Why was a distinction made between Direct and Indirect Costs?
The research into the review of ACT made a distinction between Direct and Indirect Costs on the basis that direct costs were those that could be directly attributed to the teaching of medical students (and medical teaching of dental students). A model was developed to estimate the actual costs to the NHS of supporting these students and this was used to inform the Direct Costs formula. On Indirect Costs, research was commissioned to find evidence to support the view that major teaching hospitals incurred inevitably higher running costs due to teaching activities (in addition to the direct costs). The research could find no evidence to explain why teaching hospitals should have higher costs, which were estimated to be around £25m for the 8 teaching hospitals in Scotland. To avoid financial turbulence for Boards it was decided that rather than removing these funds, the balance of the ACT funding and Direct Costs (around £28m) would be added to their Unified Budgets, and distributed on th
