108.This chapter explains the changes in the delivery of integrated care that have emerged since the NHS Five Year Forward View was published in October 2014, particularly new care models, integrated care partnerships and ACOs.
109.While ACOs have attracted more attention, there are currently no ACOs in the NHS. The main expression of change to the delivery of care in the NHS has been the emergence of integrated care partnerships. This chapter describes the development of integrated care partnerships and also some of the key issues surrounding the inclusion of ACOs in the English NHS.
110.The NHS Five Year Forward View led to the development of new models of care. These models of care blur traditional boundaries between existing health and care services. 50 vanguard sites across the country have piloted these models through, for example, partnerships between hospitals, primary care providers, clinical commissioning groups and care homes.
111.Two of these models, primary and acute hospital systems (PACS) and multispecialty community providers (MCPs), have a greater focus on integration and prevention. NHS England’s written evidence to our inquiry set out a series of positive early signs that these new models are improving patient care and reducing demands on the system. However, the evidence for this improvement is not yet statistically robust.
112.The Government’s ambition for health and social care to be integrated across the country by 2020 depends on the scale-up and spread of new models of care across the country. As yet, there is no clear plan describing how NHS England plans to fulfil this objective. NHS England is required by the mandate to:
Assess progress of the vanguards and identify models consistent with the multispecialty community providers, integrated primary and acute care systems and enhanced health in care homes vanguard frameworks that can be replicated across the country.
113.The new models of care programme built on pre-existing partnerships between local services in some parts of the country and encouraged the development of partnerships in others. These partnerships were recently defined by The King’s Fund as:
alliances of NHS providers that work together to deliver care by agreeing to collaborate rather than compete. These providers include hospitals, community services, mental health services and GPs. Social care and independent and third sector providers may also be involved.
114.Some of these partnerships have emerged out of the new care models programme, although many predated the new care models initiative. These integrated care partnerships are delivering integrated care without the need to form a single organisation. We heard during our inquiry that by using flexibilities within the current legislation to form alliances, services within the partnerships can agree to collaborate rather than compete.
115.Contractual tools, namely alliance and prime provider contracts, aim to facilitate these arrangements by enabling partners to share financial risks. These contracts can be costly and time-consuming to set up, but initial evidence suggests that where these contracts have been used successfully parties report greater inter-organisational working. However, it is too early to provide empirical evidence of the effectiveness of these contracts in the NHS.
116.Accountable care organisations do not yet exist in the NHS. Within the English NHS, The King’s Fund explain that ACOs are likely to be:
a more formal version of an ICP that may result when NHS providers agree to merge to create a single organisation or when commissioners use competitive procurement to invite bids from organisations capable of taking on a contract to deliver services to a defined population.
117.Two areas, Dudley and the City of Manchester, have expressed an interest in formalising their existing integrated care partnerships into a single organisation if, and when, NHS England makes an accountable care contract available.
118.Organisations called ACOs currently exist in the US: a legacy that has sparked concern that organisations of the same name proposed for England could follow the same formula.
119.ACOs in the US were established by the US Affordable Care Act 2010, but built on models such as Kaiser Permanente in the US and Ribero Salud Grupo in Spain. According to an article in the British Medical Journal there are approximately 1000 ACOs serving over 30 million people in US.
120.The context in the US is very different. The fragmentation of funding and delivery is far more pronounced within the US. For example, the US does not have a nationally funded and centrally controlled national health service and eligibility criteria for access to services are wholly different to those of the NHS. Therefore ACOs in the English NHS are likely to be very different from those in the US and other countries. However, the choice of this terminology was mistaken and has contributed to widespread misunderstanding.
121.The Department of Health and Social Care has consulted on changes to existing regulations to enable an Accountable Care Contract to be introduced. The outcome of the Department’s consultation on the regulations was published in April 2018. NHS England also plans to consult on a draft contract, which will outline “how the contract fits within the NHS, how NHS commissioners and providers party to an ACO contract will perform their existing statutory duties and the arrangements that will be in place to ensure public accountability and patient choice”.
