Hospitals may lose out in plan to make funds follow student

The shake-up of education and funding for training proposed by Lord Darzi could have a "major destabilising impact" on established teaching hospitals.

A confidential paper on the financial impact of the health minister's workforce strategy warns that London's prestigious teaching hospitals stand to lose the most, with up to £258m a year at risk.

The expert working group's paper, seen by HSJ, examines the impact of proposals to make up to £4.3bn of education and training funds "follow the student", reflecting the numbers in training rather than block funding.

The change means that hospitals in London could lose up to £173m a year in funding for trainee and postgraduate doctors - equivalent to a 31 per cent cut. A similar change to funding the cost of non-medical training such as nurses could cost them another £85m.

The paper bases its calculations on a tariff rate of £35,000 a year for medical undergraduate and graduate students, £3,000 per non-medical trainee and £4,000 per newly qualified non-medical staff placement. It says these rates are "for modelling purposes only", but these models match the £4.3bn set aside for training in 2007-08, suggesting the options for manoeuvre are limited.

The models explore adjusting the tariff rate for each strategic health authority region according to a "market forces factor" that takes account of the differing costs of providing training in England.

That would reduce London's loss from £258m to £142m. The capital would still lose the most, but East Midlands, East of England and Yorkshire and the Humber would each lose proportionately more of their medical training funds. However, South Central and South East Coast SHAs would gain an extra £20m and £54m respectively.

A teaching hospital source told HSJ there were concerns the new system would advantage district general hospitals hosting "just a few trainees" at the expense of major teaching hospitals and centres of excellence that bear the "unavoidable extra costs" of hosting large numbers of students and specialists.

Asked if he believed the new tariff system would cause a consolidation of training provision, Lord Darzi told HSJ: "I don't think so, but I think we'll raise the bar [on quality]".

The Department of Health hopes to have the new system in place for next financial year.