“The unhappy and growing tendency to regard healthcare as a commodity is not serving the people of the UK well.”— President of the Royal College of Paediatrics and Child Health
Search Results for: ACO
As a result of widespread concern about the introduction of Accountable Care Organisations, and urging on the part of the Health Select Committee to pause the introduction of these new models of care until there is more evidence on their implications, NHS England has announced it will be launching a public consultation on the contracting arrangements for Accountable Care Organisations (ACOs). No date as yet.
The House of Commons’ Health and Social Care Committee has published its report ‘Integrated care: Organisations, partnerships and systems’. It’s a curate’s egg (good in part) but overall, it’s disappointing and a bit of a fudge.
It recognises that Accountable Care Organisations are illegal under current law, and believes that, if introduced, they should be established by primary legislation.
However, they also seem to suggest that ACOs’ illegal status can be ‘worked around” through passing secondary legislation (thus avoiding Parliamentary scrutiny). The Committee refuses to accept that ACOs facilitate privatisation, but does recommend that they should be public bodies (because of the risk that companies holding long-term, large-scale ACO contracts will collapse).
See Keep Our NHS Public‘s response for more details.
Accountable Care Organisations (ACOs) are new models of care that raise huge concerns, not least about giving new opportunities to private healthcare companies to plan and commission NHS funded services (as well as provide them).
The way ACOs change commissioning flies in the face of existing primary legislation. Ministers are trying to get ACOs legitimated through introducing secondary legislation – a move that means no Parliamentary debate or scrutiny.
Some MPs have arranged an Early Day Motion to call for proper debate. To stop the introduction of ACOs by the back door, please write to your MP and ask them to sign Early Day Motion 660.
(For more information see https://www.theguardian.com/society/2017/dec/07/labour-demands-commons-vote-secret-plan-nhs)
Current proposals for integrated care, through new care models such as Integrated Care Systems and Integrated Care Organisations (ICOs) (previously called Accountable Care Organisations) raise a number of concerns.
Human Rights issues
NHS England’s proposals for integrating care are based on capitation-based payment systems, including ‘integrated’ or whole population budgets (WPBs) These fund services for a specific population over a specified period for fixed sum. Populations are defined according to registered patients lists, rather than by geographical area (the way in which universal care has been ensured up until now).
In addition, despite the minimum delivery standards set out in contracts, WPBs provide an inducement to raise treatment thresholds or ration some services in order to minimise costs, irrespective of the care that is actually needed. Capitation funding has been a feature of NHS local allocations since the 1970s and today is the basis for funding of CCGs. But the WPB approach to capitation funding – especially in the absence of adequate levels of funding – flouts the duty of government to care for all in society.
In these ways, introducing WPBs as the payment system to underpin integrated care potentially contravenes the NHS Constitution and is fundamentally at odds with an NHS based on the principle of social solidarity and the values of equity and universalism.
Governance, accountability and legal issues
ST Partnerships are introducing radically new ways of delivering care with scant public involvement or any meaningful consultation. This is despite the inevitable changes these new care systems will involve, and despite current law (HSC Act 2012) and statutory guidance.
Simon Stevens, CEO of NHSE, has said that he will give ST Partnerships governance rights over organisations within their local health system, including bodies such as CCGs or local authorities with statutory responsibilities. Currently, ST Partnerships (and the integrated care systems they may evolve into) are, by NHSE’s own admission, not statutory bodies: they have no legal power to make decisions without referring these back to partner organisations. The Conservative Party Manifesto of 2017 proposed changes by secondary legislation – without public consultation or Parliamentary scrutiny – to allow ICOs to operate.
ST Partnerships are introducing radically new ways of delivering care with scant public involvement or any meaningful consultation. This is despite the inevitable changes these new care systems will involve, and despite current law (HSC Act 2012) and statutory guidance requiring commissioners to directly involve the public in commissioning arrangements (such as plans to transform services and proposals to change procurement and contracts). ACOs and ICSs are presented as local bodies working in partnership with local communities but, in reality, they will be run as businesses with little accountability to local people. This is in breach of the NHS Constitution, which commissioners have a duty to promote. According to the Constitution, the NHS is accountable to the public, to communities and to the patients that it serves.
The HSC Act 2012 gave clinical commissioning groups (CCGs) control of most funding for healthcare services at the local level. Even though there has been no amendment of legislation so far, ICOs will transfer many of CCG responsibilities, including some commissioning of services, to potentially new organisations and these may not be NHS or local authority bodies. In addition, NHSE’s draft contract for organisations (Integrated Care Providers) commissioning and delivering the services on behalf of an ICOs shows that the contract holder could be a consortium of companies or even a Special Purpose Vehicle. This could give the private sector (including multinational companies) a significant role in the planning and commissioning of services, as well in as their delivery. There are some indications that ICOs will issue a ‘prospectus’, suggesting they intend to attract private sector funding.
Funding to run NHS and social care services is being significantly cut. Yet the Naylor Review, to which the government appears to be committed, estimates that the infrastructure necessary for new models of care will require around £10 billion of capital investment in the medium term. The review suggests that about £2 billion of this can be raised by the sale of NHS assets, notably land and buildings owned by NHS providers in the acute sector, while facilitating the building of 26,000 new homes. Naylor observes that, currently, even though their assets might be “of greater benefit in another part of the healthcare economy”, providers such as NHS Foundation Trusts tend to keep assets to fund their own interests and are unlikely to sell what they own to support others with different statutory responsibilities. However, Naylor sees that the introduction of ICOs will overcome this conflict of interest, persuading acute providers to invest their property assets in primary, community and mental health services as part of a collective responsibility within an ICO. According to the British Medical Association, land or building sales will be conducted through public/private partnerships (Project Phoenix), effectively undermining the social ownership of NHS assets while allowing private companies to profiteer from these.
Many ST Partnerships have used private consultants (e.g. McKinsey, Deloitte and PwC) to develop plans in order to meet the requirements of NHSE’s Five Year Forward View, including plans for new care delivery systems. It has been estimated that by February 2017, at least £17.6 million of NHS money had been spent on consultancy fees.
Some analysts fear that new ways of delivering care, especially ICOs, will provide a structure that, in future, could help facilitate the replacement of the NHS by private health insurance. Whilst the NHS as a whole is far too big to sell in a single transaction, ICOs will offer discrete local systems with budgets big enough to attract investors and potential takeovers, or – if the political circumstances allowed this to be considered – with organisational forms compatible with the US health insurance market.
There is little robust evidence from pioneer programmes in the UK to support the introduction of ACOs or ICSs to the NHS: by NHSE’s own admission, these programmes have been of short duration and provided only small sample sizes.
Ribera Salud hospitals that set up ICOs (or ACOs) in Valencia, Spain claim to have higher patient satisfaction rates, lower staff absenteeism, shorter average lengths of patient stay, lower waiting times and lower capitation costs than competitors. However, clear evidence is hard to find: reliable financial and contract information is limited, and there are serious concerns about the objectivity of data from the Ribera Salud company.
ACOs are usually associated with the US healthcare system, and may have influenced the drive towards ICOs in the UK. However, there is mixed evidence about the performance of US ACOs (still in their early days). In addition, the very different contexts in which the NHS and US health care system operate (not least the different levels of funding), and the lack of a standard model of care makes it difficult to extrapolate from the US experience or learn from cross-national experience more generally. As researchers from Manchester Business School put it, “Care is needed to avoid unwarranted inferences that this [ICO] policy will deliver the claimed benefits of lower costs whilst maintaining sustainable quality.”
ST Partnerships (and their successors, ICSs and ICOs) are expected to rely heavily on the co-operation of all their member organisations. Yet in September 2017, a survey showed that only one of 56 organisations involved in ST Partnerships believed that full joint working would be achieved in the next five years.
ICSs and ICOs will also have to accept a new form of financial control (a ‘system control total’) in which financial risk is shared across the whole local health system: individual providers within the system must set aside their own interests and allow any surpluses they make to be used to offset losses that have been run up elsewhere within the system. Failure to keep to the overall control total will mean no transformation funding from NHSE for the entire system. In effect, each provider will police the spending of its partners. As, increasingly, many providers within ICOs or ICSs could be private companies whose first priority must be to make a profit, they are unlikely to put aside their own interests for the good of the whole, especially as some NHS providers will be in deficit. Alternatively, this system runs the risk that public funding will be used to support private companies operating at a loss.
There are indications that one of the ways in which an ICS or ICO will reduce costs will be through ‘transforming’ its workforce. As the private consultancy firm McKinsey (2009) points out, STP plans, “provider efficiencies” are the biggest way to cut costs. With staffing the biggest cost for providers, the new set ups are likely to have reduced numbers of doctors and nurses. Instead, new digital technologies will be introduced, and new roles, such as lower paid, lower skilled physician- and nurse-associates. It ‘s feared that nationally agreed pay levels and NHS terms and conditions of work will be undermined as members of staff are transferred to employment by ICOs and offered locally negotiated employment contracts.
New systems for delivering care, like ICOs and ICSs, are being introduced at breakneck speed, without robust evidence, and in the absence of meaningful public involvement and consultation, parliamentary scrutiny or appropriate legislation. In addition, they are already beginning to allow private corporations new roles and powers to shape the NHS in their interests.
No one can deny the need for acute, primary care and community NHS services and social care to be fully coordinated. However, this will not be achieved by fragmenting the NHS. Nor does coordination require commercial contracts and the involvement of corporates. The introduction of new care delivery systems such as ICSs and ICOs must be opposed.