122.NHS England has delayed its consultation pending the outcome of our inquiry and two judicial reviews on the legality of the changes it proposes. The Department of Health and Social Care signalled in its consultation response its intentions to consult again on legal directions to ensure “criteria for an ACO delivering primary medical services (GP services) are consistent with the criteria for existing providers of primary medical services.” Once NHS England has implemented a contract, these legal directions will be limited to Dudley and the City of Manchester initially, although other areas may apply to use the contract.
123.We heard concerns that national bodies have an expectation that STPs will develop into integrated care systems which will then lead to the roll-out of accountable care organisations across the NHS. On the contrary, rather than national bodies having a pre-determined expectation that each area will form accountable care organisations, we heard from NHS England that an Accountable Care Contract, if and when it becomes available, will be just one option for local systems. Simon Stevens, Chief Executive of NHS England, told us that:
I doubt that the whole of England, or anything like the majority of it, will be using this particular contractual vehicle, but those who want to integrate funding may do so.
124.Dudley and the City of Manchester, while they have both expressed an interest in using an ACO contract, differ in the extent to which this is integral to their plans. Paul Maubech, Chief Executive of Dudley Clinical Commissioning Group, described several reasons why an ACO contract is critical to Dudley’s plan. The City of Manchester, in contrast, see the ACO contract as a potential enabler, although there are issues, including different regulations covering VAT exemptions between NHS and local government, which may have significant financial implications for the partners involved.
125.Stephen Barclay, Minister of State for Health, referred to plans to “pilot” ACOs in Dudley and the City of Manchester. The Government’s response to the proposed regulatory changes to enable an ACO contract stated that legal directions, once consulted on, would be limited to Dudley and the City of Manchester. However, as yet we have not seen any detailed proposals setting out the parameters of these pilots: the time period, the outcomes they seek to measure, or how the pilot will be evaluated. The Minister also said that pilots of ACOs are in part being carried out to assess the budget that is needed to transform care across the wider NHS:
Of course, there needs to be transformation and that requires a budget, and there is a question as to what that should be. The ACOs involve two areas at the moment. It is very difficult to make an assessment ahead of that. Part of the reason for having pilots is to understand what is involved, and to take that forward.
126.We are unclear about Government and national bodies’ plans to pilot ACOs in Dudley and the City of Manchester, and it is not certain that the City of Manchester will go down this route if and when the contract becomes available.
127.The Minister’s evidence also implies that these pilots will be used to assess the level of transformation funding that is required across the NHS. The need for transformation funding in our view is urgent and should not wait for the results of a small pilot of ACOs. Also, the Minister’s comments appear to contradict Simon Stevens’s statement that the ACO contract will be an option for local areas (including those other than Dudley and the City of Manchester).
128.The purported benefits of using an ACO contract are that it enables an integrated care partnership to merge into a single organisation, streamline decision making and align financial incentives. National and local leaders made the case that merging services into a one single legal entity would reduce complexity, particularly the complexity of internal decision-making processes, and bring health professionals together into one organisation, with the same objectives and incentives.
129.As explained in Chapter 2, there are some substantial and persistent obstacles which make the task of integrating health and social care hard to achieve. The case was made to us that merging partnerships into a single organisation would enable change to occur at a faster pace, as it would help to overcome some of these obstacles (organisational boundaries, cultural practices, terms and conditions, legal accountabilities and payment systems).
130.Paul Maubach from Dudley CCG made the case that, unlike acute hospitals, primary, community and social care services are provided by a more disparate array of services. The NHS Five Year Forward View argues that these traditional divides are no longer fit for purpose. Mr Maubach argued that the proposition of splitting hospital services into separate organisations, with separate management teams, and then asking them to form an alliance to collaborate to provide an acute contract would be undesirable, so why approach services outside hospitals in this fashion? He stated: “we have multiple organisations, but actually the public want one joined-up service.”
131.One of the persistent barriers to integrated care, according to the NAO, are misaligned financial incentives. Paul Maubach described how Dudley CCG commission long-term diabetic care from GPs and diabetologists. Those funding the service, clinicians and patients, all want stable management of a patient’s diabetes, yet GPs and diabetologists are paid in different ways. GPs are paid based on their practice population, with incentives to reward the stable management of a patient’s condition, whereas the diabetologists are paid for activity, specifically how often a patient visits, with no link to outcomes.
