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Prime providers and
  capitated budgets: will
they enable new models of
           care?
       Professor Chris Ham
          Chief Executive
         The King’s Fund
         17 January 2013
In future, commissioners will have greater
scope to develop integrated care pathways
where this makes sense, working with a range
of local clinicians, and new health and
wellbeing boards will promote integration
across the NHS, social care and public health.
We are encouraging GPs to work with local
hospitals to improve care pathways. Clinician-
led commissioning will support integrated care
and commissioners will have the flexibility they
need to be able to bundle services together
across a pathway where this makes sense.
                           (David Nicholson, 2011)
Ideas in good currency today

 Prime provider/lead provider/prime vendor type
 models of care
 Commissioning for outcomes of care e.g. COBIC
 initiative
 Alliance contracting
 Integrated care following the listening exercise
 and with Norman Lamb’s interest
 Year of care tariff
Chris Ham: capitated budgets - a flexible way to enable new models of care
Case studies of commissioning
integrated care

 Birmingham North and East PCT – commissioning
 integrated care for people nearing the end of life
 Milton Keynes PCT – seeking to contract an ‘accountable
 care organisation’ for a whole programme of care
 Tower Hamlets PCT – commissioning outcome-based
 diabetes care from networks of providers
 Smethwick Pathfinder – a group of GP practices holding
 a capitated budget for managing the care of people with
 long-term conditions
Case studies of commissioning
integrated care (2)
 Cumbria PCT and practice-based commissioning –
 commissioning integrated diabetes care across a county,
 using a new specialist care organisation
 Knowsley PCT – contracting with a lead specialist provider
 to deliver the full range of cardiovascular care for a
 population with major health inequalities
 Somerset PCT – commissioning an integrated COPD
 service from a partnership of BUPA and a company formed
 of local GPs
 West Kent PCT – commissioning a social enterprise to
 deliver integrated out-of-hours primary care and
 emergency primary care, based in the hospital A&E
Penine MSK Partnership: a case study

 Company limited by shares holding SPMS
 contract
 Partnership delivers integrated MSK services –
 primary, community and secondary care
 Funded via a ‘programme budget’ and not
 through PbR
 Developed over 10 years by innovative GP
 specialist and nurse consultant in rheumatology
The lessons

 How to define the scope of the service to be
 commissioned?
 All care for the whole population on large (county
 wide) or small (locality) scale
 Care for people with a specific disease (e.g.
 Diabetes) or condition (e.g. Dementia)
 How easy is it to draw boundaries and deal with
 cost shifting and risk shifting?
Lessons (2)

 How well placed are providers to act as prime
 providers?
 What proportion of care can they deliver directly?
 What proportion of care will they sub-contract to
 other providers?
 Do the providers in the supply chain have a track
 record of working together?
Lessons (3)

 How easy is it to define the budget for the service
 to be commissioned?
 What are the risk sharing arrangements between
 commissioners and providers?
 What incentives can be built into contracts to
 ensure high quality is delivered?
 How will prime providers pay and incentivise
 providers with whom they subcontract?
Lessons (4)

 In the new NHS, which commissioners need to be
 involved?
 Does a CCG need to act with other CCGs and the
 NHS CB?
 Do local authorities need to be involved too
 especially but not only re social care
 commissioning?
 What are the means by which commissioners
 collaborate if this is necessary?
Lessons (5)

 The fundamental challenge of information
 asymmetry in health care
 Clinically led commissioners cannot hope to
 negotiate on equal terms with providers across
 the full spectrum of care
 Outcome based contracts are the way forward
 where outcomes can be defined
 The process of contracting matters e.g. the value
 of competitive dialogue
Lessons (6)

 Competition and integration are not necessarily in
 conflict
 Competition in the market is different from
 competition for the market
 Stephen Dorrell talks about ‘competition for
 solutions’
 There are lessons from other sectors including
 supply chains
Where service integration and continuity of care
is important to secure the best clinical outcomes,
patient experience and value for money (for
example, in end of life care), the intention is that
commissioners will be able to go to competitive
tender and offer the service to one provider or
‘prime contractor’. In this model, patients would
still have choice of treatment, setting or lead
clinician, and potentially of provider for certain
services within the pathway.
                                          (DH, 2011)
Integration: What will the policy
framework and the law allow
 NONE of the following should stop you commissioning or
 delivering effective innovative integrated care:
      • DH or NHS CB policy
      • Procurement law
      • Competition law
      • Monitor – as economic regulator
      • NHS Standard Contract
 As long as you are driven by what’s best for patients, are
 clear about outcomes and follow fair, transparent,
 compliant processes


       “Seek forgiveness, not permission”
Chris Ham: capitated budgets - a flexible way to enable new models of care
Options for paying for care

 PbR
 Bundled payments
 Episode payments
 Year of care tariff
 Programme budgets
 Capitated budgets
 Quality incentives
International experience

 High performing integrated systems use capitated
 budgets for almost all care
 Their main focus is on population based budgets
 not disease or condition based budgets
 They also specify the quality/outcomes they
 expect to be delivered
 Systems like Kaiser Permanente are not over-
 reliant on payment methods and financial
 incentives – other tools are also important
The wrong kind of integrated care

 Small scale
 Disease based
 Organisational (not clinical or service integration)
 Integrated care that creates unresponsive
 monopolies
Implications for providers

