MPET Review Presentation to JMC 19 November 2009

1. MPET ReviewPresentation to JMC 19 November 2009

2. WHAT IS THE MPET REVIEW ‘A High Quality Workforce’ sets out the workforce commitments of ‘High Quality Care for All’ for the NHS The commitment outlined within ‘A High Quality Workforce’, The Next Stage Review (NSR) is to; Review the way education and training is funded through the Multi Professional Education and Training levy (MPET). Address the problems with the existing system and bring about transparency, promote fairness and reward quality in education provision. 2

3. AIMS OF THE MPET REVIEW In particular, A High Quality Workforce stated a commitment to; Rebase MPET Replace with a tariff based system where funding follows trainee More appropriate support for all professions The review also links with work on Education Commissioning for Quality to ensure commissioners have the metrics and financial levers to improve quality and ensure greater clarity of investment in education and training 3

4. WHY SHOULD WE REVIEW MPET It is widely accepted that MPET funding: • Is not fit for purpose • The cost base is historic • It is not linked to quality, quantity or cost • Medical undergraduate funding per student varies substantially between institutions and organisations (£10k to £110k) • PGME funding is based on an arbitrary proportion (50 or 100%) of basic salary • There is no dedicated contribution to training costs for PGME, i.e. the consultant trainer is under growing pressure during annual consultant job planning • There is no dedicated placement fee for NMET pre-reg training and some regions are experiencing difficulty securing placements or driving quality improvements 4

5. PROGRESS SO FAR • DH worked with 21 trusts in 3 SHAs (London, SW and Yorks/Humber) on a detailed costing exercise that included • Costing methodology and data collection templates were developed with participating trusts and SHAs • Resulting costings were signed off by trust DFs • Outcomes from one trust were peer reviewed by another • Whole process was quality assured • Based on 07/08 activity and prices

6. EXTRAPOLATION OF THE COSTS NATIONALLY • We then extrapolated the costs nationally to test affordability • This suggested that: • Medical SIFT* funding exceeded costs by c£120m (Dental SIFT is outside the scope of this Review) • MADEL costs exceeded funding by c£500m • NMET costs exceeded funding by c£400m • Overall, MPET costs exceed funding by c£800m though weaknesses in NMET costings cast doubt on this • We considered 2 options: • rebasing funds from PCTs into MPET so we could pay the actual costs of education, or • deflating the national rates so they were affordable within the existing MPET budget * Includes medical for dental

7. SHOULD WE REBASE OR NOT? • Rebasing would be complex, difficult and time-consuming • Decision was made that it would be better not to rebase provided the national rates were sufficient to enable attractive prices • Which followed consideration into whether the national rates for MSIFT, MADEL and NMET should be • deflated equally, or • deflated differentially • This resulted in the preferred option being: • Pay MSIFT at 100% of cost • Pay NMET at a de minimus level (equivalent to social care rate) • Pay a placement rate for MADEL equivalent to 1 PA (c£12k) • Adjust salary rates to reflect better the split between training and service contribution provided that the resulting national rates gave education commissioners sufficient leverage

8. SHA VALIDATION EXERCISE • Following our meeting with SHA Directors of Finance on 16th June, there was agreement that the SHAs would validate all DH costings and proposals • They asked 4 strategic questions: • Are the national rates robust? • Are they affordable? • Who are the major gainers and losers? • How can the financial risks be managed? • The review has been very helpful and we believe it should increase confidence in the prospect of a tariff, however it also raises some issues.

9. JOINT MEETING WITH SHAs DFs AND WDs • Progress to date presented to the group on 6 Aug together with the issues raised from SHA validation exercise • Agreed actions to resolve issues: • To undertake further work on tariff/non tariff split to improve consistency • Model tariffs on 09/10 activity and compare against 09/10 financial allocations ensuring they are affordable within tariff envelope • To review salary support rates with Deans’ assistance • Test feasibility of applying an education MFF rather than PbR • Primary Care rates • Develop new allocation methodology based on fair shares

10. SALARY SUPPORT • The percentages suggested by PG Deans • Percentages risk assessed by 5 Teaching Trusts • MEE suggest expanding to a wider sample of Trusts (including DGHs) and assessing the impact in different specialities (now extended to 12 Trusts)

11. WHAT IT SHOWS Table 1 – Impact Salary Support Rates

12. WHAT IT SHOWS – OVERALL (indicative) Funding SIFT at 100%, NMET at a de –minimus and MADEL at the Deans’ proposal gives the following results: SIFT funding reduces by £100m overall MADEL funding increases by £40m overall NMET funding increases by £60m overall Medical stakeholders have raised issues with the approach on MADEL salaries 12

13. SALARY SUPPORT ISSUES • The risk assessment exercise raised the following issues: • Rates provided by SHAs are lower than those allocated by DH • Post numbers declared by SHAs are in excess of posts required, overall (around 1000 extra posts) • Activity data is not consistent across different data sources within each SHA • Some SHAs using a composite funding rate across all specialty grades • Proposed salary support rates result in a loss across the senior trainees. This disadvantages those Trusts with a richer skill mix • Consequently, we are considering further options for salary support that are less radical

14. SALARY SUPPORT OPTIONS • Option 1 - Status quo • Option 2 - Status quo plus targeted funding of additional £40m • Option 3 – Smoothed approach

15. THE RESULTS – PLACEMENT RATES (provisional) SIFT is based on 100% of assessed costs. NMET is based on a de-minimus figure equivalent to Social Care degrees MADEL placement rate is funded on the remaining balance Salary support is based on Deans’ advice (see Table 1). We are still working through the detail on the other options 15

16. % change % change (expressed (expressed > > 3 % 2% to 2% to 0% to 0% to 0% 0% 0% to 0% to 2% to 2% to > 4% > 4% Total Total as % of as % of 3% 2% 2% 2% 2% 4% 4% Trust Trust turnover) turnover) Number of Number of 2 9 60 3 160 1 1 236 2 Trusts Trusts Range of Range of £ £ 24.8m £ £ 18.2m £ £ 13.6m £9k to £ £ £ 3m £ £ 14.2m absolute absolute to to £ £ 3.1m to to to to £ £ 15k £ £ 2. 2.6m change change £ £ 2.4m THE RESULTS – TRUST IMPACT (based on Deans’ proposal for salary support) < --------losers-------------> <-----------gainers-------->

18. THE PROPOSALS • Do not redistribute funding until allocation methodology review is complete and the quality metrics are in place (probably April 2011) • Issue the proposed tariffs in shadow form in December 2009 • Move away from a hard tariff to a softer benchmark price • Allow SHAs the flexibility to move Trusts towards the tariff where possible, within the parameters of their existing allocation • Pilot the pricing options for salary support • Work with Finance colleagues to determine the way we allocate MPET • Work with Workforce Planners on the distribution of medical trainees