132.Stephen Barclay, Minister of State for Health, described how having a single organisation responsible for the health and care provision of a defined population within a capitated budget over a 10–15 year contract presents an opportunity to frontload investment and focus on outcomes, so services have “more skin in the game.”
133.The purported benefits of organisational integration, while they appear convincing at a common-sense level, are not supported by studies from organisational or economic literature. Organisational integration and alignment of financial incentives, through changes to payment systems, remove barriers to integrated care. An analysis of ACOs, particularly in the US, suggests that the benefits of removing such barriers are unlikely to be sufficient to drive improvements in patient care. Instead, evidence presented in the British Medical Journal, which looked at factors contributing to the performance of ACOs in Colorado and Oregon, suggests leadership, culture and management, particularly enhancing the capability of professionals to redesign services, are better explanations of ACO performance. Professor Katharine Checkland, from the University of Manchester, who leads the national evaluation of the new care models programme, echoed this view:
creating an integrated organisation does not necessarily make it easier to do integration work. It is about relationships and communication, and knowing where people are and who to speak to. It is the day-to-day work of integration.
134.There has been a longstanding effort to provide more care outside of hospitals. However, hospital services continue to consume the lion’s share of healthcare resources compared to the rest of the sector. Problems in the acute sector also consume the attention and resources of policymakers. As Paul Maubach described the centre of gravity in the NHS is towards the acute sector. The Sustainability and Transformation Fund has largely been used to improve the financial position of NHS providers, particularly acute providers.
135.Primary care and community services are currently much smaller, more disparate, organisations, although there has been an increase in GP federations over recent years. According to Paul Maubech from Dudley CCG:
A major challenge at the moment is how to shift that gravity towards integrated care to support people, managing and supporting them to live with the complexity of the conditions they have, in their own homes.
136.Paul Maubech argued that bringing the disparate array of primary and community health services into a single, much larger, ACO provider would help to shift the balance within the system. While this may be the case, the challenge of allocating resources, which are currently limited, within a single organisation does not of itself resolve the problem of moving funding towards out-of-hospital services when demand for acute care is rising. It is possible such an arrangement could also favour secondary care if other sectors are not sufficiently represented and protected within one provider.
137.Another critical reason for using an ACO contract is to improve the resilience of primary care services. Paul Maubech told us how five years ago Dudley had 52 GP practices, but is now losing branch surgeries and practices at the rate of one every six months. There are two interrelated reasons for this development. One is that there are not enough doctors coming into general practice. The other that there is rising demand for primary care. Patients are increasingly presenting with complex multi-morbidities, which according to Mr Maubach are better served by a multi-disciplinary approach. A key advantage of an ACO contract is the ability to incorporate primary care. Mr Maubach explained that an ACO contract:
offers the opportunity fully to integrate primary care with the rest of the system. There is no other contractual mechanism available to do that. Without the ACO contract, you cannot formally integrate primary care with community mental health and other services.
138.The ability of the accountable care organisations to improve the resilience of primary care is largely at the discretion of GPs themselves. Simon Stevens told us that GPs have to “feel that this is a sensible approach and they want to do it, in parts of the country where the health service wants to do it. That is why it should be an option, but it is not a requirement.” Most of the GPs in Dudley have opted for partial integration rather than full integration with the ACO contract if and when this becomes available.
139.There are questions about whether using an Accountable Care Contract to create a single organisation will accelerate integration. However, there is a strong case for using these contracts to streamline decision making rather than require decisions to be referred back to individual statutory partners. Evidence to date suggest that the most important factor is effective joint working to shift incentives towards preventing ill-health, improve the management of long-term conditionss and strengthen services outside hospitals.
140.Given the controversy surrounding the introduction of accountable care organisations in the English NHS, we believe piloting these models before roll-out is advisable. There should be an incremental approach to the introduction of ACOs in the English NHS, with any areas choosing to go down this route being carefully evaluated.
141.The evaluation of ACOs should seek to assess:
b)the implications of the scope of the ACO contract, particularly whether hospital services, GP practices and social care should be incorporated, either in a partially integrated or fully integrated capacity.
