Can alliance contracting help deliver integrated care?

The NHS Five Year Forward View published last month is clear that traditional divides between primary care, community services and hospitals are a barrier to providing integrated care for patients.

Integrated care, with organisations along the patient pathway working together, is seen as a way of delivering better outcomes. National Voices and the National Collaboration for Integrated Care and Support described what integrated care would feel like from a patient perspective.

The Forward View raises the possibility of new models of care being used to help organisations work together, including multispeciality community providers (MCPs), primary and acute care systems (PACS), hospital chains and provider networks.

But what contracting models would commissioners and providers need to put in place to set up these new models of care?

Various innovative contracting models are being tested in the NHS, including most frequently the prime contractor/lead provider model, which many are now familiar with, as well as the integrated pathway hub model.

Perhaps most interestingly, there is also alliance contracting. In this article we explore what alliance contracting is and how it could be used in the NHS to help organisations work together to improve patient outcomes.

What is alliance contracting?

Alliance contracting is a contracting structure in which multiple organisations both commissioners and providers, agree to work collaboratively to delivery agreed services.

Ten key features of alliance contracting:

  1. Commissioners enter into a single overarching contract with a number of providers
  2. Commissioners are part of the alliance
  3. Objectives are aligned for all parties and everyone signs up to an agreed vision and values against which the contract will be delivered
  4. All parties are jointly responsible for delivering agreed outcomes, but particular contractors may take the lead for certain elements of service delivery
  5. Everybody succeeds or fails together – commissioners and providers share risk and reward
  6. No organisational integration is required, whether by merging existing organisations or setting up new legal entities to deliver the services
  7. Contractors pool their payment streams into a combined pot of funds and profit is shared between the parties
  8. There may be an alliance board of some kind to coordinate delivery of the contract against the agreed performance framework
  9. Strong relationships are essential and disputes are resolved within the alliance
  10. Innovation is expected and built into the contract.

How can alliance contracting be used in the NHS?

The NHS standard contract can be used for many innovative contracting models, in particular because the 2014/15 version allows more flexibility than previously on contract duration and pricing. However, it does not currently allow a single overarching contract to be awarded to a number of providers (see key feature 1).

This does not rule out using a modified version of alliance contracting. The remaining nine key features identified can still be accommodated in a contractual structure that replicates the single overarching contract model. This type of structure may involve the following features:

  • Providers retain their individual service contracts
  • Commissioners and providers enter into an overarching agreement which sets out high level principles for integrated working and seeks to link risk and reward across the parties.

What is alliance contracting?

Alliance contracting is a contracting structure in which multiple organisations, both commissioners and providers, agree to work collaboratively to deliver agreed services.

“I can plan my care with people who work together to understand me and my carer(s), allow me control, and bring together services to achieve the outcomes important to me.”

The overarching agreement may be a legally binding agreement or a non-legally binding memorandum of understanding or charter, though a legally binding arrangement would add complexity.

One advantage of this model might be the ability of commissioners to substitute contractors when existing service contracts expire and new contractors enter the market, allowing commissioners to put in place a long term framework for collaborative working.

Key issues that commissioners and providers will need to consider when developing an NHS alliance contracting model are:

  • Procurement obligations under the Public Contract Regulations 2006 and forthcoming 2015 Regulations as well as the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013
  • Payment terms including variations to national tariff, incentives and sanctions
  • Patient choice and compliance with competition law
  • Integration with the implementation of personal health budgets
  • Governance arrangements
  • Allocating risk and reward
  • The framework of contractual documents needed to implement the model.

How Hempsons can help

We are advising commissioner and provider clients on innovative contracting models including alliance contracting. Contact one of our authors for more information.

Click here to read our other newsbrief articles on fit and proper person requirements, primary care and the Mitchell Judgment.

Click here to read our newsbrief in full via a pdf.