Feature / Learning curve

A first ever mandatory cost collection should start to throw light on the real costs of educating and training clinical staff in the NHS. The exercise itself has been a learning process for costing teams. Steve Brown reports

At the start of this year, costing and education teams across English NHS providers took part in their first ever mandatory cost return covering clinical education and training activities. Based on just six months’ activity, many costing teams were far from enthusiastic about the exercise – given the work involved and the levels of existing workload. But Health Education England (HEE) – the body responsible for supporting the costing work and using it to develop currencies – says the hard work has paid off and the NHS is now in a far better place to take on its first full year collection this summer.

‘We were really encouraged that all but three providers met the deadline for submission, although it is clear from the feedback that this has been a lot of work for trusts,’ says Jenni Field, HEE’s head of finance strategy.

‘It’s been a learning exercise both for trusts and the centre. And while the data collected won’t be used to inform tariffs, it will be used in the development of currencies. The whole process has helped us to identify areas where more support is needed, and helped trusts to understand their own local approaches.’

Call for change

There have been calls for years for the NHS to tackle education and training costing. Traditionally, in the annual reference cost return, providers net off the income for training, before allocating the remaining costs down to patient activities. There has been widespread recognition that this approach – assuming the costs of providing training activities equate to the income received – fails to recognise actual training costs and impacts on the costs reported for patient services too.

While more accurate costs, both for non-patient care and patient care activities, would provide a better foundation for local decision-making, the task of costing training has stayed firmly in the ‘too difficult’ pile. However, the move to introduce tariffs for education and training – replacing existing funding arrangements, many of which were based on historical practice and local contracts – has provided the service with the push it needed to grasp this particular wicked issue (see education tariffs box).

The annual reference costs process is a mix of bottom-up and top-down costing, but the starting point is the overall quantum of costs. However, the education and training costing exercise is a pure bottom-up costing process. There is no education and training quantum from which organisations can allocate and apportion down to the various training programmes and trainees.

Given this, there is no clear view of what a full year of robust costing might demonstrate. But it could suggest that education and training in overall terms is run at a loss or a profit. Or, even if it provides evidence for existing funding levels in overall terms, it could demonstrate that the current funding is in the wrong place.

The Department of Health is responsible for the development of and setting education and training tariffs and continues to collect reference costs on behalf of regulator Monitor. It has been moving towards this cost collection for some time. For the 2012/13 reference costs (submitted last summer), trusts were required to exclude costs (rather than net off income) for private patients. It made clear that this small step towards better costing of non-NHS patient care activities would be followed by a move into the more material area of education and training. The only uncertainty had been over whether the training cost collection would be mandatory – a decision that was made in October. Trusts were required to submit costs by the end of January and 233 out of 236 providers considered to be ‘in scope’ made a return (ambulance trusts were not involved). Some 174 trusts submitted a confidence rating alongside their costs, with just over half the sample indicating ‘low’ or ‘very low’ confidence levels. While disappointing on the face of the figures, Ms Field says this is not surprising, given the scale of work involved and the fact that this is the first time costs have been collected.

Complex picture

It is a complicated exercise. In total, HEE spends £5bn on training, of which about £2.8bn goes on placements and salary support. The cost exercise only covered a part year and included training posts funded historically by trusts to maintain rotas and service. Detailed comparisons of HEE spend with costs will not be possible until after the summer collection.

There are some 127 salaried programmes, including postgraduate medical training,

pre-registration pharmacy and healthcare science specialty training. (Within this total are 76 specialty specific medical/dental training programmes.)

In addition, there are a further 42 non-salaried programmes covering undergraduate medical and dental training, pre-registration nursing and allied health professions. Different trusts will provide different combinations of these programmes.

 Eight different cost components have been identified for the non-salaried programmes – covering everything from pre-placement costs and direct teaching costs to the productivity loss of senior staff teaching while delivering patient care and overheads. A further four components, including the crucial estimate of how a salaried trainee’s time is split between delivering service and being trained, are included for the salaried programmes.

