scotland continued:

  • There is a lack of clarity over whether NSS eHealth monies fall under wider NSS governance arrangements or those of the Scottish Government eHealth team. As a result it appears that the eHealth arrangements fell outside of both respective governance arrangements. The NSS eHealth Head of Finance facilitated a number of the transactions via the Scottish Government, with certain members of the wider NSS finance team copied in at differing points in time.
  • We identified that there were inconsistencies and quality issues in the reports used for tracking and monitoring of financial spend and funding commitments and receipts. Reports are confusing, and the risk of spreadsheets within NSS eHealth and Scottish Government eHealth increases the risk of error for example the sums in 2016/17 NHS Tayside were holding dropped off the NSS eHealth tracker in error.
  • The email trails reference a number of individuals in the NSS eHealth Team including the Head of Finance. In February 2016 (related to 15/16 monies) emails evidence discussion between the Director of Finance at NHS Tayside, who explains the Tayside financial position and the associated income position and the Director of Finance at NSS, who also confirms that NHS Tayside can “bank” funds. In certain emails the Director of Finance at NSS is copied in, indicating awareness of the situation at this point in time. The email trail appears to indicates that the Director of Finance at NHS Tayside was planning on using the eHealth money as part of their overall income that year, and that the Director of Finance at NSS was aware of this intention.
  • Within the NSS internal audit report there is an acknowledgement of historic practices. However, practices which appear out with the norm should have been challenged and raised – particularly given NHS Tayside’s financial position in the later years of the transactions.

NHS Tayside:

  • Since 2012, the Board’s reported financial performance has been misrepresented. The Board recognised allocations that were communicated at the eHealth working group as being ‘held’ on behalf of eHealth Leads (other health boards) to support their underlying financial performance (as in effect income was recognised through the total RRL allocation but no corresponding expenditure).
  • There is a lack of controls in place at NHS Tayside around the approval for amendments to revenue resource allocations to/from the Scottish Government and the nature of these funds.
  • The financial monitoring reports presented to the Directors Group and Finance Committee / NHS Tayside Board do not detail the eHealth funding transactions. Given the significance of the transaction values (£2.582 million in 2016/17) on the Board’s reported outturn position, and that they would need to be repaid in future years through reductions in resource allocations, we would have expected this to be identified in monitoring reports.

Key findings (continued)

NHS Tayside continued

  • The eHealth funding transactions were not visible across either internal management reports or the Board / Finance and Resources Committee papers. While not in the scope of our review, we have significant concerns around the practices being followed by NHS Tayside in relation to the use of funds to offset expenditure to which the funding had not been provided. This process has been embedded into the Board’s financial planning and financial reporting processes for a number of years and therefore has masked the underlying operating position of the Board.
  • There does not appear to have been any challenge by the Board around the accounting treatment of eHealth monies as well as other monies recognised in year but for which expenditure was deferred to future years. This we think is due to a lack of reporting of the transactions, as the knowledge of these transactions seems to be contained to the NHS Tayside Director of Finance, NSS eHealth and the eHealth Leads group. They have been in effect “off budget reporting” transactions.

eHealth and the SGHSCD:

  • There was a lack of scrutiny and challenge from eHealth leads to consider the nature of the arrangements in place that allowed NHS Tayside to ‘hold’ the funds. The eHealth leads are IT/Operational leads from the respective NHS Boards and therefore not necessarily of a financial accounting background. The eHealth Leads group were focused on operational delivery of eHealth programmes.
  • The Deputy Director eHealth has responsibility for ensuring resources under his remit are spent appropriately. The transfer of funds to NHS Tayside to “carry forward” for eHealth programmes were not appropriate, given these would not be utilised by the Board in the year.
  • There are opportunities to enhance the oversight and scrutiny of resource transfers within SGHSCD and eHealth Leads. Within SGHSCD we would have anticipated that the nature of the transfer request should have prompted concerns around the purpose and use of these funds. Meetings took place between SGHSCD Finance and NSS to monitor the financial performance across national programmes but these did not identify clearly that NHS Tayside were holding funds on behalf of the NSS eHealth programme. Likewise, there is significant scope to enhance the current financial monitoring arrangements in place across the eHealth Leads group.

Key findings (continued)

Our conclusions

Based on our review, there were a number of different parties involved in the process – NHS Tayside, NSS, NSS eHealth team and Scottish Government eHealth. As evidenced in our review of the supporting emails, relevant papers reviewed and those interviewed we would conclude:

EHealth leads

This was an IT operational group, representing all Boards. Based on the review of the minutes this group was focused on the delivery of the various eHealth programmes. The focus was on delivering the programmes planned within the eHealth budget and to minimise slippage. Whilst the group did get finance updates, the group on the whole were not financially aware (given operational focus). The group did approve the carry forward of eHealth funds where slippage was incurred from 2012 but we believe this was in the context of looking to ensure eHealth programmes were still delivered and they were not aware of the financial consequence, in particular how NHS Tayside would account for this money. The NHS Tayside Director of Finance was not on this group.

NSS eHealth Finance (part of NSS Finance)

This team were focused on the overall eHealth budget and delivering the planned eHealth programmes. Based on the email exchange they acted to ensure eHealth monies were not retained back into Scottish Government but believed could be in effect held, and brought back into NSS the following year to fund ongoing eHealth programmes. It is unclear why NHS Tayside were the Board to “hold monies” in 2012 but coincides with the first year the Board received brokerage. As the arrangement progressed, this became beneficial to both NHS Tayside and eHealth as there was greater slippage in the programme alongside reductions in future funding. This arrangement was reported to the eHealth group and was approved by the Scottish Government eHealth team who processed the transactions via RRL allocations.

Wider NSS Finance

Between 2012 and 2017, more latterly from February 2016 onwards members of the NSS finance team were aware of the funding arrangements and that NHS Tayside were holding e-Health monies to be returned the following year. This is evidenced in email exchanges between the NHS Director of Finance for Tayside and the NSS Director of Finance (relating to 2015/16 monies). Therefore, although being aware, this was never raised as a potential issue or concern, particularly in light of the NHS Tayside financial challenges and therefore a historic practice was allowed to continue. NSS as an organisation did not get visibility of the overall eHealth budget as it was considered as ‘pass through monies’ and therefore not subject to NSS governance or scrutiny arrangements at the overall budget level.

Key findings (continued)

Our conclusions (continued)

NHS Tayside

Up until 2016/17 NHS Tayside “held” the money and the returned the money to NSS via negative RRL allocations. In 2017/18 NHS did not return the £2.582 million allocation received in 2016/17 as it was not required by the eHealth programme. The nature of this transaction with was not visible in any of NHS Tayside’s internal reporting arrangements, including executive team updates, reporting to finance committee and the Board. The money was accounted for in the RRL position for NHS Tayside but not declared or reported as not being related to in-year expenditure, and therefore deferred income. Therefore misrepresenting NHS Tayside’s financial position.

Scottish Government eHealth

Over the period of time, NSS eHealth directed the Scottish Government eHealth team to make the respective RRL allocation adjustments, setting out the rationale. The Scottish Government eHealth team processed these transactions and did not scrutinise or challenge the rationale. The Deputy Director of eHealth was involved in the eHealth leads group, but similar to the wider group we understand their role, based on minutes, was focused on operational delivery of the projects. We would have expected additional controls to be in place to scrutinise and challenge the legitimacy of the requests and subsequent transfers.


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