While the annual deficit improved by £60m, the three-year cumulative over-spend increased from £385m in 2023-24 to £461m in 2024-25, with all seven health boards again breaching their statutory duty to break even.
Auditor general, Adrian Crompton said health boards failing to break even had become a recurring theme in recent years.
Compton said: ‘Record levels of investment and ever-increasing levels of savings are failing to control the costs that are being driven by rising demand for services, inflationary pressures and overall growth in pay costs.'
The auditor general said the NHS Wales was ‘still a long way from being able to live within its means' and was approaching a point where ‘more of the same is untenable if the institution that we all depend on is going to be sustainable for future generations'.
Health services received £11.57bn of revenue funding in 2024-25, up by £927m and significantly higher than the uplift of £744m in 2023-24. On the positive side, agency staff spending fell by 46% between 2022-23 and 2024-25 to £174m.
The overall deficit was recorded despite savings being their highest since 2018-19 at £253m. Non-recurrent savings made up 38% of total reported savings in 2024-25 down from 60% in 2022-23.
Only one health board was able to secure approval from the cabinet secretary for health and social care for a three-year integrated medium-term plan for 2024-27. A failure of an NHS body to produce a financially balanced three-year plan typically results in a reversion to a one-year plan.
The auditor said it was proving increasingly difficult for NHS bodies to produce financially balanced plans in the current climate of cost pressures and service demand and stressed the longer-term need to include a greater focus on preventing illness to ensure financial sustainability.
A Welsh Government spokesperson said: ‘As the auditor general's report shows, NHS organisations continue to deliver significant levels of savings - £253m is the highest level since the pandemic and agency costs are now 46% lower than two years ago.
‘Our budget has continued to prioritise funding for the NHS; this year we are providing an additional £600m for the NHS and social care.
‘We continue to work with health boards to improve their financial position.'
