Contracting for integrated care – what happens once the ink is dry?

This content relates to the following topics:

A few weeks ago, in our publication Commissioning and contracting for integrated care we described a number of alternative contracting models currently being implemented that encourage and allow providers to work together, within a single budget and/or to an agreed set of outcomes.

In the discussions I had producing this report and afterwards, there was a lot of interest in these contracting models among commissioners, providers and policy-makers. At a national level, the NHS five year forward view clearly describes several different provider models. New integrated provider models are being defined and rolled out, and contracting tools are seen as the vehicle to make these models happen. However, the contract is often seen as an end in itself rather than a tool for encouraging new ways of working.

In addition to signing on the dotted line, we highlight a number of factors that should be taken into consideration when building new contracting models:

  • collaboration and engagement across the local health system
  • establishing appropriate outcome measures
  • reducing fragmentation across different payment streams
  • focusing on building trust and relationships.

But these issues all relate to establishing the contract – focusing particularly on how commissioners can use the contract to stimulate collaboration. In the report we also highlight the importance of provider governance. In other words – what happens once the ink is dry?

The contracts we describe all shift more financial and clinical risk onto providers. Many promising models in England and abroad have failed in the past because providers have not had the foresight, skills or information to manage this risk. See our paper on accountable care organisations for more on this issue.

We have recently heard that the prime contractor for musculoskeletal services in Bedfordshire (one of the case studies in the report) has been unable to agree the terms of a sub-contract with one of its main local acute providers. This highlights my point – the contract in itself cannot make integration happen, it is just the starting point for establishing a new way of working, one that removes some of the pre-existing financial and organisational barriers.

At the moment, it seems that commissioners and providers are focusing on the structures of contracts rather than on how they will actually work in practice. The contract should remove some of the traditional barriers to integration and establish a clear set of outcome measures, but it will not in itself provide a blueprint for how providers work together to make decisions and deliver care for patients on a daily basis.

Providers within new contractual models must establish an appropriate governance structure. Through this they can work together to develop and agree delivery models and pathways that will meet the outcomes stipulated in the contract.

New contractual models are inherently risky, particularly as providers take on large budgets and shift money around the system. They are largely untested, despite the promises of cost savings and quality improvement. In more complex partnerships that involve financial risk and complex flows of money, providers will need to keep their eyes open, giving careful consideration to how this risk is managed in order to protect the interests of all partners.

The commissioners and providers involved in developing these new contractual solutions feel like the whole world is watching – waiting to see some flicker of success before following suit, or waiting for failure so they can say ‘I told you so’.

The conditions are as good as they have ever been for these new models to flourish. The national context is much more permissive and flexible – allowing for longer-term contracts and more flexible payment models. Commissioners have a number of different template models available, and support from a range of different sources. Once the ink is dry, the main thing standing in the way of providers working together in a meaningful way is their own capacity and willingness to do so.


Bev Bookless

Leadership and Career Coach,
You First Coaching
Comment date
18 December 2014
I totally agree that delivering, high quality, effective integrated care requires system leadership. Agreeing a contract is only the first step and it should be acknowledged that this in itself is no easy ask. Relationships built upon trust, cultures developed across organisations that facilitate and support care is critical, the right environment for all to come together, sharing risk and respecting each different part of the system are of equal importance. A simple reminder is the reason for going along this route. Putting the patient at the centre and delivering a care service that is joined up. But it is not so simple but I'm optimistic can be achieved.

Varsha Dodhia

Comment date
17 December 2014
"focusing on building trust and relationships" is the important factor.

Imagine a family is building their new house, the architect draws the plans and invariably there will be changes as the "construction" starts and progresses with challenges to be met and how over-spend or "unexpected" issues crop up. If contracts get in the way then it becomes a construction site for years and at one point or other a settlement needs to happen.

In this the "Governance" framework is the pivotal point and both "upside" and "downside" need to be equitably shared.

We are at a juncture where "System Leadership" is what is required and all involved take this up as a personal goal.

Geraint Day

Comment date
16 December 2014
Totally agree with this particular comment of yours:
"However, the contract is often seen as an end in itself rather than a tool for encouraging new ways of working".

Which goes to the heart of much of so-called 'management' in the National Health Service in England. Writing policy and contract documents has in many cases been elevated into the de facto purpose. It's not new a new thing either. Been going on since the 1990s.

How to change that may well be easier said than done but must almost certainly involve putting healthcare outcomes at the centre of decision making. And a probable shakeup in skills mix anong those employed to do that. Away from pontification and more focus on practical results.

Just a thought.

Add your comment