Instead, as campaigners such as Keep Our NHD Public argue, the success of a truly coordinated system of health and social care requires:
- Increased funding of the NHS and personal social care to ensure that coordination can deliver improved patient services rather than be the disguise for ‘efficiency savings’ and cuts;
- Personal social care provided on the same terms as health, free at the point of use and paid for from public funding, as in Scotland;
- Full public involvement and meaningful consultation;
- Robust piloting of future plans for coordination with in-depth, independent evaluation;
- Clarity on the governance and accountability of decision making bodies;
- New legislation that
- protects Bevan’s founding principles of the NHS;
- ends the marketisation and fragmentation of the NHS; and
- re-establishes public bodies and NHS services that are accountable to Parliamentand local communities.
Information on this page of the patients4nhs website comes from the Resources section of Keep Our NHS Public (see section on Accountable (Integrated Care Organisations and Systems). You can find a range of articles there, as well as references to support the statements made above.
As mentioned on other pages, NHS England (NHSE) has divided the English NHS into 44 local health systems (‘footprints’), now described as Sustainability and Transformation Partnerships (ST Partnerships). Initially, NHSE expected at least some of these Partnerships to evolve into what were then called Accountable Care Systems (ACSs), and that many of these would evolve into Accountable Care Organisations (ACOs).
In 2018 NHS England renamed ACSs as Integrated Care Systems (ICSs), arguably because the term ‘accountable care’ had become rather toxic. But there was increasing confusion about what ‘integrated care’ meant and it was being interpreted differently in different places. Attempts to pin down ‘integrated care’ and the systems that were to provide this have been frustrating: NHSE and NHSI appear to change terminology when their plans become unpopular or ‘generate unwarranted misunderstanding’.
Accountable Care Systems
Accountable Care Systems (ACSs) were introduced by NHSE as partnerships between Clinical Commissioning Groups (CCGs) and providers such as NHS Trusts, GPs and community healthcare providers within an STP. These partners were expected to work together through, for example,
- setting up collective decision-making and governance structures – not easy, given that, as an ACS was not a statutory body, it couldn’t replace the individual accountability of the organisations within it that were statutory bodies (such as NHS Trusts);
- sharing their workforce and facilities, ‘where appropriate’;
- agreeing how to share risk and gain;
- agreeing a performance contract with NHSE and NHSI to deliver rapid improvements in care and performance; and
- managing funding for a defined population through a ‘system control total’ (see below).
In return for providing ‘joined up, better coordinated care’, it was claimed that ACSs would have more control over their funding and the operation of the health system in their area. In reality, ACSs provided a means by which national bodies (the Treasury, the Department of Health, for example) could assert more control, especial with regard to finances and performance.
A central feature of ACSs (and now a part of ICSs) was that they were largely funded by new ‘capitated payment’ arrangements, such as a ‘whole population budget’ (a fixed payment to the ACS to provide specified services for a defined, geographical population, for a set period of time). There are deep concerns, in the context of inadequate funding, that even if there are minimum standards in place, this type of payment system provides an incentive for rationing or for raising the threshold at which patients are offered treatment, irrespective of the care needed.
NHSE’s ambition was for ACSs to cover half the population of England by 2020, something it acknowledged would be a complicated transition, requiring a staged implementation.
First wave of ACSs
By 2017 there were 10 pilot or ‘shadow’ ACSs across England, where NHS Trusts, local councils and others, including private providers, came together to manage resources collectively and deliver services to a specific population. Services could include hospitals, community services, mental health services and primary care, but could also involve social care. Four further ICSs were selected in 2018.
These shadow ACSs agreed, in principle, a draft Memorandum of Understanding (MOU) with NHSE, that signed them up to
- finding ways to control the uptake of services (or “more assertively moderating demand growth”);
- meeting quality targets;
- setting up appropriate governance, and
- accepting significant changes to how finances were controlled.
Each individual organisation within an ACS had to remain accountable for remaining within the ‘financial control total’ set for them by NHSE and NHS Improvement to ensure that that any financial deficit that providers had was reduced to zero. Agreeing to deliver a control total was a condition of access to the Sustainability and Transformation Fund.
The introduction of financial control totals for all NHS providers in 2016/17 (regardless of whether they were in deficit or not) meant a dramatic extension of central control. These controls govern how an organisation uses its own reserves, and enforce a range of other conditions from the centre (ie NHSE and NHS Improvement) – for example, they dictate how to manage things like annual leave and short-term sick leave as well as issues of financial management.
But in addition, in order to facilitate the pooling of resources across providers within an ACS, these providers also had to be accountable as a collective for achieving a ‘system control total’ (equal to the sum of the control totals of all organisations within the system). The MOU acknowledged that this new approach to financial control will “inevitably be bumpy in terms of its impact on the financial position of individual organisations”.
Change of name to Integrated Care Systems
New planning guidance from NHSE and NHS Improvement (NHSI) published in February 2018 clarified that they had changed the name of ACSs to ‘Integrated Care System’ (ICS) – apparently as it gave a more accurate description of the work that these systems did.
As some have suggested for ACOs, new systems like ICSs mean considerable changes to the role of Clinical Commissioning Groups (CCGs). CCGs remain responsible for
- ensuring that ICSs are commissioned in order to provide maximum value;
- setting the required population-level outcomes; and
- holding ICSs to account for delivery.
However, providers (NHS or private) within the ICS could take on the delivery of, or contracting for, NHS and local authority funded health and care services.
ICSs – like ACSs – are expected to focus on
- managing population health (e.g. improving the health of a defined group, rather than focusing on individuals’ health needs),
- delivering more care through redesigned community and home-based services,
- taking collective responsibility for financial and operational performance, and
- ‘more robust’ arrangements between organisations within the system.
Instead of operating as separate bodies, each organisation within an ICS has to sign up to a plan for operating as a single system that incorporates relevant CCGs and providers, and establishes a common approach to matters such as income, expenditure, workforce, and activities. This focus on an overall system (rather than individual organisations within a system) allows NHSE and NHSI greater oversight or control.
For example, spending across ICSs is tightly controlled by NHSE and NHSI. ICSs are expected to produce a plan that will deliver its ‘system control total’ (“the aggregate required income and expenditure position for providers and CCGs within the system” as decided by NHSE and NHSI). Failure to draw up appropriate plans or comply with a system control total will mean loss of access to funding. Notably, organisations within an ICS will be responsible among themselves for resolving any disputes arising from the ‘system control total’.
Integrated Care Providers
NHSE wants ICSs to be delivered by an Integrated Care Provider (ICP), a single lead provider that has been awarded an Integrated Care Provider contract (the contract is currently under consultation as plans to introduce it were challenged by MPs and a judicial review, not least on the grounds that it required new regulations and public consultation). This contract gives the lead provider the task of both planning and providing services for up to half a million people within a specific area for 10-15 years, These huge contracts that may be worth billions of pounds can be held by a private company.
While private companies have until now sometimes struggled to make enough profit from providing individual NHS services and so had begun to retire from the field, budgets available for whole systems like ICSs will be large enough to attract private investors. By becoming a ‘lead provider’ with a single, long-term contract to set up and manage an entire system, a private company – providing that they stay within the terms of the contract – will be in a position to make decisions, for example, on spending, and on the nature and location of services, and to sub-contract with a range of other providers.
What is the relationship between ICPs and ACOs?
According to the Government’s response to the recommendations of the House of Commons Health and Social Care Inquiry into integrated care, the ICP was previously known as an ‘Accountable Care Organisation’.
Arguments against ICPs
A coalition of health campaign groups argues that the introduction of ICPs should be stopped, not least because
- such a move ignores the real roots of poor integration, namely the market in health services created by the Health and Social Care Act;
- the IPC contract not only opens the NHS to further privatisation and fragmentation, but if a private company holding a contract crashes (think of Carillion), a wide range of health services would be put at risk;
- the contract holder may not be a public body, so it would be less accountable to local communities – an ICP only has ‘a duty to engage’ local communities, compared to NHS statutory bodies’ ‘duty to consult’;
- ICPs would reduce transparency – for example, an ICP would not be subject to Freedom of Information requests, and would not have to give the public access to Board meetings or minutes, by citing ‘commercial confidentiality’;
- the new contract could change general practice, with many GPs being brought in under one ICP. This could mean patients have further to go to see a GP, and find they have less continuity of care.
Instead, campaigners argue:
- That the Government brings forward legislation to end the failed NHS contracting system and to re-nationalise the NHS: the only sound basis for service integration.
- That, in this context, there is a guarantee that any organisation tasked with delivering integrated care to patients will be a statutorily protected NHS organisation i.e. an NHS body not open to private providers, underwritten in legislation underpinning these undertakings (see below).The Government commits to sufficient funding and staffing for safe health and social care, and
- That Social care be brought back into public provision, free at point of use.
For more details, see
https://keepournhspublic.com/resources/resource-cabinet/ (see Accountable Care Organisations and Systems section)
House of Commons Library Briefing Paper No CBP 8190, 6th July 2018. Accountable Care Organisations.
updated October 2018
In 2017, as outlined in our page on the background of ‘integrated’ or ‘accountable’ care, NHSE required the 44 local health systems (‘footprints’) it had set up across England to morph into Sustainability and Transformation Partnerships, which were then expected to evolve into Accountable Care Systems (ACSs). Many of these, in turn, were due to become more complex Accountable Care Organisations (ACOs) over time. Then NHS England dropped the term ACO as this was too closely associated with the US health system. NHSE began to talk about Integrated Care Organisations, and now talks about Integrated Care Systems and Integrated Care Providers instead, although the change in terminology is little more than cosmetic.
