Many cases involved false prescriptions

A report by the auditor general found the bill for fraudulent claims was between �40m and �100m last year.

Most cases involved doctors, dentists and pharmacists making invalid claims or false prescriptions.

Auditor Robert Black did however find financial management within the health service was of a good standard.

'Too dependent'

But the Lothians, Grampian, and Argyll and Clyde NHS bodies were found to be experiencing financial difficulty.

Mr Chisholm insisted he was taking a "very firm line" on false claims, including setting up a counter-fraud services unit.

He told BBC Radio's Good Morning Scotland programme : "The report today says there has been significant progress in introducing a robust framework of payment verification, but of course there is more to do.

"And that's why the counter-fraud services unit is taking an increasingly pro-active approach to this.

"It is simply unacceptable and we will do everything that is possible to put an end to it."

It is simply unacceptable and we will do everything that is possible to put an end to it Malcolm Chisholm Health minister

Mr Black said he had raised concern about practitioners being able to virtually self-certify payment two years ago.

"The health department took that very seriously and they set up the counter-fraud services unit.

"So for the first time I've been able to include in my report the estimates of what's involved from the fraud unit, which is a good thing because people are starting to get a measure of the problem and are taking it very seriously."

Scottish National Party health spokeswoman Shona Robison said she found the scale of the fraud breathtaking.

"There is the possibility that patients who are now beyond treatment could have been seen earlier had this money been available to shorten waiting times," she said.

"Questions will now have to be asked about anti-fraud measures within the health service. This simply cannot be allowed to go on."

Rising expenditure

The annual report focuses on the pressures and challenges facing the NHS to improve health care and its management.

It said that the Scottish Executive is committed to helping fund those challenges over the next three years and planned expenditure is expected to increase from �6.7bn in 2002/03 to �8.5bn in 2005/06.

But Mr Black said he is concerned that NHS bodies could become over-reliant on "non-recurring funding" to deal with rising staff costs and the expense of health care.

He said: "In my previous report I expressed concern about trusts relying on non-recurring funding to balance their books.

"Some �266m of non-recurring funding was generated in 2002/03 and many NHS bodies relied on this source of revenue to achieve financial balance.

Robert Black warned against relying on "non-recurring funding"

"While some of this money was used to fund specific initiatives to develop healthcare services, it is important that NHS bodies do not become too dependent upon non-recurring income as a means of achieving a balanced recurring budget."

The five trusts which failed to break even were Argyll & Clyde Acute Hospitals, Grampian University Hospitals, Lanarkshire Acute Hospitals, Lomond and Argyll Primary Care Trust and Renfrewshire & Inverclyde Primary Care Trust.

The Scottish NHS Confederation welcomed the report's findings.

Hilary Robertson, confederation director, said: "We welcome the auditor general's overview and its findings that the overall financial management in the NHS continues to be of a good standard.

"The service is going through a period of change and faces many financial and organisational pressures.