Months of speculation over the future of the chief executive of the NHS in Scotland have ended this week with the announcement that Geoff Scaife is to step down.

The news came as the Scottish Executive unveiled plans to revamp its health department by giving it a single head of department and chief executive responsible for both service delivery and policy decisions.

Mr Scaife, 50, will leave the post in three weeks' time, two months before the end of his contract and without a post to go to.Rumours about his future have been rife in the NHS since the NHS in Scotland conference in May.

Then, Mr Scaife told HSJ that stories about his imminent departure were 'all rumour and gossip. My contract is due for review in September and the Executive will make a decision on it.

There is nothing sinister about all of this; it goes on when anyone's contract is up for renewal. The same thing happened the last time Alan Langlands' contract was due to be renewed.'

A spokesperson for the Executive said: 'He is leaving two months before the end of his contract just to clear the air. There has been a lot of rumour and I think he just thought he might as well go now rather than later.

'We cannot discuss any financial deal which may have been made with Mr Scaife as that is a personal matter between himself and the Executive.

Mr Scaife is not able to comment on any deal or about his leaving the department.'

An NHS insider said: 'It took an awfully long time to get an agreement, which has been noticed by the health service and has caused some disquiet among senior managers.

'I think people will also be looking with interest at what Geoff is going to do next as he is too young to retire, and where he goes will be an indication of how valued he has been.'

He suggested a replacement should be 'someone who knows the NHS in Scotland well and the personalities involved, probably a time-served genuine civil servant, who can bring together the new roles of head of department and chief executive'.

The structure to be put in place following Mr Scaife's departure will bring the health department in line with all other departments within the Executive.

Announcing the changes, permanent secretary Muir Russell explained: 'A single head of department and chief executive - responsible both for the delivery of services in the NHS and health policy developments within the Scottish Executive - will give cohesion and co-ordination to the department's work.'

Mr Russell continued: 'Within the NHS in Scotland old demarcations are being eradicated. For example, the NHS and local authorities are working together to break down barriers in delivering community care. That process could not - and has not - stopped at the doors of St Andrew's House' [the offices of the Scottish Executive].

The revamped service will create a health policy group to be headed by Godfrey Robson, a senior civil servant, and this will incorporate all health policy work.

There is also to be a new planning and performance management group headed by Gerry Marr, currently director of human resources within the NHS in Scotland. The acting chief executive will be the current chief medical officer, Sir David Carter, who will remain in post while the job is advertised.

On Monday, Scottish health minister Susan Deacon said: 'I welcome all the changes the permanent secretary is outlining today.

'It is clear that some key themes run through all his proposals - sharp performance management, a strong emphasis on strategic development, better integration of policy areas such as primary and community care, underpinned by the need to make real improvements in people's health.'

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