Joint Finance Day: HEE and LETB Perspective Thursday 16 April 2015 Jennifer Field - Head of Finance Strategy Elizabeth Hughes – Director of Education Quality, London and South East Peter Holt - Head of Finance – London and South East

Content 1.Overall budget employed 2.Tariff and currencies 3.Transition 4.LETB and Trust interaction 5.Education reference costs 6.Development of currencies 7.Questions

Overall Budget Total is £4.848 Billion

Tariffs and Currencies Currencies are the unit of education and training activity for which a payment is made Tariffs are prices set for each currency At them moment there are 3 currencies and tariffs: Non-medical placements Undergraduate Medical Placements Postgraduate Medical Posts 2013/14£3,175 + mff *£34,623 + mffN/A 2014/15£3,175 + mff£34,623 + mff £12,400 + mff and 50% basic salary costs 2015/16£3,175 + mff£33,965 + mff £12,400 + mff and 50% basic salary costs * mff = market forces factor, to reflect local price variations

Transition path 2013/1414/1515/1616/1717/1818/1919/2020/2121/2222/23 YearYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10 % Transition Remaining100%81%58%41%29%18%9%3%1%0% £m Transition Remaining£224.2m£182.5m£130.1m£92.4m£63.9m£40.4m£21m£7.1m£1.9m£0.8m Number of Orgs with Transition support 56* *Only £100k plus.

Placement tariff criteria A placement that attracts national tariff must meet the following criteria: be a recognised part of the education/training curriculum for the course and approved by the higher education institute and the relevant regulatory body, as appropriate; meet the quality standards of the regulator and the commissioner; be quality assured in line with the commissioner’s agreed processes; be direct clinical training (including time for clinical exams and study leave) with an agreed programme being a minimum of one week; have the appropriate clinical and mentoring support as defined by the relevant regulatory body; and not workplace shadowing. Time spent by students and trainees at organisations which does not meet this definition are not covered by the tariff.

Tariff covers Direct staff teaching time within a clinical placement Teaching and student facilities, including access to library services Administration costs Infrastructure costs Education supervisors Pastoral and supervisory support Trainee study leave and time for clinical exams Health and wellbeing (excluding any occupational health assessments that are carried out by the university and funded separately) Course fees and expenses (as required to achieve professional registration) Student/trainee accommodation costs In-course feedback and assessment Formal examining Staff training and development relating to their educational role But not……. Tuition costs, items funded under Education Support, Foundation Programme administration support staff, Heads of Schools, Programme Directors, Core Leads, Relocation costs and exceptional travel costs, Directors of Medical Education / Associates

LETB / Trust interaction LDA notification to Trust FDs, CEOs, MDs, DoNs annually – activity and £££ Funds transferred to Trusts via LDA Breakdown of funding provided with funds transfer to enable local reconciliation BUT distribution within Trust is for local determination Trust visits are held to determine placement quality requirements are met E&T Costing Exercise has exposed differences between cost to deliver training and income received

Education Reference Costs The NHS does not know how much it costs to educate and train the clinical workforce It knows how much it pays to education providers Do training funds subsidise patient costs? Or do trusts undertake training at a loss? The DH is responsible for the development and setting of E&T tariffs Better costing provides more accurate tariffs and inform decision making Costs captured under salaried and non salaried (not undergrad, post grad and non med) (127 salaried programmes and 42 non salaried) For first collection (Jan 2014) 233 out of 236 trusts submitted, but low confidence levels Collection requires close involvement of trust education and clinical staff, with support from Board and dedicated project resources. Currently, for PbR, education income netted off Full year collection not reconciled to trust turnover – potential double count/gap. Pricing group and currency development groups mobilised. ERG likely to go live 2016/17

ERC scope In future years, it is intended that the tariffs will be informed by an annual reference cost collection on education and training.... Acute, healthcare and mental health trusts are included within the scope of the exercise NHS ambulance trusts, Independent sector providers, Social enterprises and GP practices are excluded at this stage Approx 50 non salaried programmes are listed across 8 training categories as follows : - Allied health professionals- nursing and midwifery - Operating department practitioners- Pharmacy - Practitioner training programmes (HCS)- Medical - Professions complimentary to dentistry(PCD) - Dental Approx 125 salaried programmes are listed (which includes around 75 specialty specific medical/ dental training programmes), across 11 training categories as follows : - Dentistry- Pharmacy - Improving access to Psychological therapies- Healthcare scientists - Pathology- Psychology - Psychiatry - Acute Care - Medicine- Surgery - Obstetrics and gynaecology

Cost Collections Initial mid-year cost collection January 2014 – 233 submissions out of 236 Trusts in January – Confidence in the initial data submitted is low – However feedback is that Trusts are now better placed for the full year collection Full year cost collection August 2014 – All Trusts submitted in line with the deadline – Results shared with Trusts December 2014 – Data being used to inform currency development – Feedback used to improve 2014/15 collection

National headlines collection Significant variance on unit costs despite the non-mandatory validations Highest variability seen in Medical, Medical Undergrad, Nursing and Paediatric programmes. Lowest variability seen in Psychiatry and Allied Health Professional programmes. Overheads and ‘Cost of Staff Teaching While Delivering Patient Care’ have a wide range of costs Service-Training Split also shows high variance and in some cases can be anything from 5-100% for the same programme

Improving costing for Benchmark tool from for local use Improved guidance – particularly removing ambiguities and inconsistencies Updated collection template Tighter validation at point of submission Running further workshops through our LETBs for joint finance and education audience

14/15 collection timetable

Role of Education Leads Engagement with the process – Recording activity – Identifying activity (and reviewing how activity is recorded for future collections) – Contributing knowledge and information to feed the assumptions required in the exercise – Participating in cross function project groups within trusts to identify relevant training and education costs/ activity. Reviewing the results, investigating variances

Currencies Balance between Enough currencies to fairly reward Trusts Manageable number to limit the admin burden

Currency Development Group The groups aims: Set out the approach for creating ERGs Develop the principles for ERG design Receive and request data analysis from the central team Propose draft groupings based on the principles and applying their educational and professional insight Advise on the wider consultation process and assist with responding to feedback

CDG meetings Group has met 3 times to date: – 25 th November 2014 – ways of working, terms of reference, discussed principles for currency design – 27 th January 2015 – agreed principles, discussion focussed on undergraduate placements – 24 th March 2015 – developed proposals for undergraduate placements, and started to discuss postgraduate placements.

Outcomes of early discussions “to avoid perverse financial incentives” “commissioners and providers need to believe in the currencies” “the currencies need to support the wider workforce objectives” “as few as possible” minimum number that meets the objectives

Success? The success of this exercise is dependent on the production of cost calculations which are underpinned by robust information. This can only be achieved through the involvement of both finance and education teams within the process and we would encourage trusts who have not already established these links internally, to do this at their earliest opportunity

Questions?