What was it then that NHSE meant by Accountable Care Organisations, before it became coy about using the term?
Accountable Care Organisations
The term ‘Accountable Care Organisation’ comes from the USA, where it refers to an organisation, possibly run by an insurance company, in which a group of health care professionals and other providers commit to improving the quality of care offered while containing the money spent on services: collaborating providers take a share of any savings that the ACO achieves. Evidence that ACOs in the US have had any effect on care quality or public expenditure is mixed, at best. And the fact that ACOs were developed in an insurance-based health care industry raises questions about whether they are appropriate models for the NHS, which is premised on social solidarity and universal health care.
In the UK, NHSE’s first reference to Accountable Care Organisations came in its Five Year Forward View (5YFV which proposed to introduce new models of care, specifically ‘Multispecialty Community Provider’ (MCP) and ‘Primary and Acute Care Systems’ (PACS), that NHSE likened to ACOs found in the US and elsewhere.
Both ACOs and the ACSs that they were supposed to evolve from were radical new ways of delivering NHS systems, promoted on the basis that they would bring together different health and social care organisations in order to provide ‘integrated care’. The difference between ACOs and ACSs was blurred (Simon Stevens, for example, has been known to use the terms interchangeably) but the main distinction appeared to be that an ACO was to be set up and run by an organisation (or consortium) that has been given a single contract to provide an agreed bundle of services for an agreed period (e.g. 10 to 15 years).
The structure of an ACO could vary – it could, for example, be
- a single organisation that holds the contract and then sub-contracts with other providers to provide services. Or,
- a provider that forms a new corporate vehicle – a Special Purchase Vehicle or SPV – that holds the contract and then sub-contracts with other providers. [An SPV is a legal entity, typically set up by a bank or insurance company, that allow the risks faced by providers to be separated out and taken on by investors looking for new opportunities to make profits. Already Private Finance Initiative contracts use SPVs for hospital construction and facilities management. Now ACOs can use SPVs to organise the financial administration of clinical services as well.]
Whatever the structure, the organisations within the ACO – or for that matter an ACS – were to agree to share risks and gains. For example, they had to collectively stay within a shared budget or ‘control total’ determined by NHS England. This allowed NHSE to take a vice-like grip on costs, in effect by making each provider within an ACO police the spending of its partners. But it also meant that financial risk was shared across the whole local health system: individual providers within an ACS had to set aside their own interests and allow any surpluses they made to be used to offset losses elsewhere within the system.
This sharing of risk offered attractive new opportunities to a private sector that has become increasingly risk-averse, having found smaller NHS contracts less profitable than expected. For example, Serco decided to pull out early from a contract to provide GP out-of-hours services in Cornwall, and similarly withdrew from running Braintree Hospital in Essex when it couldn’t fulfil the terms of contracts and make money.
A further way in which ACOs could be attractive to the private sector was that, whatever the structure, the lead organisation holding an ACO contract – quite possibly a private company – would be given responsibility for deciding how to allocate resources and design care for its local population, including decisions on changing which, where, or how services were to be delivered.
The service providers within an ACO were to work together over the period of the contract to take responsibility for the cost and quality of a specified range of health (and possibly social care) services for a defined population for a fixed sum (a ‘whole population budget’). For an individual to be part of this defined population, they either had to be registered on the ACO’s list (because their GP’s practice was part of the ACO), or resident in the ACO’s “contract area”. Having said that, an individual would not be part of this defined population if they lived within the contract area but their GP’s practice was a member of a CCG which contracted with a different ACO.
The situation was even more complex because, as researchers point out, ACOs were encouraged to integrate health and social care, but the funding allocated for patients registered with the ACO’s GPs and the funding from local authorities was for different populations. On top of which, ACOs would not have health service funding allocated for unregistered CCG residents who may, nonetheless, have been eligible under the ACO contract for local authority social services”!
Concerns about ACOs have included
- That they were non-statutory, non-NHS bodies—even when set up by, or including, NHS trusts or foundation trusts.
- They had no statutory accountability or governance obligations, and no clear lines of accountability.
- Their form and ownership was unrestricted: they could include NHS providers or GPs, but also private companies, insurance companies, banks and property companies.
- They could be established as off-shore companies.
- An ACO might need numerous sub-contracts with trusts, general practices, private health companies, voluntary organisations etc to provide services, leading to unnecessary costs, fragmentation and loss of public control.
ACOs in practice: the Alzira model
Many of those in favour of ACOs (including NHSE) have pointed to the Alzira model as an example for the NHS to follow.
The Alzira model is a form of public-private investment partnership (PPP). PPP is similar in some ways to the infamous Private Finance Initiative (PFI) where the private sector finances and constructs healthcare infrastructure, such as a new hospital, and manages and maintains that infrastructure throughout a specified, renewable contract period. But where PPP is used in the healthcare sector, it differs from PFI in that the private sector is additionally responsible for the delivery of all health services – curative, preventive, and diagnostic – that take place in the newly built or renovated facilities. This may be in addition to responsibility for the supply of non-clinical support services—such as medical transport, human resources, and facilities management. The private partner involved generally forms a consortium and may sub-contract some of these services.
The Alzira version of PPP is named after the town in Valencia, Spain, where the model was first introduced in 1999. Spain operates a federal system of government, with each autonomous community having complete authority regarding healthcare issues. What appeared to be initial success of the Alzira initiative led to the establishment of new PPPs in four other health districts in Valencia, and a similar model being implemented by the regional government of Madrid, most with the company Ribera Salud as their parent. It has to be said that not all were successful.
The original Alzira initiative represents the first time that the private sector in Spain could enter into contracts to self-manage hospitals. In the late 1990s the regional government of Valencia awarded a ten-year contract to UTE-Ribera (an SPV of Ribera Salud – a health management enterprise, an insurance company and construction firms) to finance, build and run a new public hospital in the town of Alzira.
A central feature of this model was a ‘payment by capitation’ system. Under the contract, the government of Valencia paid UTE Ribera an annually adjusted fee for each resident for the duration of the contract. This figure had to cover all the expenses needed to provide the service, including payroll, drugs and other medical consumables, utilities, depreciation of assets and the cost of loans. Research suggests that this system has built-in ‘perverse’ incentives, such as encouraging managers to ‘cherry pick’ the most lucrative specialities or to choose less expensive treatments (such as the prescription of medicines rather than admission to hospital) that may not be in patients’ interest.
UTE-Ribera’s tender for the contract turned out to miscalculate the capitation payment (the fee for each resident) required to provide services. The contract was terminated after four years due to financial losses.
Nonetheless, the Alzira model was introduced in other regions, including Madrid, while in Alzira the UTE-Ribera SPV was refinanced, and a new contract put in place, this time giving UTE-Ribera a 15 year ‘management concession’, with responsibility for all health care – now both both primary and secondary – for the local population.
Hospital doctors and many GPs working within the Alzira model were employed by the operating company (rather than the public sector as is usual in Spain’s public hospitals). Generally, in Spain, private sector contracts of employment have worse terms and conditions, including less job security, lower pay scales and longer working hours, meaning increases in productivity of around 20 – 30% over the public sector. In Alzira, medical salaries had a fixed component (80%, or 90% for GPs) and a variable component dependant, for example, on how staff responded to certain ‘incentives’.
Notably, in June 2017 the new coalition government in Valencia passed new legislation to return the Alzira health concession to direct public management. At around the same time, one of the main players involved in the Alzira PPP – the Ribera Salud Group – came under police investigation for embezzlement and corruption. In Madrid, following mass strikes by health workers and other difficulties, the regional government abandoned its plan to use the Alzira system for six public hospitals.
Nonetheless, Ribera Salud has emerged in the UK: now 50% owned by transnational health insurance company Centene Corporation, they are involved in developing an accountable care system for Greater Nottingham. Centene is expanding in the UK, where they already own 75% of The Practice Group, a private company involved in providing a wide range of NHS funded services, mostly in primary and community care. Centene has been contracted not as a provider but as a ‘care integrator’ for the vanguard ACS in Greater Nottingham, responsible for developing the ACS and establishing works streams concerned, for example, with patient pathways, population health, social care, and information management.
There are concerns about importing the Alzira model into the NHS. For example, it could transfer significant power from NHS service commissioners (usually Clinical Commissioning Groups or CCGs) to private providers: the Alzira model requires commissioners to take quite a different approach to their role, using contracts to state the outcomes they want but giving little detail and direction about how to achieve these. There is also some anxiety about the potential closeness between the contract holder and their suppliers in Alzira, suggesting less than rigorous oversight of sub-contractors. In addition, it’s feared that this model could squeeze out some types of providers with serious consequences for social enterprises and charitable providers.
Models like Alzira are promoted largely on the grounds that they reduce costs yet maintain quality. Yet research into the Alzira project in Spain suggests that, once these types of organisations become operational, there is a lack of public accountability, with monitoring limited by the terms of the contract. The same analysis also suggests that it’s hard to learn from the experience of other nations’ health systems because of different institutional factors. This means that it can’t be assumed that the claims made about the Alzira model of lowered costs while maintaining quality can be taken at face value.
