About contracting for integrated care

Two models that are gaining traction which may be important in the development of the IPC programme are “prime contracts” and “alliance contracts.”

In a prime contract model, the commissioner(s) contracts with a single organisation (or consortium) which takes responsibility for the day-to-day management of other providers that deliver care within the contracted scope or pathway. The prime contractor is often referred to as an integrator, managing other providers through individual sub-contracts to deliver the service. A variation on this model is the prime provider, where the contracted organisation also delivers some or all of the services covered by the contract. The prime provider could be a new or existing provider from within the local health economy, or a consortium of providers. This is intended to limit the fragmentation that can be caused by introducing a new organisation into the landscape in an integrating role and to enable the provider to build capacity to deliver services differently.

In an alliance contract model, a group of providers enter into a single arrangement with the commissioner to deliver services. The key difference is that all parties in the alliance share risk and responsibility for meeting the agreed outcomes. The alliance is not co-ordinated by a prime contractor or provider and there are no sub-contractual arrangements involved. All organisations are deemed equal partners and rely on governance arrangements to manage their relationships and service delivery. The intention is that integration and collaboration are formalised through the contract, as commissioners and providers within the alliance are legally bound together to deliver the specific contracted service, sharing in risks and rewards accordingly.

In both instances, NHS commissioners would need to remove the specific functions contracted for from the NHS standard contract or block contract with providers and then renegotiate the terms of the new contract. Both models can then be administered within various structures – including a legal contract, agreement or memorandum of understanding – with providers establishing organisational and governance models to deliver according to the terms agreed.

There are pros and cons of both approaches and the time and resources needed to implement new contractual models can be very significant. The Kings Fund set out four essential lessons that CCGs, other commissioners and providers should keep in mind while embarking on new models of commissioning and contracting for integrated care:

  • It is essential to continually engage and communicate with providers, patients and the wider community to define the problem and identify appropriate solutions. Through this process, all partners can develop a shared vision setting out what they want care to look and feel like in the future – then work back from that point to build a model that meets these aspirations.
  • It will be important to develop transactional and relational approaches. Nurturing trust and building relationships between providers will be just as important (if not more so) to successful integrated delivery of care as the overarching contract or form of the partnership. Contractual vehicles do not replace the need to establish high-functioning local relationships.
  • Payment mechanisms and incentives will need to be aligned across providers. Inconsistencies in the way that different providers are reimbursed and incentivised continue to reinforce fragmentation in the delivery of care. Recent guidance from Monitor provides an opportunity for local variation and flexibility to overcome this fragmentation and develop new models, while innovative forms of payment are developing at a local level.
  • Providers will need to develop appropriate governance and organisational models. Shifting more accountability onto providers through contractual models leads to greater interdependencies and risk for providers. Providers will be best placed to develop inter-organisational forums and processes for decision-making and holding each other to account.