URGENT action is needed to address the declining performance of the NHS in Scotland, according to the public spending watchdog, who has said it is “not financially sustainable” in its current form.

In her annual review of the NHS published today, Auditor General for Scotland, Caroline Gardner, said pressure was increasing on the service with rising numbers of people on waiting lists, major workforce challenges, rising drug costs and a “significant” maintenance backlog.

No part of the country had met all eight key national targets for the NHS, with Lothian failing to achieve any, and she said “decisive action” was needed to secure the future of the “vital and valued service”.

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“No NHS boards were able to meet all eight key national targets and performance against these targets declined nationally,” she wrote.

“More people waited longer for outpatient and inpatient appointments. Only one of the eight key performance targets was met nationally.”

Gardner said the health budget was £13.1 billion in 2017/18 – 42% of the total Scottish budget – but allowing for inflation, this was a 0.2% drop on the previous year.

NHS boards struggled to make “unprecedented savings” of £449.1 million and relied heavily on one-off savings, leaving the service unable to break even.

She said the NHS also faced “significant workforce challenges” in recruiting staff and there was evidence it was struggling to recruit and retain the right people.

Boards were also considering the potential impact of Brexit on areas such as staffing, the supply and cost of drugs, and food prices and Gardner said it could “significantly affect the NHS”. She wrote: “It has been difficult to assess the scale of the risk, particularly in terms of workforce as data on the nationality of employees is not routinely collected, and there is still significant uncertainty about what form EU withdrawal will take.”

However, she pointed out that General Medical Council data showed 5.9% (1177 people) of doctors working in Scotland obtained their primary medical qualification in a non-UK European Economic Area (EEA) country; and the Scottish Government had estimated there were 17,000 non-UK EU nationals working in health and social care in Scotland (4.4% of the sector workforce).

Gardner said: “The performance of the NHS continues to decline, while demands on the service from Scotland’s ageing population are growing. The solutions lie in changing how healthcare is accessed and delivered, but progress is too slow. “The scale of the challenges facing the NHS means that decisive action is needed now to deliver the fundamental change that will secure the future of this vital and valued service.

“Alongside longer term financial planning, this must include effective leadership, and much more engagement with communities about new forms of care and the difference they make to people’s lives.”

The Royal College of Physicians of Edinburgh said the need for quality governance in healthcare had never been greater. A spokesperson said: “As the delivery of healthcare becomes ever more complex, the problems that can result from poor governance systems can be severe for staff and patients.”

Health Secretary Jeanne Freeman said the Scottish Government was already taking forward Gardner’s recommendations: “Under this Government, NHS funding has reached record levels of more than £13bn this year, supporting substantial increases in frontline NHS staffing, as well as increases in patient satisfaction, reductions in mortality rates, falls in healthcare associated infections, and Scotland’s A&E performance has been the best across the UK for more than three years.

“While our NHS faces challenges, common with health systems across the world, we are implementing a new waiting times improvement plan to direct £850m of investment over the next three years to deliver substantial and sustainable improvements to performance, and significantly improve the experience of patients waiting to be seen or treated. Ultimately we want to ensure people can continue to look forward to a healthier future with access to a health and social care system that continues to deliver the world-class compassionate care Scotland is known for.”