142.There is no doubt that contracting a single organisation to deliver health and care for an entire local population over a 10–15 year period brings with it risks that will need to be managed. In this respect, accountable care organisations represent a significant shift in health policy. In acknowledgement, the Next Steps to the NHS Five Year Forward View, referring to the introduction of ACOs, stated clearly that:
The complexity of the procurement process needed, and the requirements for systematic evaluation and management of risk, means they will not be the focus of activity in most areas over the next few years.
143.Given the risks involved, it is not surprising that many responses to our inquiry expressed significant concerns about the introduction of accountable care organisations in the English NHS. The worries people have cover not only the concept of ACOs and the initial proposals over how they will operate, but also how these contracts will be introduced.
144.The main concerns expressed to us are that accountable care organisations extend the scope for privatisation of the NHS, will worsen terms and conditions for staff or will lead to increased charges and care being rationed.
145.The Government has not ruled out the prospect of private providers bidding or holding an ACO contract because they point out that Clinical commissioning groups are prevented from favouring bidders based on their ownership (e.g. whether they are public or non-statutory services), by the Public Contracts Regulations 2015.
146.Privatisation of the NHS remains a concern for many people (see Chapter 6). Keep Our NHS Public, on its website, suggest that accountable care organisations, “increase the potential scope of NHS privatisation.” According to this website, the introduction of ACOs means:
multiple procurements will be replaced by a single, major, long-term contract to provide health and social care services for an entire area. The draft model contract for ACOs published by NHSE allows for, and is likely to attract, bids from multinational corporations.
147.The main concerns about the prospect of private companies taking responsibility for an ACO contract include:
a)The type of private provider, including the potential for ACOs to be special purpose vehicles.
b)The length of the contractual term (a 10–15 year contract).
c)The ability of private providers to exit the market in the event of failure.
148.Stephen Barclay assured us that there are a “number of checks and balances in the system”. He told us that they include:
149.There are several reasons why the prospect of a private provider holding an ACO contract is unlikely. Most significantly, while commissioners cannot discriminate based on a bidder’s organisational form, CCGs can decide not to tender services if there is only one credible provider. Using an ACO contract to merge existing services, acute, community, primary, mental health and social care, into one complex contract would effectively narrow the scope of eligible bidders. Integrated care partnerships between NHS bodies looking to use the contract to form a large integrated care provider would have an advantage over non-statutory providers that are less likely to have experience of managing the same scope of services: NHS bodies, therefore, are far more likely to be “credible providers” than non-statutory bodies.
150.Jonathon Marron from the Department of Health and Social Care described this process, saying that the regulations as they currently stand mean, for example, that a competition is not run every year for the “Guy’s and St Thomas’s contract” as there is no alternative provider. Rather than increasing private sector involvement, we heard that creating large integrated legal entities through an ACO would enable more services (e.g. community nursing, sexual health) to be incorporated into the organisation, thereby reducing the eligibility of smaller providers to bid for separate contracts and the necessity for commissioners to go out to tender.
151.It was also pointed out that there is little room to extract profits given the available budgets and so these contracts are unlikely to appeal to the private sector in the way that some fear.
152.The two areas considering using the ACO contract, Dudley and the City of Manchester, are looking to work through NHS bodies, rather than with the private sector. Paul Maubach from Dudley CCG explained that an ACO contract becomes a useful vehicle once you have effective partnerships between services in place. Mr Maubach’s view was that the concerns surrounding privatisation are a “red herring”, as the existence of effective partnerships means it is harder for independent providers outside a partnership to demonstrate that they could provide greater value than existing, NHS, providers.
153.There is also little appetite from within the private sector itself to be the sole provider of these contracts. NHS Partners Network, a representative of independent sector providers, told us that in the current environment it does not expect private providers to take on an ACO contract for a whole system. NHSPN states that in addition to the political sensitivities involved, it would be a significant financial risk and independent providers would not expect to be ‘bailed out’. Nigel Edwards, Chief Executive of the Nuffield Trust, explained that transferring staff and assets to a private provider, while theoretically possible, may require primary legislation.
