New models of care

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 (

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

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 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” (


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 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

May  2017

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