NHS Long-term Plan: legislative proposals Contents

4Integrating care provision

68.It is possible to organise services in various ways to support integrated care for patients. In essence, there are ways of removing or reducing the barriers separate organisational boundaries pose for integration. Integrating contracts and organisations is not the same as integrating care for patients. During our last inquiry, and again in this one, we heard frequently that a patient’s experience of integration depends much more on the behaviours, culture and infrastructure in place locally which support integration, rather than on the specific organisational forms integration take.87

69.The organisational form integrated care takes ranges from partnerships between existing services at one end of the spectrum through to the formal consolidation of services into a single organisation at the other end. Integrated care partnerships, which have emerged out of the New Care Models programme, are the most common form in the NHS at present. There are two broad types: alliance and prime provider models. An alliance model is where a partnership of different health and care providers holds an alliance contract for a range of services, which enables these services to collaborate. A prime/lead provider model is similar, but in this model one provider, such as a foundation trust or local authority, takes the lead. While these options provide useful ways to reduce or remove organisational boundaries the NHS Confederation told us that:

Some of our members who supported the concept of integrated care trusts nevertheless believed many provider organisations were not ready, or in some cases willing, to join up at this point. Alongside the legislative proposals, we believe more work is needed to address the underlying reasons why providers do not feel they can come together using existing flexibilities or by merging. Part of this is almost certainly down to the lack of system-wide incentives to pool risk and share rewards.88

70.In Dudley, the NHS is attempting to formalise an existing partnership into a single organisation, which would then hold an Integrated Care Provider contract (ICP contract). Dudley’s plans represent the first attempt to apply these arrangements in the NHS.

71.The original term proposed, accountable care organisation (ACO), creates confusion with the Affordable Care Act 2010 in the US. The term integrated care provider (ICP) is now used in place of the term ACO to reflect the point that the use of this model in the English NHS is likely to be very different from the model of the same name used in other countries.89 There are many benefits to creating an ICP in the English NHS. ICPs offer, for example, the opportunity to bring a disparate array of services, particularly out of hospital services, into a single organisation, with one workforce and aligned incentives that enable resources to be shifted away from hospitals and towards improving population health.90

72.The widespread use of the term ACO sparked concerns, and misconceptions, about how these models might be used in the English NHS. Most notably, campaign groups have asserted that ACOs could extend the privatisation of the NHS, if private companies are allowed hold long-term contracts for a wide variety of NHS services. In fact, we heard that the opposite is more likely, as the private sector has little appetite to bid for such contracts and commissioners are more likely to use an ICP model to formalise partnerships between NHS services, rather than to contract services out to the private sector. Nevertheless, we strongly recommended that ICPs should be established in primary legislation as NHS bodies to put this beyond doubt.91

73.Integrating contracts and services is not the same as integrating care for patients. Nevertheless, there already exist different contractual and service options, permissible within existing legislation, that help to remove or reduce the barriers which organisational boundaries pose to integration. More work is needed to understand why some services are currently unable or unwilling to make use of these arrangements. We recommend that the National Implementation Plan/ framework should include proposals to increase the uptake of existing contractual options and/or further extend the ways organisations can work collaboratively.

Integrated care provider contract

74.The NHS has developed an Integrated Care Provider contract, as a way to establish integrated care providers within the English NHS. Many parts of the NHS are achieving similar aims with alternative models, such as alliance contracts and prime provider contracts, but an ICP contract provides a mechanism which caters for the interest some local health systems have expressed in “bringing some services together under the responsibility of a single provider organisation, supported by a single contract and a combined budget.”92

75.NHS England and NHS Improvement’s proposals state that there is a clear expectation that holders of an ICP contract will be public statutory providers, but that ICP contract holders will not have to provide all the relevant services themselves.93 Holders of an ICP contract may subcontract services from GPs, voluntary and community services and the independent sector, where the contract holder deems this necessary.94 This approach provides a way to ensure the risk entailed in an ICP contract rests with a public statutory provider, but without removing the ability of the NHS to draw on the mixed economy of health and care provision available across the country. Where such a provider exists, it is likely that they will carry out similar functions currently undertaken by CCGs. The governance and accountability of these providers therefore requires careful attention. The creation of a large integrated care provider, when viewed alongside changes to allow joint committees of providers and commissioners to be created in ICSs, may result in new conflicts of interest that will need to be managed, as the Nuffield Trust describe.95