154.There is currently no prescribed organisational form for ACOs. Theoretically they can be public or non-statutory organisations. For many staff, there is a worry that their employer could end up being outside the NHS, thereby posing a threat to their existing terms and conditions. Such fears have been amplified by a recent increase in the practice of foundation trusts establishing subsidiary companies to make efficiencies. Simon Stevens confirmed that NHS England:
will be making it absolutely clear in our public consultation on the draft contract that subcontracting of that nature would not be permitted without the authorisation of the CCG as exists at the moment, so that there were no new risks arising.
155.We recognise the concern expressed by those who worry that ACOs could be taken over by private companies managing a very large budget, but we heard a clear message that this is unlikely to happen in practice. Rather than leading to increasing privatisation and charges for healthcare, we heard that using an ACO contract to form large integrated care organisations would be more likely to lead to less competition and a diminution of the internal market and private sector involvement.
156.We recommend that ACOs, if a decision is made to introduce them more widely, should be established in primary legislation as NHS bodies. This will require a fundamental revisiting of the Health and Social Care Act 2012 and other legislation. Whilst we see ACOs as a mechanism to strengthen integration and to roll back the internal market, these organisations should have the freedom to involve, and contract with, non-statutory bodies where that is in the best interests of patients.
90 Q234 [Professor Checkland]
91 Department of Health and Social Care, March 2018, page 20
92 The King’s Fund, Making sense of accountable care, January 2018
93 Sanderson, M., Allen, P., Osipovic, D., Moran, V. (2017) New Models of Contracting in the NHS: Interim Report Policy Research Unit on Commissioning and the Healthcare System; London School of Hygiene & Tropical Medicine
94 The King’s Fund, Making sense of accountable care, January 2018
95 Can accountable care organisations really improve the English NHS? Lessons from the United States, British Medical Journal, 2 March 2018
96 British Medical Journal, Can accountable care organisations really improve the English NHS? Lessons from the United States, March 2018
97 Department of Health and Social Care, Accountable care organisations: Government response on changes to regulations required to facilitate the operation of an NHS Standard Contract (Accountable care models), April 2018
98 Department of Health and Social Care, Accountable care organisations: Government response on changes to regulations required to facilitate the operation of an NHS Standard Contract (Accountable care models), April 2018
99 Department of Health and Social Care, Accountable care organisations: Government response on changes to regulations required to facilitate the operation of an NHS Standard Contract (Accountable care models), April 2018
100 Q280 Simon Stevens
101 Q161 Ian Williamson
102 Q414 Stephen Barclay
103 Department of Health and Social Care, Accountable care organisations: Government response on changes to regulations required to facilitate the operation of an NHS Standard Contract (Accountable care models), April 2018
104 Q414 Stephen Barclay
105 Q280 Simon Stevens
106 Q394 Jonathon Marron, Q184 Paul Maubach
107 Q185 Paul Maubach
108 National Audit Office, , HC 1011 Session 2016–17 8 February 2017, page 10, para 20
109 Q169 Paul Maubach
110 Q393 Stephen Barclay
111 Q236 Professor Katharine Checkland
112 Department of Health and Social Care, Accountable care organisations: Government response on changes to regulations required to facilitate the operation of an NHS Standard Contract (Accountable care models), April 2018
113 Q264 Professor Katharine Checkland
114 Q196 Paul Maubach
115 Q171 Paul Maubach
116 Q172 Paul Maubach
117 Q172 Paul Maubach
118 Q172 Paul Maubach
119 Q271 Simon Stevens
120 Aspiring ACO will not fully integrate vast majority of its GPs, Health Service Journal, 22 March 2018
121 NHS England, , March 2017, page 37
122 Correspondence from Rt. Hon Jeremy Hunt MP, Secretary of State for Health and Social Care to Dr Sarah Wollaston MP, Chair of the Health and Social Care Committee, 22 January 2018, POC_1115906
123 Keep Our NHS Public, Accountable care: Accountable care organisations, accountable care systems in England, accessed on 18 May 2018.
124 Keep Our NHS Public, Accountable care: Accountable care organisations, accountable care systems in England, accessed on 18 May 2018.
125 Q375 Stephen Barclay
126 Q389 Jonathon Marron
127 Q390 Jonathon Marron
128 Q240 Professor Chris Ham
129 Q164 Paul Maubach
130 NHS Partners Network STP0120
131 Q238 Nigel Edwards
132 Q278 Simon Stevens
Published: 11 June 2018