Challenges to ACOs
The introduction of a contract for ACOs prompted a number of challenges, including two legal challenges – one from the campaign group ‘999 Call for the NHS’, and another from a group of campaigners (including the late Professor Stephen Hawking), known as ‘JR4NHS’.
The campaign group 999 Call for the NHS argued that the ACO contract’s shift to a single, annual budget for a population, rather than a payment by services used model, breaches current legislation (the Health and Social Care Act of 2012).
The case put by the JR4NHS group questioned the legality of the consultation process around the draft ACO contract, as well as broader concerns about its interaction with current NHS legislation, for example, that the commissioning functions of Clinical Commissioning Groups (CCGs) were to be – illegally – delegated to ACOs. Under the HSC Act (2012), CCGs have statutory duties around the commissioning of health care for their populations that they cannot delegate to bodies, such as ACOs, that have no legislative basis, and yet CCGs were expected to do so. On top of which, ACOs could be wholly or partly private organisations, so for- profit health organisations could be making important, long-term decisions about NHS services.
In this case, the Court ruled that, in principle, the integration of health and social care via a single provider of care (an ACO, now termed an ICP) where that provider has a substantial degree of autonomy over health care choices and resource allocation:
- is within the statutory powers of a CCG
- does not represent the unlawful delegation to ICPs of non-delegable functions or preclude CCGs from fulfilling their statutory functions, and
- is not contrary to the commissioner-provider split under the National Health Service Act 2006.
However, both judicial reviews raised important issues and prompted the Department of Health and Social Care to promise a full consultation on the draft contract for ACOs (then rebranded as Integrated Care Providers).
https://keepournhspublic.com/resources/resource-cabinet/ (see Accountable Care Organisations and Systems section)
British Medical Association Accountable care systems:what are they and what do they mean for the NHS https://www.bma.org.uk
The troubles of Ribera Salud and the Alzira model: https://calderdaleandkirklees999callforthenhs.wordpress.com/2017/09/01/buyer-beware-centene-corporation-contract-with-nottingham-nhs-organisations-is-2-7m-can-of-worms/
Why we should be concerned about accountable care organisations in England’s NHS http://www.bmj.com/content/360/bmj.k343.full?ijkey=6nNNns7Wzf3dbs3&keytype=ref
The NHS England’s Five Year Forward View (FYFV) that set out plans for the NHS from 2015 to 2020 estimated that the NHS would need an extra £30 billion by 2020 to deal with growth in healthcare need, the emergence of new treatments, and so on. Of this figure, the FYFV suggested that the government should provide £8 billion, while £22 billion could be found from within the NHS through further ‘efficiency’ measures’. In effect NHS England was demanding ‘productivity gains’ of 2-3% each year between 2015 and 2020. This is highly ambitious compared with the kind of efficiencies achieved by the wider UK economy or the health care systems of other countries. These ‘efficiencies’ may also bring safety risks in a service where every ounce of fat has already been cut.
Analysts have calculated that instead of the £8 billion asked of the government, total health spending in England will rise by only £4.5 billion in real terms between 2015/16
Of the £22 billion that the Five Year Forward View expects the NHS to achieve through ‘efficiency savings’, these are to be found, for example, by
- restructuring the NHS (again) through introducing new models of care that share similarities with Accountable Care Organisations (ACOs) found, for instance, in the US. ACOs aim to reduce costs by bringing in economies of scale and introducing higher thresholds for treating patients, although the evidence for reduced costs is mixed;
- restructuring the NHS workforce through bringing in new, more ‘flexible’ roles carried out by less qualified, cheaper staff, and weaker rules about pay and conditions (such as a significant reduction in real term salaries for many staff); and
- reducing red tape and reduced waste.
A report by the Centre for Health and Public Interest (CHPI), published in May 2017, assessed seven key assumptions on which the plans for achieving the efficiency savings were based and found them to be unrealistic. Key findings are that:
- The vast majority of this year’s up-front funding earmarked for transforming NHS services (£1.8bn out of £2.1bn) has instead been spent on reducing hospital deficits. This leaves only £300 million available for the NHS to invest in achieving its efficiency targets.
- Last year hospitals were only able to find recurrent cost savings of 2.8% and yet average targets of 4% and 4.2% have been set for this year and next. NHS Improvement has admitted that targets of 4% in previous years were unrealistic.
- A 1% pay cap on NHS staff wages will be hard to maintain with national average earnings expected to grow by 2.9% a year and inflation at 1.9% a year. A 0.9% real wage cut amidst 6% staff shortages is unlikely to hold.
- Social care is expecting a funding shortfall of £3.5bn by 2020/21. Less social care provision will mean longer stays in hospital for older people who are well enough to leave and higher costs being passed onto the NHS.
Efficiency savings are to be ensured by a carrot-and-stick approach: in 2016 NHS England directed that the NHS in England will be divided into 44 new ‘local health systems’ or ‘footprints’ and that each will produce a ‘Sustainability and Transformation Plan‘ (STP). Each footprint will show in its STP how it will transform the way it plans and delivers health and care services in line with the FYFV. But most importantly, each ‘footprint’ is expected to show how it will cut expenditure and stay within budget through, for example,
- moderating ‘demand’ (reducing patients’ use of services),
- increasing productivity (cutting the budgets for service providers, reducing the pay bill, reducing the number of hospital beds etc), and
- generating income (potentially from private patients or selling land).
The Health Secretary has made it clear that Trusts must balance their books or their governing boards could be removed. An extra £1.8 billion ‘transformation fund” for the NHS that George Osborne announced for 2016-17 is only available to NHS trusts that promise to meet a huge range of demands, including moving to ‘seven-day services’. It’s feared that even if footprints can meet NHS England’s demands, much of the funding they might receive will have to go on reversing financial deficits.
In May 2017 secret NHS England plans were circulated among top NHS officials suggesting a new way of cutting costs called the ‘capped expenditure process’. NHS spending is to be capped in about 14 areas of England where there are the biggest NHS deficits and where financial targets are unlikely to be met in 2017-18. In these areas, NHS leaders have been told to ‘think the unthinkable’ and introduce changes that are usually avoided as too unpleasant, unpopular or controversial not least because they will impact on the quality of patient care.
- lengthening waiting times for planned care, even if this breaches the standards set out in the NHS Constitution.
- stopping NHS funding for some treatments, such as those considered ‘low value (…); delaying the funding of some newly approved treatments; and extending the limits on IVF treatment
- Closing wards and theatres, reducing staff while trying to maintain enough emergency care capacity to deal with winter pressures
- Closing or downgrading services
- Selling NHS estate such as land and buildings.
- Stopping prescriptions for some items,
- Cutting financial support to patients with serious, long-term medical problems and disabilities.
NHS Providers, the organisation that represents NHS Trusts, has responded by saying the proposals represent the biggest threat to the NHS’s ability to treat patients since it was set up in 1948:
“Some of the proposals could challenge fundamental expectations shared by NHS staff and the public about what the health service is there to provide. We can not do that without a full and proper debate”.
To find information about planned cuts to NHS services in your area, and what you can do about this, visit https://healthcheck.nhsfunding.info/fundournhs.
updated November 2017
NHS England’s Five Year Forward View (FYFV) calls for ‘sometimes controversial system efficiencies’, some of which are given more prominence in the plan than others. According to the FYFV, the main ways of achieving these efficiencies will be through a radical restructuring of the NHS.
In line with dissolving the traditional boundaries of the NHS (for example between health services and social care, primary and secondary health etc), the FYFV wants to see services integrated around the patient, and out-of-hospital care becoming a much larger part of what the NHS does.
To this effect, the FVFV calls for stronger ‘health-related powers’ to be given to local government and elected mayors to allow “local democratic decisions on public health policy that go further and faster than prevailing national law” on issues that affect physical and mental health. There are no further details within the FYFV on the nature of these extended powers or how they might be regulated. However, it’s possible to get some sense of the direction of travel in recent government strategy that – apparently – devolves powers (including the control of pooled health and social care budgets) to local areas (see Devolution and the NHS and Sustainability and Transformation Plans or STPs).
New models of care
STPs are expected to include new, radical, ‘place-based’ ways of delivering care – such as ‘new care models’ that aim to provide best value for money while improving patients’ experience. These new models are to be developed rapidly and extensively – in fact, implementation is already under way, first through a number of ‘vanguard sites’ and then, even before these are up and running, through a comprehensive programme of ‘transformation’ across the NHS in England (see Transformation and STPs). According to NHS England,
“Through the New Care Models programme, complete redesign of whole health and care systems are being considered”.
While the FYFV emphasises that there is no one size that fits all and that the exact nature of the models used will be decided on locally, the choice of model will be ‘guided’ by NHS England.
There are already examples of GP practices forming federations or networks to help them survive in a competitive market, either sharing ‘back room’ administration, staff or occasionally premises. The FYFV encourages such initiatives but is really pushing for more extensive forms of ‘integration’. Here we give two examples of the kinds of models of care outlined by the FYFV: these are the ones that, so far, seem to have caught the most attention.
1. Multispecialty Community Provider (MCPs)
According to the British Medical Association, there are different versions of this model. These variations include:
- federations of GPs who extend the services they already provide;
- versions where a CCG reorganises services around different GP practices, and
- the large-scale version described in the FYFV.