76.Despite assurances by NHS England and NHS Improvement that ICP contract holders are expected to be public statutory bodies, the prospect of non-statutory providers holding an ICP contract has not been ruled out.96 Our previous inquiry on integrated care concluded that in practice the use of ICPs in the English NHS is likely to reduce the need for competitive tendering, thereby lessening, rather than extending, the private sector’s involvement in the NHS.97 Nonetheless, the prospect of a private provider holding an ICP contract remains unpalatable to many.98 UNISON’s written evidence argues that:

[ … ] for the avoidance of doubt the proposals could be strengthened by making clear that ICP contracts have to be held by public bodies. This would go even further in assuaging the concerns of staff and campaigners that there remains some residual prospect of ICP contracts ending up in private hands.99

77.It has been widely accepted that the holder of an ICP contract should be an NHS body, as suggested by us and by NHS England. We note that, in its response to consultation on the latest draft of the ICP contract, NHS England has suggested that the contract should go into use before the legislative change has been made.100 Making an ICP contract available at this stage means there will be no legal bar on non-NHS providers holding one. There is no urgency to use such a contract. We heard during our last inquiry that its use will be piloted in Dudley and potentially Manchester.101 We are not aware of any other local areas that are seeking to adopt this model at this stage. However, now is not the time to make the contract available for widespread use. As we mentioned in our previous report, the introduction of an ICP model requires careful monitoring and evaluation to assess its merits within the English NHS.102

78.We welcome assurances from NHS England and NHS Improvement that holders of an Integrated Care Provider contract are expected to be public statutory providers, but with the ability to subcontract with a range of other partners. This proposal would achieve a sensible balance by enabling ICP contract holders to draw on the diverse mix of health and care provision that exists across the country, while ensuring the responsibility entailed in these long-term contracts rests with public statutory bodies.

79.We strongly recommend that legislation should rule out the option of non-statutory providers holding an ICP contract. Doing so would allay fears that ICP contracts provide a vehicle for extending the scope of privatisation in the English NHS.

80.Given the political climate, we recognise that legislation may not be brought before the House of Commons for some time. Until legislation is passed, we strongly urge that ICP contracts should be piloted only in a small number of local areas and subject to careful evaluation and that they should not be not held by non-statutory providers.

New NHS Integrated Care Trusts

81.There is broad support for giving the Secretary of State the power to create new NHS trusts for the purpose of delivering integrated care in an area. By creating a new NHS trust the Secretary of State will help commissioners who may struggle to identify an existing organisation that can hold an ICP contract.

82.The key advantage of creating a new NHS trust, according to Jon Rouse, Chief Officer of Greater Manchester Health and Social Care Partnership, is that it provides a mechanism for giving participating services an equal stake in the organisation. This may not be possible in other models, in which one organisation, such as a foundation trust, is the lead provider. As Mr Rouse told us:

At the present time, we have some very successful prime provider models in both Salford and Tameside, and those organisations work hard to make them feel like they are a collation of equal providers, but the reality is that they are run by the foundation trust—by the acute trust—which has turned itself into a much more integrated care provider. This option may bring something that is genuinely, in a more equal way, primary care, community health and so on, and feels that equivalence within the ownership of the trust.103

83.We heard that the creation of a new NHS trust must have buy-in from the local health and care economy and represent an efficient use of local resources. A new NHS trust is only one of the options. Creating a new NHS trust of this kind, according to NHS Providers, is likely to be complex and time consuming, especially since any such trust would be responsible for providing a wide range of services.104 The creation of a new NHS trust could also have a destabilising effect on a local health and care economy. While it may be advantageous in some circumstances, we heard that the decision to create a new NHS trust should be preceded by a period of engagement with the local health and care community, including staff and patients, in order to ensure there is buy-in locally. There was widespread support for using the proposed ‘best value’ test to inform the creation of a new NHS trust to ensure this decision represents the most efficient use of public resources, and that similar objectives cannot be achieved through less disruptive means.