Populating these components is far from straightforward. It can’t be done simply by interrogating ledgers. Instead it requires close involvement of education and clinical staff – often using detailed questionnaires – and potentially significant levels of subjectivity.

Dashboards containing first figures from the half-year collection were due to be released to providers as Healthcare Finance went to press. But Ms Field says the real learning has come in terms of the feedback process and in getting trusts to run through the process for a first time and to understand what is involved and where the obstacles are.

‘One of the key issues is understanding what the local education and training boards can do to support trusts,’ says Ms Field. ‘In the past strategic health authorities would have brought together the costing leads, and we’ve found that some LETBs have been very active in providing this local support. We recognise that we need to take a more consistent approach.’

In total, the Department and HEE have 500 items of feedback to work through (see box overleaf). But two high-level issues have been identified by the Department:

• The importance of engagement between those providing activity and those providing costs
• The need for trusts to do some basic validation of the data they are submitting.

In extreme examples, one trust reported nurse training costs of less than £1 per hour, while another indicated medical undergraduate training costs ran to more than £5,000 per hour. Although the template automatically calculated unit costs, some trusts clearly hadn’t sense-checked their own submissions.

In other cases, trusts submitted data for training periods that exceeded the maximum number possible. The errors were put down to time pressures, underlining the need to start early and prepare well.

Engagement of leads

Peter Holt, head of finance at Health Education Wessex (HEW), says the engagement and collaboration of finance, education and clinical leads is crucial. ‘In Wessex we engaged with trusts very early in 2013 and held a first workshop in June, bringing together the relevant disciplines – not just finance,’ he says.

The topic was also raised at HEW’s board to ensure trust senior management were aware of the exercise and would support local project teams. ‘HEW engaged some specialist support and we visited each of the 11 trusts to follow this up, determine individual approaches and to offer support as appropriate,’ he says, adding that areas that have treated this as a finance-led exercise will have struggled.

Work in Wessex trusts got under way in earnest in September with, some trusts coming together to appoint a project manager to drive the programme. Mr Holt says even with this preparation, the collection was a challenge, although it was helped by good collaboration across the trusts.

 ‘For a standard trust with all the different departments, there is no way that trusts could complete 100% of all the different programmes [and cost areas] so there has been some extrapolation,’ he says. ‘As a result of the complexity and breadth of programmes within a trust – and the short timescales, coupled with other local pressures – completeness of data and confidence levels in the returns varied.’ HEW also determined that it could develop a standard for all trusts to use around library services, coordinated by the LETB, to agree a representative split of costs between service and education for different types of trusts.

Mr Holt says the initial reaction to the announcement that the exercise would be mandatory was that there was too little time. But he says that local practitioners soon came round to seeing the benefits of getting started on an exercise that would need to be run a few times over the coming years to inform robust tariffs. While the half year exercise has been really useful, he believes the full year collection will be harder, in part because the additional six months covers a period where  education and training activities are more intense (for example with first clinical placements for undergraduates taking place late in the Autumn term). The timing also coincides with other key activities within the trusts, and will put pressure on teams to deliver to quality and to time.

 But he agrees the half year exercise has helped trusts to understand the challenge, what they need to do and where the difficulties lie. It should also have helped the centre to understand how it can help trusts and ensure greater consistency in approach.

 Further help is at hand in the form of dashboards (above), which will display each trust’s own costs against the average for its peers. This should enable trusts to challenge their own costs and identify parts of the costing process that may need further work.

HEE and the Department are also looking at the half-year figures to understand how education resource groups (ERGs) could be developed. These groups could bring together training programmes that consume similar levels of resource, rather than having separate tariffs for all different training programmes.

However, costs are likely to continue to be collected at the more granular level while ERGs are being developed.

With the publication of the dashboards, all eyes will now turn to the summer collection. Expectations will be higher. Trusts will be expected to be better prepared and better rehearsed. And finance directors will be required to sign off submissions, and so are likely to subject returns to greater scrutiny.

The stakes are also higher because the summer collection will, in a sense, be for real – with the resulting costs expected to inform the tariff for education and training in 2016/17.