In the FYFV version, a group of GP practices comes together with a variety of health practitioners to form an organisation providing the majority of out-of-hospital care for a registered list, probably of around 50,000 patients. The MCP is funded through a capitated contract – i.e. on the basis of a flat fee for each patient registered, irrespective of how many visits a patient makes or how many treatments are given.
The MCP will combine GP care with community-based services such as district nursing, health visiting, dentistry, and pharmacy, and – potentially – mental health services and social care. It could provide many of the specialist services currently provided by hospitals, such as chemotherapy and dialysis, on an outpatient basis. Over time, MCPs may employ hospital consultants, have admitting rights to hospital beds and/or manage the health service budget (or even the combined health and social care budget) of their registered patients. (MCPs are described as providing ‘horizontal integration’.)
2. Primary and Acute Care Systems (PACS)
PACS are single organisations that are contracted to integrate hospital, GP, community and mental health services for a registered list of patients, on the basis of a fixed budget per head and on a long-term basis. PACS are generally seen as hospital-led: for example, hospitals could open GP surgeries by setting up or taking over existing surgeries, especially in deprived areas where staff recruitment is more difficult. They are similar in some ways to MCPs but extend further, incorporating all core hospital services and ‘redesigned’ emergency care and urgent care services. PACS are also likely to cover wider geographical areas, serving a population similar to that covered by a small District General Hospital (around 250,000 patients or more). There will be a requirement for PACS to offer personal health budgets. In time, PACs might become accountable for the entire health needs of a registered list of patients across different care settings. (PACS are described as providing ‘vertical integration’.)
Both MCPs and PACs are types of population-based care models (see below) that can vary in scope and scale: as stated above, no one size that fits all. However, where these models of care are formalised through the use of a contract, MPCs or PACs become forms of Accountable Care Organisations, as found in other countries like the USA and Spain.
Accountable Care Organisations
An ACO is formed by a group of health service providers who work together to manage and deliver services for a defined population over a set period of time and according to a budget that is fixed irrespective of how much care their registered patients need (see capitated payments).
ACOs have attracted interest from NHSE as offering a way of overcoming the fragmentation of commissioning and service provision in the NHS entrenched by the Health and Social Care Act 2012. (Ironically, at the same time, ACOs provide a way of fragmenting the NHS as a national health care system.) They are a way of developing ‘place-based’ working under which NHS organisations and their partners (including any in the private sector) agree to collaborate in order to meet the needs of the population they serve.
Seen as a form of ‘managed care’ (see our explanation of terms), ACOs, despite taking numerous forms, have in common that they must be accountable for improving the quality of care while at the same time reducing costs. They offer incentives for certain ‘outcomes’ (such as reduced hospital stays, or reduced use of expensive tests) rather than ‘activity’ (e.g. the number of patients seen). In the USA at least, budget savings are encouraged by giving a share of the money saved (or profits) to doctors, hospitals and the service commissioners. However, a survey of ACOs in the US suggests that they have a mixed record regarding quality improvement or cost control (http://www.kingsfund.org.uk/blog/2015/08/what-impact-do-accountable-care-organisations-have-care-quality).
Moving towards the use of models like ACOs in the NHS raises questions about how the planning and commissioning of services will work. For example, ACOs offer different options for the way services are contracted such as:
- prime contracting, in which a prime contractor is commissioned to provide a service or range of services and who then subcontracts work to a range of providers;
- an alliance between commissioners and providers and
- a special purpose vehicle (see below).
Plans for ACOs within the NHS are already underway. For example, in a radical move away from the current divide between commissioners and providers, Northumberland CCG (a vanguard site for NHS England’s STP programme) is proposing to hand over its budget and most of its functions to a provider-led ACO to develop a primary and acute care system. The initiative is to be led by Northumbria Healthcare Foundation Trust, which will set up a special purpose vehicle (SPV), essentially a new company, in order to take on much of the planning – and in theory the risk – of providing services for the local health economy (See http://www.newcastle-hospitals.org.uk/downloads/Board%20of%20directors/September_2015_A4i_Executive_Report_-_Sept_15.doc).
A SPV is a legal entity, in some ways similar to a shell company. SPVs are set up for various reasons. They are typically used where a company wants to isolate itself from financial risk by allocating assets to the SPV rather than the parent company. They can also be set up to own and more easily dispose of assets. And they may be used as a way of setting up a public-private partnership.
SPVs already play a role within the NHS: in the absence of government funding, providers such as hospital trusts have used the Private Finance Initiative to borrow money from the commercial sector (generally at extra high rates of interest) to fund capital projects like hospital building. Although SPVs have legitimate uses, they can also be used to hide debt, ownership or the relationships between different commercial bodies. This behaviour seems unlikely within the context of the NHS. However, there are fears that the use of SPVs and the potential they offer, for example, for the involvement of private financiers and for disposing of assets, could be a further step towards privatisation.
Setting up ACOs will involve substantial change and NHS England has made it clear it expects the NHS to evolve towards ACOs over time, first through Sustainability and Transformation Partnerships and then what were initially called Accountable Care Systems and are now termed Integrated Care Systems. (See also our Explanation of Terms.)
Pros and cons of Accountable Care Organisations
One of the benefits attributed to ACOs is that they remove some of the transactional costs (e.g. the costs of tendering, legal services etc) that are now part and parcel of commissioning NHS services, particularly since the Health and Social Care Act (2012) which introduced compulsory competition. (Reversing the ‘marketisation‘ of the NHS, as proponents of the NHS Reinstatement Bill suggest, would also remove these kinds of transactional costs).
It’s also thought by some that the new forms of contracting services used by ACOs will make it easier to break down the boundaries between existing organisations, and so help to ‘integrate’ services. If integrating care means ensuring good multidisciplinary team working to make a patients’ care as seamless as possible, some parts of the NHS have managed to achieve this without creating an ACO.
The move to ACOs is not one based on robust evidence. From the evidence that exists, it seems that ACOs are not particularly efficient and, far from saving money, may increase costs, partly because of subsidies for providers and the use of shared saving bonuses. ACOs are highly reliant on IT technology that allows the transfer of information across providers and the monitoring of patient outcomes for which providers are held to account. However, the squeeze on NHS funding means there has been insufficient investment in IT systems, as the recent wide scale hacking of NHS computers has highlighted.
ACOs can be penalised financially for admitting or readmitting patients unnecessarily. Some doctors are concerned that this could threaten their clinical autonomy, if not their income.
Within the NHS, ACOs, like other new models of care referred to in the FYFV, offer new opportunities for the private sector as prime contractors, which can then sub-contract work to NHS and private health service providers.
As the Chair of the House of Commons Health Committee has noted, where services are outsourced from the NHS and then sub-contracted to other providers, there may be implications for patient safety and concerns about lines of accountability ().
Some critics argue that, in the US, ACOs are really Health Maintenance Organisations (HMOs) in disguise – i.e financial intermediaries (often large corporate insurers) that essentially collect payments from patients and arrange their care with service providers.
In their pursuit of profit or savings, HMOs have been known to refuse patients access to necessary treatment, to drag their heels on insurance claims, and ‘cherry pick’ patients (those who were not sick and therefore likely to cost the HMO less). (See the Stewart Player article in Sources (below) for more details). And, as we indicated above, it may also be the case that setting up ACOs through the use of SPVs will make it easier to transfer assets out of the NHS.
NHSE was planning to introduce the first ACOs by April 2018, and to sidestep existing legislation by introducing secondary legislation that would not require Parliamentary scrutiny. However, several campaign groups have sought judicial reviews on a number of aspects of ACOs. To take one example: ACOs (which have no statutory authority and could be wholly or partly private organisations) would in effect take over the functions of CCGs (which are statutory bodies), and become responsible for making most decisions about providing health and care services (more details below). Largely in response to these challenges, the introduction of ACOs is to be paused until the outcome of the judicial reviews is know, and a public consultation is undertaken.
Will new models of care make the NHS more efficient or affordable?
A report from the National Audit Office (NAO) found that “NHS England’s ambition to save £900 million through introducing seven new care models may be optimistic.” They stated that benefits of the new care models are as yet unproven and their impact is still being evaluated. While there are a range of initiatives exploring different ways to transform care and create a financially sustainable care system, their governance and oversight is poor.
Other models of care besides MCPs and PACS
Another potential model of care includes the creation of viable smaller hospitals that develop new organisational forms. These forms could be in the shape of specialist franchises or ‘management chains’. The idea of management chains comes from the private sector. According to the Nuffield Trust, instead of one organisation taking over another and running different sites using its existing management (the usual practice in the NHS), management chains have a separate corporate core that oversees the different sites. In its study, the Nuffield Trust took evidence from organisations operating chains outside the NHS, including a UK-based private health provider; the pub and restaurant sector; a large overseas hospital chain operator, a provider of secure services and the casino and gambling sector. It concluded that the management chain model should not be seen as a silver bullet solution for the fundamental challenges facing the NHS.
For details of other care models referred to in the Five Year Plan, see http://www.england.nhs.uk/ourwork/futurenhs/5yfv-ch3/. And for more details about how new models of care might be implemented, see the Dalton Review (details below), commissioned by the Health Secretary to help deliver the Five Year Plan and to consider how other sectors and international healthcare systems have embraced models such as networks of hospitals and clinical services, chains and other joint ventures.
Most of these new models of care create the conditions for the private sector to take the lead in running new healthcare organisations, with NHS Trusts and physician groups or private healthcare providers brought in as sub-contractors.