84.More detail is required on the governance and accountability of these new NHS trusts. The Local Government Association has argued that new NHS trusts should have statutory duties to improve population health and deliver integration, so that the duties on these bodies “mirror the contractual duties and responsibilities within the ICP contract” and are aligned with the duties on clinical commissioning groups, health and wellbeing boards and local authorities.105

85.There may be a need to ensure appropriate safeguards are applied to avoid the creation of new NHS trust being used inappropriately. The value of this power is that it provides a mechanism for the Secretary of State to extend the options available to local commissioners, where such a provider is desired locally. However, NHS Providers warned that this power could be used by national bodies as a lever to force, or threaten, services to collaborate.106 Doing so would be counter-intuitive given that the success of any organisational form integration takes depends more on the relationships, culture and behaviours at a local level.

86.We support the proposal to give the Secretary of State the power to create a new NHS trust to deliver integrated care in an area. This change to the legislation will extend the ways in which local commissioners can integrate health and social care. Our view is that this power must not be used by the Secretary of State to impose a form of integration on local health and care services or as threat to incentivise organisations to collaborate. We recommend that the Secretary of State must not be allowed to exercise this power without a request from the local clinical commissioning group(s).

87.We recommend that a request to the Secretary of State must follow a robust assessment and public consultation to ensure the creation of a new NHS trust is in the best interests of patients and the local population, and represents an efficient use of public money.

VAT regulations

88.Different VAT regulations covering NHS bodies, local authorities and non-NHS providers are an example of barriers to integration within the system. For example, some NHS to NHS contracting is exempt from VAT (NHS contracting out services regime), which enables NHS bodies to reclaim VAT from HMRC.107 However, this provision ceases to exist when the chain of NHS to NHS contracting is broken.108 This is what happened in the failure of Uniting Care Partnership in Cambridge, where two foundation trusts established a limited liability partnership to hold a prime provider contract with the CCG. As the contract was held by a private company, the chain of NHS to NHS contracting was broken and the two trusts were liable in respect of VAT on services they provided to the CCG, where previously the services they provided would have been exempt.109

89.These VAT restrictions affect not only integration between the NHS and non-statutory providers, but also integration with local authorities.110 Christian Dingwall explained how:

if the NHS were to delegate, under the section 75 partnership regulations that we have discussed, its NHS commissioning to a local authority, we will run into the same problem about upsetting the contracting-out services regime. That is a problem in respect of local authorities getting involved in the contracting.111

90.Local authorities also have separate VAT exemptions (known as partial exemption rules) where full recovery of VAT is permitted provided councils remain within their partial exemption limit. They may present a problem, as Mr Dingwall, explained: “if a local authority delegates its commissioning to the NHS, it may run into problems with VAT recovery under the partial exemption rules.”112 These exemptions save millions of pounds for the NHS and local authorities so it is important that reforms to integrate care do not upset either regime.113

91.As Simon Stevens explained in his oral evidence to the Public Accounts Committee’s inquiry into the Uniting Care Partnership in Cambridge:

[ … ] the VAT rules are quite complicated as between type of bidder; so one of the complaints is that in some ways there is not a level playing field, in that if you are an NHS bidder you have a different VAT look-through than if you are not, and different types of cost within a contract are subject to different VAT rates; so it is not just 20% across the board, in or out.114

92.We recommend the Government’s forthcoming review of VAT exemptions on central government should also make recommendations for how VAT exemptions covering the NHS and local government can be protected and/or extended so as to ensure neither body is worse off as a result of integration.


87 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650, NHS Confederation (NLN0047)

88 NHS Confederation (NLN0047)

89 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650

90 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650

91 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650

95 Nuffield Trust (NLN0009)

96 UNISON (NLN0028)

97 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650

98 British Medical Association (NLN0037), UNISON (NLN0028), Prof Sue Richards, Keep Our NHS Public (NLN0053)

99 UNISON (NLN0028)

100 ‘Contracting arrangements for integrated care providers – response to consultation’ NHS England March 2019

101 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650

102 Health and Social Care Committee, Integrated care: organisations, partnerships and systems, Seventh report of Session 2017–19, HC 650

103 Q130 Jon Rouse

104 NHS Providers (NLN0011)

105 Local Government Association (NLN0051)

106 NHS Providers (NLN0011)

108 Q271Christian Dingwell

110 Q272 Christian Dingwall

111 Q272 Christian Dingwall

112 Q272 Christian Dingwall

113 Q271 Christian Dingwall

114 Public Accounts Committee, Oral evidence: UnitingCare Partnership Contract, 14 September 2016, HC 633, Q186 Simon Stevens




Published: 24 June 2019