NHS Shetland will cut spending by £4 million to address rising costs at the trust.
The heath board’s core grant from the Scottish Government is only in line to increase by £700,000 over the next financial year.
This will ensure that the total settlement rises to £46.5 million, but this will be insufficient to deal with outgoings in the region.
Chief executive Ralph Roberts has confirmed that costs at NHS Shetland will rise by approximately £2.4 million in the coming years.
And the health board is already £1.8m over budget, meaning that it will now have to find ways to reduce costs by around £4m.
Around £600,000 of this figures is related to nationally agreed pay awards.
Meanwhile, inflation, new and increased prescription of drugs and Shetland’s ageing population will also put pressure on finances.
“We are continuing to look at how we might achieve this and are currently planning to present a budget to our board meeting in February,” Roberts commented.
NHS Shetland’s core funding increase was confirmed in finance minister Derek Mackay’s draft budget.
It suggested that the health board was in line to receive £3.9 million in additional funding, but Roberts said much of this was already taken in last year outside the normal allocation.
The health board also expects to receive around £400,000 as a share of a national £107 million fund for social care.
It will be passed to the Integrated Joint Board and it is expected to be used to offset increased costs in providing social care and the reduced revenue grant due to be received by Shetland Islands Council.
NHS Shetland also expects around to receive £10 million of recurring funding for specific services such as public health and dental services. These budgets will not be finalised until January.
It is anticipated that this funding will be around the same level as 2016/17, but it won’t reflect inflation, meaning that increased costs related to the services will have to be met by savings elsewhere in the health board’s budget.
Shetland is treated as a separate region to NHS Scotland, owing to its unique location northeast of the British mainland.
The island houses over 23,000 residents.