What does this mean for Clinical Commissioning Groups (CCGs)?
CCGs were set up as a result of the Health and Social Care Act (2012), to take on the complex task of planning and buying health care services for the populations that they each covered. Steered predominantly by GPs, they were supposed to put clinicians ‘in the driving seat’, as it was argued that they knew best about patients’ needs. However, much of the work of CCGs was subsequently delegated to Commissioning Support Units, which have increasingly involved private companies – not just in managing admin, but also in some cases in planning and buying health care services.
The FYFV means further changes for CCGs. One of the main ways of implementing the FYFV is through dividing England into 44 local health economies or ‘footprints’ in which each of these must bring together the CCGs in the area and the local authorities, and produce a Sustainability and Transformation Plan or STP’. Each STP has to show how the footprint will reduce demand on health and care services; increase productivity (through for example, introducing new care models like ACOs); and generate income – e.g. from selling NHS assets.
As new care models are established, the boundary between what is done by CCGs and those providing health services will shift (e.g. with a provider taking on some of the functions of a CCG, acting as a prime contractor which then sub-contracts work to other providers). But according to NHS England, CCGs will still have a commissioning function in the NHS, including acting as funder, setting local priorities and incentives, overseeing contracts, ensuring best value, and “ensuring the provision of a comprehensive local NHS within the available resources” (https://www.england.nhs.uk/wp-content/uploads/2016/09/NHS-operational-planning-guidance-201617-201819.pdf.
The FYFV acknowledges that there is no appetite for wholesale reorganisation of the NHS, but this is nonetheless what the FYFV wants to bring about. What’s more, this kind of reorganisation comes on top of the massive change that followed the Health and Social Care Act (2012) that has already led to chaos, huge expense and poor staff morale.
The FYFV says that the changes it calls for will be different and less disruptive than after the 2012 Act because they will be locally driven: NHS England will be backing ‘local leadership’ in place of the ‘distraction of further national reorganisation’. However, it’s hard to see how a series of radical, local changes taking place across the whole of the NHS in England is anything other than a national reorganisation, especially when strongly steered or ‘co-developed’ by a central organisation like NHS England.
The FYFV prompts many concerns about how such reorganisation will affect NHS services, such as the possibility that patients will have to travel further for in-patient and emergency services. NHS England sees that current forms of payment may inhibit integrated care and, in future, a system of fixed, captitated payments may play a central role in the NHS. With new models of care based on a fixed budget for each registered patient and designed with cost containment in mind, there are likely to be pressures on staff to minimise hospital referrals or other treatments. Plus there is no evidence that what’s being proposed will save money, and little to no detail (given the encouragement to sell off NHS property and the current shortage of GPs and nurses) about where the new buildings, equipment and staff required needed in this new structure will come from … unless funded by large corporations with deep pockets.
However, one of the biggest concerns is about the future of the NHS itself. The FYFV calls for the use of new models of care (such as MCPs or PACs) that have not been developed for a universal, publicly funded health service like the NHS but, instead, evolved in the US to meet the needs of an insurance based system. It’s only a short step from setting up a structure for the NHS that is compatible with an insurance-based health care system to turning the NHS into a system based on health insurance.
And in line with the thinking behind the development of current models of care in the US, the FYFV suggests that its plan depends on not prescribing any specific model, but on innovation and adaptation to the local context. This suggests that while individual organisations like MultiSpecialty Community Providers may ‘integrate’ care for their registered patients across organisational boundaries, the NHS more broadly will become increasingly fragmented.
New care models
For a detailed discussion of new care models from the British Medical Association- go to http://bma.org.uk/working-for-change/negotiating-for-the-profession/bma-general-practitioners-committee/gpc-current-issues/general-practice-and-integration and click on the link to the document “General practice and integration: Becoming architects of new care models in England”.
Accountable Care Organisations
How routine surgery is being denied to those who are overweight or smoke
Placed based care
Despite massive re-organisation of the NHS as a result of the Health and Social Care Act of 2012 (HSCA), more radical change is now taking place, providing a further step towards privatisation as well as the means to implement cuts.
The latest restructuring is based on the benign-sounding idea of ‘integrated care’. But this is not integrated care in the sense of joined up care that’s carefully planned around individual patients. Instead its about a group of service providers (and maybe commissioners) combining to provide almost all services for a defined population.
The emergence of this kind of integrated care can be traced to the World Economic Forum (WEF), which describes itself as the International Organisation for Public-Private Cooperation, “providing a platform for the world’s leading 1,000 companies to shape a better future.” In 2012 the WEF carried out a project looking at the financial sustainability of national health services due to factors like “the growing burden of chronic disease” and “raised patient expectations”. The project lead was Simon Stevens, then Vice President of the United Health group (a transnational corporation based in the USA), and its report was co-authored by McKinsey (a global management consultancy firm also involved in drawing up the HSCA of 2012).
The preferred strategy put forward by the WEF report was to deliver more services with fewer resources, primarily by shifting health systems towards ‘integrated care’ – in effect reinventing the delivery of health care by introducing models of care that ‘manage demand’ more effectively and eliminate inefficiencies and waste. This strategy now informs the approach of NHS England (NHSE).
NHSE’s The Five Year Forward View and new models of care
Simon Stevens moved from United Health to become Chief Executive Officer of NHSE in April 2014, just six months before it published its Five Year Forward View (5YFV). This document promoted integrated care, describing how the delivery of NHS services was to be completely and rapidly redesigned through new models of care that dismantled traditional organisational boundaries – such as those between the NHS and social care, or between community care and hospital services.
The main models of care outlined were:
- The Multispecialty Community Provider (MCP) model, in which GPs and other community based health practitioners (e.g. district nurses, pharmacists) form an organisation that provides most out-of-hospital care for a registered list of patients, with a delegated responsibility for managing the health service budget for their registered patients. This would bring so-called ‘horizontal’ integration.
- The Primary and Acute Care System (PACS), where a single organisation provides GP and hospital services, together with – for example – mental health and community care. These were described as similar to the Accountable Care Organisations seen in other countries like the USA.
These models of care were supposed to provide a way of improving quality while cutting costs ( although evidence is mixed from the USA about the impact of ACOs on quality and cost). Both MCPs and PACs were to be funded by a ‘whole population budget’. This is a fixed or lump sum that will be paid to providers to cover the cost of almost all healthcare services for a defined population, over a set period (probably 10-15 years), irrespective of the care that is actually needed or provided: treatments will be limited to what is affordable within the budget.
The first step towards implementing the redesign of the NHS was taken at the end 2015 with NHSE selecting 50 pilot or ‘vanguard’ sites to introduce the new care models programme. Then, at the beginning of 2016, before these vanguard sites were fully up and running – and certainly before any evaluation had been done – NHSE produced a new directive. Called “Delivering the Forward View: NHS planning guidance 2016/17 – 2020/21“, it required the creation of new local health systems, each of which would develop a Sustainability and Transformation Plan (STP) that would put the FYFV into practice.
New local health systems or ‘footprints’
The directive Delivering the Forward View – for which NHS England has no legal authority – required the setting up of 44 new ‘local health systems’ or ‘footprints’ across England in what it called ‘place-based planning’ (i.e planning to cover an entire health area rather than a single organisation). ‘Footprints’ were to bring together ‘clinicians, patients, carers, citizens, and local community partners (including the independent and voluntary sectors), and local government through health and wellbeing boards. These new local health systems – the boundaries of which may roughly mirror those of county boundaries – are expected to transform the way that health and care services are planned and delivered for local people. The populations that they will cover range from 300,000 (for example in West, North and East Cumbria) to nearly three million people (as in Greater Manchester). On average they will incorporate three or four local councils and about five Clinical Commissioning Groups (CCGs). But ‘local health systems’ will not be responsible for all planning eventualities and it is recognised that different footprints will have different needs.
These ‘footprints’ share some similarities with the old Strategic Health Authorities (SHAs) that were abolished by the Health and Social Care Act (2012) although SHAs were not expected to make financial savings. Now, cutting costs is the first priority.
A further difference is that, unlike SHAs, ‘footprints’ have no statutory basis or accountability and so are not subject to the same level of scrutiny.
At the time of publishing Delivering the Forward View, there were no legal or other structures that connected the organisations or people involved, no procedures for dealing with disagreements, and little planning expertise among those expected to meet NHS England’s demands (expensive consultancy firms had a field day). And although NHS England could compel health care organisations to comply with their requirements, this was not the case for those bodies responsible for social care – local councils – that were also part of ‘footprints’.
Even so, each ‘footprint’ was asked to produce – with scant notice – a five-year Sustainability and Transformation Plan (STP), showing how local health and social care services will become financially ‘sustainable’ and transformed in line with the Five Year Forward View by 2021.
Sustainability and Transformation Plans (STPs)
In response to Delivering the Forward View, ‘footprints’ were to draw up their draft STPs with considerable secrecy: they were told by NHS England that they could not make their plans public. As NHS England’s Director of Commissioning Operations for North Midlands is reported as saying
“STPs are not meant to be published at all. They should not go to Board meetings. Some of them contain very radical things… These are highly political and highly contentious. Once they’re washed off and the national messages are gathered together, they will be published.”
