Ed Waller and Miranda Carter: National development and regulation of new governance arrangements

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Ed Waller, Head of Multi-specialty Community Provider Contract Development and Intensive Support at NHS England, and Miranda Carter, Director of Foundation Trusts Assessment and New Organisational Models at NHS Improvement, discuss the work being done by NHS England and NHS Improvement to support the implementation of contracts for new care models.

This presentation was recorded at our conference on Governance and accountability in new care models on 8 February 2017.


EW:  Hi everybody, thanks for having us.   Miranda and I are going to do a double act, which hopefully means that it’ll be obvious there’s not cigarette paper between the NHS England view of all of this, and NHSI view of all of this.  We’ll try and whizz through what we want to say more quickly than perhaps we could, because there’s an awful lot to talk about if we had much longer, and then hopefully plenty of time for questions.

My role in NHS England is effectively to do all of the, what people describe as technical wiring behind the scenes. So I thought the first thing to do, would be to pick up the question in the last session about why we’re bothering with all of this contracting and technical change, and are we in danger of losing the focus on the thing that matters at the front end of all of this, which is the care model that’s changing.

And, I think the answer to that is, that some people could be in danger of losing sight of the important bit of this, and we’re very clear, that the reason we’re developing all of this technical underpinning policy and thinking is not because it has any end in itself but because it underpins a very clear vision about how you want care to change in place, what it will deliver for patients and the idea is that this will make it sustainable, practical and negotiable. So, we’ll just cover very quickly four main things.

So some of the principles of the contracting commissioning is, for the new models of care, how the process of agreeing that a new contact should be awarded should take place, and how NHS England and NHS are involved in that process. A little bit about what sort of organisational forms you might see evolving in local places to deliver these contracts and care models… and very quickly touch on payment mechanism.

My team has existed for just shy of a year, with a mission of creating the national contracts that will underpin all of this. What we set out to do wasn’t to sit in Skipton House and to design those in a bubble, but to actually sit alongside the handful of vanguard MCP, vanguards particularly who were at the forefront of developing these models and to design the contract that they’re going to use with them. And, we’ve published some materials before Christmas that are draft versions, and all of that.  We’ve been through an engagement exercise, which some of you might even been part of, and we’re hoping soon to have a version which we will then use with those vanguards.

I think we should pitch this very much as a process that’s going to evolve, so we don’t pretend that the thinking we’ve done on this is all correct, all universally applicable and won’t change, we’ll work with the people who are going to use these things first, we’ll see what their experience of it is, and then eventually after we’ve done a few times, we should have a very clear view about the different ways of doing this, some of the better ways of doing this and trying to codify that more clearly for people who follow.

We’ve started with MCPs, because they were simpler and you’ll see that, none of it is very simple, but we eventually want to expand the way we’ve been thinking about the technical underpinning of these models to, models are taking acute scope and the packs model itself, and that’s the next phase of our work, to do that in the next few months.

So, just to give a very quick overview of the technical pieces of work that are going on. So number one, the centre piece is effectively the new contract. The reason we need a new contract is that there are standard ways of contracting for primary care and other NHS services, but there isn’t actually a standard way of using a single contract to put those into the same contract with the same provider, and that’s effectively what we’re trying to create. So we’re trying to partner the NHS standard contract that exists in the currently with something that you could use and adapt to deliver integrated models of care that start include primary care, but also start to cover social care and other elements of local authority services.

Contract length, we currently think some of these contracts should be longer than current contracts tend to be in the system now. They may be up to 10-15 years long, and we think the reason for this is, that to put the investment both in financial, but also in people and changed terms into getting these arrangements in place, you need to have a significant period of stability that follows that. So you can prove that the model that you’ve put in place works and you aren’t in a cycle of constant negotiation and contract and procurement process.

Importantly, we need to think about the fact that these contracts could be held by a range of NHS or non NHS organisations, and that isn’t because, contrary to some commentary, that we are thinking about how you handover large sways of NHS provision to private providers, necessarily, but that in actual fact a lot of these models rely on a series of providers on a patch and perhaps beyond a patch, coming together in a collaborative way to deliver these models. And, some of the ways they might choose to do that, involve the creations of joint venture structures etc. which are not the traditional type of NHS trust that have held the vast majority of, certainly non-primary care services, thus far.

You could touch a little bit on procurement, but we’ve had to chart our way through procurement regulations that were written in 2015. We’ve published something in December on how that might work for new care models, so I could touch on that in questions if there are specifics, but we could point people to that.

One of the trickiest things about the new contract is striking the right balance between how much you describe centrally about what these new care models are going to look like and how much you leave to local commissioners and providers to negotiate as a contract terms or how much discretion is left in the contract terms to the provider, to have the conscience about the delivery of the service model that works best. And, so what we’ve ended up with is quite a, we need to describe this a little bit better in the next version, but quite a limited set of principles about what the care model we’re buying looks like in the national portion of the contract we’ve written, and then quite a lot of flexibility for commissioners to decide the balance between how they want to buy these care models and to what extent they’re buying outcomes, to what extent they’re buying service specification, and how far that service specification might be the slightly sought in the spirit of the new model of care that’s about addressing needs, prevention, personalisation rather than very specific, step by step lists of what we’ve provided on what day and what place.

