Provider procurement models

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The current version of the NHS Standard Contract is the 2019/20 edition the NHS Standard Contract 2014/15  allowed greater flexibility for longer-term contracts and more innovative contracting models, than previously available. Guidance on the process to effect the mandatory 2019/20 National Variation to existing contracts, the terms of which extend beyond 31 March 2019, and the National Variation templates are available here.

See also: Clinical contracting considerations, Grafton Group 2013 – An outline of the main contracting mechanisms for use when procuring clinical services and to provide a “road map” as to when the differing contracting mechanisms may be best applied.

(Note – the Grafton Group is a group of nine CCGs comprising Cumbria, North East Lincolnshire, Leeds South and East, Principia Rushcliffe, Nene, Bedfordshire, Tower Hamlets, Somerset and South Devon and Torbay, “who have come together to share knowledge and ambition to be amongst the best CCGs nationally in delivering the commissioning agenda: ensuring excellent patient care for their populations.”)

Key Reports

The Commissioning and contracting for integrated care paper from the Kings Fund (Nov 2014) focuses on the contractual vehicles being used by commissioners to deliver integrated services  (prime contractor, prime provider and alliance contract models). Link here for the report and summaries of the three frameworks.

Commissioning and contracting for integrated care – presentations from an event held at Kings Fund March 2014 including case studies, a discussion of payment systems and a presentation by  Bob Ricketts on the risks and benefits of various contracting methods.

NHS contracting in England and Wales: changing contexts and relationships, NIHR Service Delivery and Organisation programme; 2011.
This study examines the extent of divergence in contracting arrangements in England and Wales since 1991. It concentrates on contracting for secondary care services. The research examines contractual governance, in terms of the use of contracts to manage relationships and the purchase of NHS services, its practice and its limitations in the two systems.

Definitions and case studies of current and developing provider models identified from the NHS Standard contract and the published literature are outlined below.

Accountable care

Can CCGs become accountable care organisations? – Read the blog from Rachael Addicott,Senior Research Fellow at the Kings Fund (14 August 2014).

Accountable care organisations in the United States and England, Kings Fund, March 2014 – a description of the different types of ACOs emerging in the United States; some early evidence on their performance; assessment the future for ACOs; and discussion of the implication of these developments for integrated care initiatives in England.

Analysis of Early Accountable Care Organizations Defines Patient, Structural, Cost, and Quality-of-Care Characteristics – Health Affairs, Jan. 2014 33(1):95–102.
This US study identified ACOs that had joined the Medicare programs as of fall 2012 to collect baseline information about their patient populations, quality, hospitals, and costs.

Focusing Accountability on the Outcomes that Matter – Report of the Accountable Care Working Group 2013

“In this population-based accountable care model a group of providers are held jointly accountable for achieving a set of outcomes for a prospectively defined population over a period of time and for an agreed cost.” p2

Can US health models fit the NHS? What would the arrival of US-style accountable care organisations mean for GPs? GP Online, 30 August 2013

“An ACO is a loosely-defined healthcare model that aims to promote integration, reduce costs and improve healthcare outcomes.
ACOs are led by a group of providers with a pooled budget, meaning primary and secondary care work together and share objectives.”

Alliance contracting

“Key characteristics of alliance contracting are said to be alignment of objectives and incentives amongst providers; sharing of risks; success being judged on the performance of all, with collective accountability; contracting for outcomes; and an expectation of innovation.” (NHS Standard Contract 2014/15 Technical Guidance)

Team effort: Commissioning through alliance contracts, HSJ 22 November 2013. (Subscription required)
“Alliance contracts are usually an arrangement where a number of parties enter into an agreement to work cooperatively and to share risk and reward, measured against set performance indicators − often pre-agreed outcomes indicators.”

 What is an alliance contract? – and “History of alliance contracting” – LH Alliances
“An alliance contract is one contract between the owner/financier/commissioner and an alliance of parties who deliver the project or service.”

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AQP – Any Qualified Provider

Under AQP patients can choose from a range of providers all of whom meet NHS standards and price established by the commissioners. The commissioner holds the contract held with qualified providers.

Understanding the reforms… Choice and any qualified provider

Integrated pathway hub (IPH)

“the commissioners enter into separate contracts with a number of providers, all of whom contribute towards the delivery of an integrated service.” (NHS Standard Contract 2014/15 Technical Guidance)

Introducing intergrating pathway hubs – Strategic Projects Team

“A pathway hub is an intermediary organisation that works for GPs and commissioners to best manage the patient pathway, undertaking some health services itself and referring the patient on to secondary and specialist care, including third and independent sector providers as required. An IPH will ensure each patient receives the appropriate treatment, rather than a one size fits all approach applied by the traditional acute outpatient appointment system.”

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Prime contractor/provider/lead provider/prime vendor

“Under this model, the commissioners enter into a contract with a provider (the prime contractor or lead provider). That contract allocates risk and reward as between the commissioner and the prime contractor. The prime contractor then sub-contracts specific roles and responsibilities (and allocates risk associated with their performance) to other providers. The prime contractor remains responsible to the commissioners for the delivery of the entire service, and for the co-ordination of its ‘supply chain’ (ie its sub-contractor providers) in order to ensure that it can and does deliver that entire service. The prime contractor is likely to be a provider of clinical services itself, but it could sub-contract all but the co-ordination role.” (NHS Standard Contract 2014/15 Technical Guidance)

Prime providers and capitated budgets: will they enable new models of care? a presentation by Professor Chris Ham, Kings Fund, 17

Circle named preferred bidder for musculoskeletal £120m contract.) Read the

Case studies

Coastal West Sussex Clinical Commissioning Group musculoskeletal services

  • A five year “prime provider” contract was awarded to a BupaCSH Ltd – a partnership between CSH Surrey and Bupa UK.

Cambridgeshire & Peterborough CCG integrated older peoples services:

  • “Provision of integrated older people’s pathway and community services for adults, principally (but not exclusively) older people (65 years of age and over; population of c.126,600) the pathway includes but is not limited to the provision of acute hospital unplanned care, community services, older people’s mental health services, end of life services, and, possibly, NHS Continuing care, occupational therapy, and intermediate care and re-ablement services.”
  • News (HSJ 27 November 2013) Cambridgeshire & Peterborough CCG have confirmed four out of the initial ten bidders have now dropped out of the race to be “lead provider” of a new contract to provide integrated older people’s services. (Subscription required) .
  • Cambridge and Peterborough – Procurement and change  Press release, Strategic Projects Team, October 2013
  • Follow news on HSJ here (Subscription required).

Spot Purchasing

“Usually no guarantees of income, unlike grants or fixed contracts.”

Read the explanation here.

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