Nonetheless, despite the secrecy, a number of STPs were leaked or some details became known through Freedom of Information requests. Then, eventually (December 2016), each footprint’s draft STP was published (see https://www.england.nhs.uk/stps/view-stps/), although not necessarily with the relevant appendices giving the important financial details. (These details, when available, were usually pretty impenetrable.)
STPs have to cover all areas of activity currently commissioned by CCGs and NHS England, including specialised services and primary medical care. They also have to ensure better integration with local authority services, including prevention and social care – and who would argue with that? But at heart, STPs have to:
1. Improve sustainability by achieving financial balance: Each ‘footprint’ is expected to cut expenditure and stay within budget through, for example,
1. Improve sustainability by achieving financial balance:
Each ‘footprint’ is expected to cut expenditure and stay within budget through, for example,
2. Maximise efficiency through transforming services:
‘Delivering the Forward View‘ argues that “local NHS systems will only become sustainable if they accelerate their work on prevention and care design”, including the implementation of the new models that increase out-of-hospital care proposed by the FYFV.
Of these priorities, plans for ‘sustainability’ are given the most weight: Of the £1.8 billion earmarked for STPs for 2016/17, a total of £1.6 billion was to be made available to those ‘footprints’ whose plans met the financial control targets agreed with NHS England. In contrast, just £200 million was available for plans to improve efficiency, such as the introduction of new models of care.
Overall, STPs were to become the single application and approval process by which cash-strapped ‘footprints’ would have access to ‘transformation funding’ from 2017/18 onwards. But if an STP failed to show sufficient ‘financial discipline’, not only would the ‘footprin’ be denied access to this funding, it could be put in special measures and have its leaders replaced.
STPs were also to be assessed on additional measures besides finance, such as
- whether they will expand the use of integrated personal budgets (especially for maternity, end-of-life and elective care);
- whether they support the national roll out of the Healthy NHS programme to improve the health of the ‘footprint’s’ workforce; and
- how they will facilitate the implementation of ‘seven day’ services.
iii) Lack of legitimacy
Until recently, the nature and extent of changes that STPs were to bring about would have had been introduced or supported by government white papers, formal public consultation, policy guidance, primary legislation and statutory instruments. In contrast, the transformation of the NHS that STPs and the new care models programme they introduce are only by order of the Chief Executive of NHS England.
What’s more, some of the changes being introduced are at odds with existing legislation:
There are two sorts of change afoot – things which are in the Health and Social Care Act 2012 or other legislation, but which are simply being ignored or changed on the ground; and new ideas which don’t figure anywhere in the Health and Social Care Act 2012 or other NHS legislation, but which are being done anyway. (http://blog.policy.manchester.ac.uk/posts/2016/09/the-nhs-reform-reorganisation-and-the-risks-of-rushing-into-changes-without-proper-scrutiny/)
On top of which, the development of each STP was led by an ad hoc group of people drawn, for example, from CCGs, health service providers and local authorities: as an organisational body, the ‘footprint’ has no formal existence, no legal authority. Nonetheless, NHS England (itself not a statutory body) expects them to impose decisions on organisations that do have statutory authority and accountability (such as CCGs and local authorities). For example, in March 2017 Simon Stevens (Chief Executive of NHSE) told the House of Commons Public Accounts Committee that
We are going to formally appoint leads to the 44 [Sustainability and Transformation Partnerships]. We are going to give them a range of governance rights over the organisations that are within their geographical areas, including the ability to marshal the forces of the CCGs and the local NHS England staff.
In addition, as non-statutory bodies, the new ST Partnerships are not required to undergo internal or external audit. Consequently,
Decision-making is likely to become less transparent. Public consultations, board meetings and formal, open ways to make decisions and to challenge them are likely to be replaced or subverted by backroom deals and horse-trading. (http://blog.policy.manchester.ac.uk/posts/2016/09/the-nhs-reform-reorganisation-and-the-risks-of-rushing-into-changes-without-proper-scrutiny/)
iv) Lack of public involvement and consultation
NHS England, CCGs, NHS foundation trusts and NHS trusts are all under a duty to make arrangements to involve patients in:
- the planning of commissioning arrangements (NHS England & CCGs) or provision of services (NHS foundation trusts and NHS trusts);
- the development and consideration of proposals for changes in the way those services are commissioned/provided which would have an impact upon the range of services available or the manner of their delivery; and
- decisions affecting the operation of those commissioning arrangements/services which would have such an impact.
However, patient involvement in the development of STPs before their submission to NHS England was minimal (see our page on Patient engagement and consultation) In addition, STPs were not developed by CCGs, local authorities or other bodies that are under statutory requirements to consult, but by a new organisational form – a ‘footprint’ – that had no formal existence. This means that their obligations and accountability are unclear.
iv) Lack of financial credibility
There are growing doubts about the credibility of STPs as cost saving measures. In 2017, a review of the 44 ‘footprints’ by the British Medical Association found the claim that STPs would save £26 billion from NHS and social care budgets to be unrealistic:
- most savings depend on the injection of capital up front in order to update or build new health facilities – but this money is not available. It’s estimated that, collectively, ‘footprints’ will need £9.5 billion of capital funding to create the infrastructure necessary to deliver the STPs;
- In the UK there is virtually no evidence to suggest that the large scale reshaping of hospital services will improve NHS finances;
- Although most STPs claim that they can cut costs by moving services out of hospitals, research suggests otherwise, especially within five years;
- to be in line with NHS England’s five year plan, public health and prevention have to be priorities for STPs. However public health and prevention are now the responsibility of local authorities, whose budgets have been seriously cut in recent years;
- it’s expected that savings can be made by providing more care in the community, but many STPs don’t consider where funding for extra work in the community will come from.
In addition, many STPs have been drawn up in large part (and presumably in their own interests) by private consultancy firms like PwC. By the end of 2018, research based on Freedom of Information (FOI) requests found that STPs spent at least £26 million on consultants, with 11 of the 44 STPs each paying over £500,000 on fees. (The total figure is likely to be much larger as some STPs failed to respond to FOIs) – money taken away from providing patient care. The same research identified that STPs created around 550 new, non-clinical jobs, costing £32 million a year: 316 of these jobs attracted annual salaries of up to £142,500.
Accountable care systems and accountable care organisations
Subsequently, Next Steps on the Five Year Forward View (NS5YFV), published by NHSE in March 2017, required ‘footprints’/STPs to morph into Sustainability and Transformation Partnerships (ST Partnerships) to implement the STPs and create integrated (or accountable) care systems.
As with ‘footprints’, these Partnerships have no statutory basis: according to the NS5YFV, they “supplement rather than replace the accountabilities of individual organisations”. How they work will vary across the country – although the government’s preferred ways of integrating services is first through ST Partnerships evolving into accountable care systems (ACSs), with some of these eventually becoming accountable care organisations (ACOs).
In essence, while ACSs can take many different forms, what they have in common is a defined population, a uniform payment system and a focus on health outcomes. NHSE describes an ACS as a locally integrated health system (possibly a part of a ‘footprint’), within which NHS organisations – often in partnership with local authorities – take on collective responsibility for the health of a defined population and the resources to deliver care services, while making savings – for example by targeting patients at risk of avoidable hospital admission. An ACS is expected share savings, as well as risk and any losses, across the system.
ACSs are expected to have more control over the operation of the health system in their area. They are part of a more general shift required by NHSE towards ‘demand management’. This means creating a health service that operates on a fixed budget (based on a set amount per head of the population in a defined area) and controls access to services by limiting treatments to what ‘affordable’ within this budget. This approach runs counter to the basic principle of the NHS – to provide appropriate treatment to all, based on clinical need.
In June 2017, Jeremy Hunt had announced the first eight ‘shadow’ ACSs, as a step towards more integrated care. The eight pioneer ASCs will have to determine what accountable care means for them and shape it out of existing independent organisations (https://www.hsj.co.uk/sectors/commissioning/the-commissioner-next-steps-for-stps-part-1-towards-accountable-care/7016284.article) They will be expected to take the strain off A&E departments, invest in general practice and improve access to quality cancer and mental health services. They have, in principle, agreed a draft Memorandum of Understanding (MOU) with NHSE that will, among other things, sign them up to
- reducing the growth of use of NHS services, and
- achieving a single financial control system – something the MOU acknowledges will “inevitably be bumpy in terms of its impact on the financial position of individual organisations”.
According to the British Medical Association, the main difference between an ACS and an ACO is that, with ACOs, there is a single contract with a single provider that will make most of the decisions about how to allocate resources and design care for its local population, including decisions on changing the method or point of service delivery. This single provider could be an NHS organisation or a private company that may sub-contract other providers. Both sit outside current legislation. With both ACSs and ACOs, individual health care organisations within the scheme are asked to set aside their own interests for the good of a wider system. This may prove difficult, especially as some providers within the system will be private companies whose agenda will be incompatible with this approach. There are also indications that ACOs have found it difficult to develop governance arrangements that are able to hold their partners to account as a collective.
A major element of NHSE’s FYFV is the increased use of IT – e.g. to prevent admissions and support out of hospital care. And both ACSs and ACOs are heavily dependent on software and information technology, for example to store patients’ records, enable the sharing of patients’ data across health care systems, or collect data relating to treatment costs and revenue margins etc. Recent research on ACOs in the USA has found that over $100 billion has been spent on such technology over six years, without any notable return on investment: there is no change in the quality of care or the cost of care that the ACOs provide. Physicians are also increasingly dissatisfied with the software they have to use to support safe, evidence based care. Apparently, one-third of the organisations in a Pioneer ACO Program in the USA are dropping out because, despite their investments in software and information technologies, they are unable to quantify the quality of care and financial risk for managing patients in the ACO.