I will skip over the financial stuff because we’ll come back to that at the end, and then just very briefly to say, that we’ve developed an insurance process that will apply to the award of these contracts, which Miranda will talk about in a minute.

There are broadly three ways of delivering an MCP or a PACS in contractual terms. The way that provides the most stability in comparison to current arrangements, is that it’s possible to take the incumbent providers who have their existing service contracts and effectively bind them together through an additional layer of governance which will be a reliance arrangement, and they will describe in that alliance arrangements, how they’re going to work together in order to deliver a new model of care. So it’s effectively codifying a collaboration between those providers.

Now, that’s not something new, we’ve not invented that for this purpose, that’s always existed as a concept, it’s been tried in various places, it’s worked in some, it’s not worked in others. It still relies on people having very, very good relationships, so because it’s all got to be consensual, because it required unanimity about things that are going to change, normally the commissioner has to be involved to make it work well, and normally people have to agree to do things that they may not be totally comfortable with in the current status quo.

When you get onto a more substantial change in the contract and financial structures, there are basically two options. And, the most visionary as it were, the one that was described originally is the one at the bottom called the ‘fully integrate model’ in which you take everything that’s part of the care model, all the service scope as part of the care model and you effectively contract for it in one go, in a single contract, from a single provider, and that is most akin to the sort of accountable care models that you can see in the States and elsewhere.

We think that they’re, maybe a few places who are wanting to do that… but we think in practice one of the barriers to that, is that you have a series of GP practises in each of the areas wanting to deliver one of these new care models and not all of them want to give up or suspend their current contractual arrangements in order to be part of a fully integrated new provider. And, that’s why we came up with number two.

So number two, the partially integrated model, allows you have to most of the scope of your care model consolidated into a single new contract, which effectively becomes a more integrated, more substantial version of what might have previously been a community services contract with extra service scope and more obligation for services to be integrated and delivered in the spirit of the new model of care. But it allows a general practise to sit outside of that contractual, to retain their current contract with an agreement signed between those two parts of the system, about how they’re going to work together to deliver the care model.

And, in many cases lots of general practitioners are very happy to be part of the model on that basis, and some of them think that they may eventually want to move to number three, but they just need some time to see the model working before they’re comfortable doing that.

One of the things I think you were touching on earlier as well, is that we’ve got to deliver these new models of care in the context of the legislative framework, where there are some fixed points, and fixed points that aren’t in legal terms going to change in the near future, so we have to work with what we’ve got. And, one of those is, that there are very clear set of functions described for the commissioners of care in the system.

It’s very clear that if you have a single large provider operating in a world where you’ve tried to give it more conscience than providers often have currently, to decide how to organise care pathways and deliver care, that some of the things that were traditionally have been done in a CCG might end up being done by one of those providers. And, we’ve gone through a process of trying to describe what sort of activity might end up moving from a CCG to one of those providers, how it might work, how resources might move, and how the system would look, the relationship between the commissioners and the providers.

Some of it might lead in time in different places to a discussion about whether things will remain exactly as they are on the CCG side of this system, so we already see CCGs collaborating, sharing teams, management teams etc. It’s possible that more of that will happen as you move to a world where you have more accountable population based provision, and a more strategic commissioning function.

And, now I’ll hand over to Miranda who will talk about a world in which have been through a commissioning and procurement process, we have a proposition to award one of these contracts and how that will work.

MC:  Hello everybody, I’m talking about the exciting area of assurance.  Why do we want to do assurance?  It really is to help set up these novel contracts for success. For me it’s been a really fantastic process of working very closely with NHSCE colleagues to work out how do we come together, as system regulators to help support you in doing some of the really great stuff that’s going to improve care for patients.

 So, we’ve introduced it, so that we can first of all understand the case for change and what really is going to change for patients in improving the three gaps, health and wellbeing, quality and finance.  We need to make sure we are very streamlined in the way we ask questions, so it can sometimes feel like, some of my NHS England colleagues will be asking some questions of you, then later someone NHSI will ask you a very similar question. So what we absolutely want to do is streamline what information we want to understand from you as you set up this contract and award it, in one way, and analyse the data and ask our relevant questions and come forward with a decision. So there’s a streamlining element to it.

 We need to think about the system view, what will the impact of your new care model be on your STP and we want to make sure all the risks are understood and mitigation is thought about up front. So I’m sure many of you in the room will have seen what happened around some of the really good stuff that was trying to be put in place by the Uniting Care Partnership, LLP, where the contract was not set up for success, that some of the more difficult issues and questions were not resolved before the contract award happened, and then it collapsed, and the whole purpose of this process is to prevent that from happening.  So ask the difficult questions up front, understand the mitigations, and then support providers as you go forward.  So that’s why it’s called ISAP Integrated Support and Assurance Process, so it is about supporting you to do the right thing.

