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Sally Gainsbury: conspiracy and coincidence

Reforms to the way the £5bn clinical and medical training budget is allocated to hospitals have been kicked repeatedly into the long grass since their latest iteration as part of Lord Darzi’s next stage review in 2008.

So it comes as little surprise the latest April 2013 start date for the promised new system looks set to be missed.

The delay is only in small part due to the complications involved in replacing what is essentially a block grant with a payment-by-results style “money-follows-the-student” system. More problematic is who those hosts are: England’s largest and generally most prestigious tertiary teaching hospital trusts, which would lose out to smaller district general hospitals if funds were allocated on a per-student basis.

Numbers crunched for Darzi back in 2008 put London’s loss alone at more than £250m a year - the equivalent of a small hospital or a third of a big hospital, and not one of those London would actually quite like to lose. For many tertiary hospitals the sums involved are double-figure millions, which would be halved, without any significant concomitant reduction in trainee burdens.

For those hospitals, the biggest gripe is the scheduled losses to their £900m service increment for teaching (SIFT) budget. To tertiaries, these funds represent compensation for the additional costs of hosting hordes of undergraduate trainees, as opposed to the odd few found at DGHs. But to the DGHs, the funds represent a shadowy London-centric conspiracy to bung a load of extra cash to those who shout the loudest.

A compromise, however, may be in the offing. After all, the Department of Health does not want to destabilise large tertiaries any more than it wants to give DGHs new cash for doing something they have been doing anyway for free.

Enter, then, parallel discussions over extending that other shadowy London-centric conspiracy - Project Diamond - to the wider national pool of Shelford group tertiary trusts, which argue the additional costs of their specialist services should be funded by an annual infrastructure grant of about 10 per cent of their clinical income.

Accountancy Ernst and Young has duly been commissioned to prove the point. But the close coincidence of both the sums and organisations involved suggests a happy ending could be found: repurposing SIFT funds to form an annual infrastructure charge that might better cover the fixed costs of specialist equipment and staff than the current piece-rate tariff top-up.

The rub, however, would be for the DGHs, a few of whom may have been lulled into expecting a SIFT windfall. For them the lesson, as ever, is: the DH giveth but it also taketh away.

Sally Gainsbury is a news reporter for the Financial Times,

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