For more information, see our page on ACOs.
… and private sector involvement:
Updated August 2017
Both the Coalition and current Conservative governments have denied that they have been privatising the NHS, pointing out that health care is still free at the point of use. Others, (such as the King’s Fund) have suggested that claims about privatisation are exaggerated.
These denials are misleading. According to the World Health Organisation,
“Privatisation is where non-government bodies become increasingly involved in the financing or provision of health care services”.
On this basis, the NHS is being privatised in a number of ways, a process that started at least as long ago as the 1980s but has been accelerating since the Health and Social Care Act of 2012 (HSC Act). The NHS, once an integrated and efficient public service, has been effectively privatised by a number of steps:
- creating an internal market, splitting those who purchased services from those who provided them;
- privatising service provision;
- privatising the purchase of services;
- removing the purchaser/provider split.
What’s wrong with privatising the NHS?
There are numerous reasons why the NHS should not be privatised. For example, private companies’ first duty is to make profit for their shareholders, and this profit comes out of NHS funding. The competitive tendering process introduced by the HSC Act is not only massively expensive but wasteful as it introduces unnecessary overhead costs. As a system, it undermines NHS providers. This is because private companies will focus on low risk, straightforward elective (planned) treatment and leave NHS providers to cope with complex specialist care. (Before competitive tendering, NHS providers used surpluses from one area to support the more expensive services they delivered.) On top of which, staff who have to move from NHS to private company employment generally face lower wages and worse terms and conditions, while fragmentation of the system means the bargaining power of the workforce is undermined.
Ways in which the NHS is being privatised
- The creation of NHS Foundation Trusts (FTs): Foundation Trusts are NHS organisations that have been granted a significant amount of managerial and financial freedom – they are no longer accountable to the Secretary of State for Health but to a board of governors. They have the freedom to set their own terms and conditions of service (including salaries), the freedom to decide local priorities, and the freedom to borrow and to set up joint ventures with the private sector. Legally, they are no longer regarded as public services but profit-seeking businesses (although profits are reinvested in the FT, and not handed out to shareholders). They can earn almost up to 50% of their income from non-NHS services (e.g. private patients).
- The increasing number of private companies providing NHS services: There is a long history of bringing in private companies to provide services to the NHS (e.g. cleaning, residential care). However, a radical shift took place after the Health and Social Care Act (2012). This Act brought about a massive restructuring of the NHS – a restructuring based on advice from a private management consultancy company, McKinsey. The Act ordered the NHS to use the private sector: it made it compulsory for those services that potentially could be provided by non-NHS organisations to be put out to competitive tender. Private companies are now involved in a wide range of NHS services, from GP or out-of-hours care to diagnostic services (such as scans or blood tests), elective (or routine) surgery and ambulance services. In addition, private, multinational consultancy firms are being paid considerable amounts of taxpayers’ money for advising NHS providers, such as hospital Trusts, on managing their service.
- The creation of a new market in ‘commissioning services’ (such as planning NHS services, managing contracts with health care providers, and designing the NHS of the future). Much of the work of commissioning, theoretically the responsibility of GPs, became the responsibility of Commissioning Support Units (CSUs). However, from 2015, commissioning services will have to be bought from a list of ‘preferred providers’ that will include some CSUs but is dominated by private, multinational companies. Apart from competing for work that was previously done by the NHS, these companies face conflicts of interest as they may be looking to provide health services while they are in charge of the local health budgets that pay for these.
- Even before the organisational changes brought about by the Health and Social Care Act had a chance to settle, NHS England (NHSE) – without any public debate or mandate – decided that the NHS needed, again, to be extensively restructured.
The first indication of this was NHSE’s five-year plan for 2015-2020, which introduced new ways of delivering services, such as new ‘models of care‘ that provide further, far-reaching opportunities for the private sector. This five year plan is now being implemented by dividing the NHS in England into 44 local health economies or ‘footprints’, each of which had to produce a Sustainability and Transformation Plan (STP) showing how it will cut costs while improving care and integrating health and social care services.
STPs had to be drawn up at ‘at scale and at pace’ – or at breakneck speed – leading many ‘footprints’ to call in private consultancy firms like PriceWaterhouseCooper to help them write their STP. In addition to the millions of pounds received in consultancy fees received, these firms also had the opportunity to slant plans to suit their own interests.
‘Footprints’, now called Sustainability and Transformation Partnerships (ST Partnerships), are required to introduce new ways of delivering services: instead of working independently of each other, organisations within an ST Partnership are encouraged to ‘integrate’ (eg GPs with hospitals, mental health providers and local authorities). They way they are jointly organised to deliver services varies across the country but the three forms currently under development are:
Accountable Care Partnerships (ACPs) – the simplest form and essentially an alliance of NHS providers;
Accountable Care Systems, recently renamed as Integrated Care Systems (ICSs), bringing together commissioners, NHS and private providers, and possibly local authorities; and
Accountable Care Organisations (ACOs) in which an organisation (private or NHS) wins a single contract to commission as well as provide or subcontracts out almost most services within a defined area.
There has been considerable concern – not least from the House of Commons Health Select Committee – that ICSs and particularly ACOs provide new opportunities for the private sector. In response, NHSEngland appears to be back peddling: mention of ACPs (composed of just NHS providers) is a recent development.
- The development of subsidiary companies by NHS Trusts in response to underfunding and growing deficits. These companies are concerned with reducing expenditure, increasing income and, as they can be managed as a separate financial unit, can help protect Trusts from risk. They may be developed in partnership with private companies, but in any event are commercial structures and some fear, as separate units, may facilitate privatisation of NHS assets.
Some NHS staff (typically ancillary staff or staff working on procurement, but potentially clinical staff in future) are being transferred to subsidiary companies, at least initially on their existing terms and conditions of employment. However, new staff are likely to be brought in on lower pay, worse terms and poorer pension arrangements, creating a two tier system that is likely to undermine morale and does nothing to built a cohesive team.
In addition, a subsidiary company be ‘tax efficient’ – unlike an NHS Trust, it can claim back the VAT it pays. This is akin to robbing Peter to pay Paul: it’s not a saving for the tax payer but reduces the money available to the Treasury.
- The use of the Private Finance Initiative: For about twenty years, the Private Finance Initiative (PFI), and its sequel PF2, have been the main ways of funding major NHS projects. For example, if an NHS Trusts needs a new hospital, it sets up a contract with a consortium of bankers, builders and service suppliers who raise the finance through borrowing and issuing shares. The consortium then manages the construction of the new hospital and its maintenance, along with some other services (such as cleaning or security) for the length of the contract – possibly 40 to 60 years. The Trust then pays the consortium for the use of the building and the services provided, often at exorbitant cost, with NHS Trusts paying bankers and other PFI investors at least twice (and in some cases seven times) as much for each new hospital as they would if Trusts could borrow the necessary finances from the government. In addition, PFI deals usually involve NHS Trusts handing over their land to private consortia for them to build on: currently over 100 NHS facilities are owned by banks and other private investors. This land only returns to the ownership of the NHS at the end of the contract, decades or in some cases up to 100 years later. If an NHS Trust defaults on its PFI deal, the land and any buildings on it are retained by the PFI consortium.
It’s unclear at the moment whether the use of PFI will be extended, following the introduction of NHSE’s Five Year Forward View (FYFW) and its requirement for Sustainability and Transformation Plans. For example, the FYFV wants to see the introduction of new models of care, some of which will require new premises in which to bring together a number of GP practices, as well as a range of services currently provided by hospitals and community services. It is unclear at the moment who is going to put up the capital for these new premises, but the fear it could come from more PFIs. (see Sustainability and Transformation Plans.)
- The setting up of a company (PropCo), also known as NHS Property Services Ltd, which now owns and manages much of the land and buildings previously owned by Primary Care Trusts before they were abolished. PropCo is currently publicly owned but could at any time sell all but one of its shares to private investors.
- The commercial use of the NHS logo: Not many patients are aware of how many private companies are providing NHS services because these companies often use the famous blue NHS logo on their vehicles, signage, staff ID etc., and provide little to no indication that they are commercial companies. According to the Department of Health, using the NHS logo will reassure patients that such contracted-out services are provided in line with NHS values. It is unclear how this can be the case, given that privately provided services will be shaped by the first priority of commercial companies – to make a profit for their shareholders.
- The introduction of personal health budgets, which some see as a step towards patients making top-up payments, or towards opening up the NHS to private insurance companies;
- A ‘revolving door culture‘ in the civil service, with a continual exchange of staff between the Department of Health or NHSE and private health companies and consultancy firms, like McKinsey or BUPA, so blurring the boundary between public and private sectors.
- The inclusion of the NHS in trade and investment agreements, such as the Transatlantic Trade and Investment Partnership (TTIP) and the Comprehensive Economic Trade Agreement (CETA). If agreed, TTIP and CETA would give transnational corporations irreversible rights to operate without limit in the NHS and prevent any reversal of its privatisation. (See also our section on TTIP and the NHS.)
These measures are gradually transferring NHS assets, whether these are tangible (e.g. land or tax payers’ money) or less tangible (such as the value of the NHS logo), to the private sector. (See also our section on Marketisation.)
See also our page on private companies involvement in the NHS.