 Capitated budgets make heavy demands on
 providers
 Providers need to operate on the appropriate
 scale and to have the right capabilities
 The more comprehensive the scope of capitated
 budgets, the more important this becomes
 Used well, payment reform can drive change and
 innovation among providers
Chris Ham: capitated budgets - a flexible way to enable new models of care
Finally
 This is important, innovative and hard work
 Don’t underestimate the time it takes
 Commissioners have a vital role in developing
 integrated care
 Prime providers and capitated budgets can
 contribute but the devil is in the detail

            c.ham@kingsfund.org.uk
                @profchrisham

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Chris Ham: capitated budgets - a flexible way to enable new models of care

  • 1. Prime providers and capitated budgets: will they enable new models of care? Professor Chris Ham Chief Executive The King’s Fund 17 January 2013
  • 2. In future, commissioners will have greater scope to develop integrated care pathways where this makes sense, working with a range of local clinicians, and new health and wellbeing boards will promote integration across the NHS, social care and public health. We are encouraging GPs to work with local hospitals to improve care pathways. Clinician- led commissioning will support integrated care and commissioners will have the flexibility they need to be able to bundle services together across a pathway where this makes sense. (David Nicholson, 2011)
  • 3. Ideas in good currency today Prime provider/lead provider/prime vendor type models of care Commissioning for outcomes of care e.g. COBIC initiative Alliance contracting Integrated care following the listening exercise and with Norman Lamb’s interest Year of care tariff
  • 5. Case studies of commissioning integrated care Birmingham North and East PCT – commissioning integrated care for people nearing the end of life Milton Keynes PCT – seeking to contract an ‘accountable care organisation’ for a whole programme of care Tower Hamlets PCT – commissioning outcome-based diabetes care from networks of providers Smethwick Pathfinder – a group of GP practices holding a capitated budget for managing the care of people with long-term conditions
  • 6. Case studies of commissioning integrated care (2) Cumbria PCT and practice-based commissioning – commissioning integrated diabetes care across a county, using a new specialist care organisation Knowsley PCT – contracting with a lead specialist provider to deliver the full range of cardiovascular care for a population with major health inequalities Somerset PCT – commissioning an integrated COPD service from a partnership of BUPA and a company formed of local GPs West Kent PCT – commissioning a social enterprise to deliver integrated out-of-hours primary care and emergency primary care, based in the hospital A&E
  • 7. Penine MSK Partnership: a case study Company limited by shares holding SPMS contract Partnership delivers integrated MSK services – primary, community and secondary care Funded via a ‘programme budget’ and not through PbR Developed over 10 years by innovative GP specialist and nurse consultant in rheumatology
  • 8. The lessons How to define the scope of the service to be commissioned? All care for the whole population on large (county wide) or small (locality) scale Care for people with a specific disease (e.g. Diabetes) or condition (e.g. Dementia) How easy is it to draw boundaries and deal with cost shifting and risk shifting?
  • 9. Lessons (2) How well placed are providers to act as prime providers? What proportion of care can they deliver directly? What proportion of care will they sub-contract to other providers? Do the providers in the supply chain have a track record of working together?
  • 10. Lessons (3) How easy is it to define the budget for the service to be commissioned? What are the risk sharing arrangements between commissioners and providers? What incentives can be built into contracts to ensure high quality is delivered? How will prime providers pay and incentivise providers with whom they subcontract?
  • 11. Lessons (4) In the new NHS, which commissioners need to be involved? Does a CCG need to act with other CCGs and the NHS CB? Do local authorities need to be involved too especially but not only re social care commissioning? What are the means by which commissioners collaborate if this is necessary?
  • 12. Lessons (5) The fundamental challenge of information asymmetry in health care Clinically led commissioners cannot hope to negotiate on equal terms with providers across the full spectrum of care Outcome based contracts are the way forward where outcomes can be defined The process of contracting matters e.g. the value of competitive dialogue
  • 13. Lessons (6) Competition and integration are not necessarily in conflict Competition in the market is different from competition for the market Stephen Dorrell talks about ‘competition for solutions’ There are lessons from other sectors including supply chains
  • 14. Where service integration and continuity of care is important to secure the best clinical outcomes, patient experience and value for money (for example, in end of life care), the intention is that commissioners will be able to go to competitive tender and offer the service to one provider or ‘prime contractor’. In this model, patients would still have choice of treatment, setting or lead clinician, and potentially of provider for certain services within the pathway. (DH, 2011)
  • 15. Integration: What will the policy framework and the law allow NONE of the following should stop you commissioning or delivering effective innovative integrated care: • DH or NHS CB policy • Procurement law • Competition law • Monitor – as economic regulator • NHS Standard Contract As long as you are driven by what’s best for patients, are clear about outcomes and follow fair, transparent, compliant processes “Seek forgiveness, not permission”
  • 17. Options for paying for care PbR Bundled payments Episode payments Year of care tariff Programme budgets Capitated budgets Quality incentives
  • 18. International experience High performing integrated systems use capitated budgets for almost all care Their main focus is on population based budgets not disease or condition based budgets They also specify the quality/outcomes they expect to be delivered Systems like Kaiser Permanente are not over- reliant on payment methods and financial incentives – other tools are also important
  • 19. The wrong kind of integrated care Small scale Disease based Organisational (not clinical or service integration) Integrated care that creates unresponsive monopolies
  • 20. Implications for providers Capitated budgets make heavy demands on providers Providers need to operate on the appropriate scale and to have the right capabilities The more comprehensive the scope of capitated budgets, the more important this becomes Used well, payment reform can drive change and innovation among providers
  • 22. Finally This is important, innovative and hard work Don’t underestimate the time it takes Commissioners have a vital role in developing integrated care Prime providers and capitated budgets can contribute but the devil is in the detail c.ham@kingsfund.org.uk @profchrisham