 It’s got three stages in it, as a process, and I just talked through very briefly what that looks like. So first of all we’d have a conversation with commissioners to understand what they’re trying to procure in terms of the new care model, and work out whether the ISAP process applies, and just have a conversation about what the process looks like.

 And, then checkpoint one is just before commissioners go out to procurement, for a competitive bid, to ask some questions about the case for change and is the procurement going to be set up in the right way. Within this section is the question about, have you really understood the implication on your STP and will you feel comfortable, and a system level we can manage the disruption that will result as you change things around? So by that I mean, understanding what that might mean for the whole system’s care quality and also the financial position.

So if you create some new over here, which completely destabilises something over here, it doesn’t give you a net benefit, then I don’t think anyone wants us to be in that territory. So that’s check point one before you go out for procurement.
 Check point two is just when a preferred bidder has been selected, and those in the room who are from the provider side, we as NHSI have always run a review of the transactions to understand the risk of transactions and are they being managed appropriately, so the providers aren’t unduly destabilised.  So, what we’ve done is, we’ve incorporated that process within this joint process with NHS England, so you won’t go through it, it will seem seamless to you.  And, the sort of questions we’ll be asking at that phase is, “Do you understand the risks of the contract? How will you manage financially, what are the details behind your plans… to make the improvements that you’re expecting through this new care model?” So what is going to be different under this arrangement to the existing status quo, so that we can really comfortable with their detailed plans to deliver the benefits that you are aspiring to get to. And, there’ll also be questions from the commissioner side, about is the contract set up for the success.

 I think this is the area where some of the tricky questions need to be resolved, about a really clear understanding of finances, how those will be managed, what’s the assumption in the contract around activity etc., to make sure that that’s all fully understood before the contract award is made… And, then checkpoint three is making sure that you’re set up for mobilisation.   If you choose an organisational form, which may need to have registration from the CQC, we need to make sure that’s all been factored in, so you’re ready to go live at the beginning of the process.

 I want to talk to you very briefly about organisational form, I know there were some questions earlier about that, as part of the work we’ve been doing with the new care model’s team, we’ve also been doing some work to run some scenarios about different organisational forms that you may select to hold your contract.  So there are different options, we have a webinar that will be published shortly, and then there’ll be some detailed guidance, which has five scenarios in it, which I’ll talk about in a minute, to help you work through the pros and cons of each.

 Just to clear, the commissioner can’t decide which organisational form providers must adopt, it’s for the provider to choose that, but we need to understand the risks around each organisational form and how that can be managed as part of the selection process.  The key things you’ll need to think about with any organisation form is, strong governance and decision making, so that that’s all clear and there’s a clear understanding of how everything comes together for the new care model, things don’t get dropped between different providers.

 The business environment, so what are the different implications about things like VAT, Corporation Tax, pensions, CNST for the different organisational forms, and very importantly how do stakeholders and GPs relate to that form? For me the point of a new care model is everybody working together to improve the care for patients, and that means everyone being bought into the model to make the changes.  So therefore everybody needs to be on board, and some of the challenges around feeling, “Do I want to be part of a dominant strong acute provider?” Maybe that’s not going to help in certain situations, but in other situations, it might be the relationships are so strong that’s not a consideration, but it’s about how you make sure you have the right form to get the right stakeholder buy in, so you’re all working to your common vision.

 So, just very briefly, this analysis that will be published quite soon looks at the five scenarios on your screen now, so there’s an option around a limited liability partnership where a group of GPs for an MCP contract will come together in a limited liability partnership to hold the contract, or corporate joint venture, similarly a group of GPs with an FT could set up a joint venture LLP, but there was a joint venture LLP for United Care Partnership.

 Someone can host a contract, the exiting FT can be the provider and then do sub contract arrangements or you can have a strong alliance which I think Ed referred to. So there are pros and cons of each model, particularly for the MCP model led by the GPs, they may feel more strongly about having their own entity, but there’ll be risks and challenges within that. At the moment one of the key considerations is the implications of VAT, at the moment in a limited liability partnership, you can’t recover the cost of VAT, but that’s being looked at the Treasury.   If it’s two public entities, you can.

 Just then finally to close, to make sure we have time for questions.  The other bit of work we’re doing to support the new care models, is looking at payment mechanisms, we will publish a handbook on whole population budget, but there are three sort of key elements, one is about the approach to setting a capitated payment within that contract, to help align the incentives to manage where you effectively buy your care from. And improvement payment scheme, so that’s to incentivised improvements in care, if you give a capitated contract you also want to know that you are improving certain quality metrics, so there’s the commissioning side all want to know that that’s happening, so what’s the element of the contract value that will be linked to pay for performance.  And, I think really critically, the gain and loss share arrangement, to make these things work, the incentive to ensure that people do the right thing to make the improvements and they can join in the gain and the lose if things work out the right way or if there’s some incentive to make sure you do the right thing otherwise you could lose out.

 So, I think for me it’s important to focus on that as part of the payment mechanism to get people to work in the right way, they all feel they’ve got some skin in the game to make the improvements.   So that’s all I was going to say to make sure we can get questions.


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