Principal provider (contractor) and subcontracting model (Prime Vendor or Prime Contractor model) A single provider takes a responsibility for providing or sub-contracting care within a pathway No organisational change required, assuming an existing provider becomes the principal provider, and all other existing providers can play a role in care provision No (HR/VAT) associated with implementation Extensive contracting arrangements required within and between principal and contractors levels of risk, with principal providers taking on most risk Capitated outcomes based contracts (COBICs) Incentivises performance by linking payment to outcomes Collaborative approach, particularly around risk sharing No organisational change required Links well with the desire to move to a capitation funding model (see later) Performance incentives may encourage adverse competition Absence of a defined structure brings reliance on good relationships between partners, therefore may not be sustainable Difficult contracting arrangements as each entity is responsible for delivering its own services but jointly accountable for the delivery of outcomes Requires understanding of total spend in order to calculate capitations Funding models Key benefits Key Payment by Results Encourages organisations with above average costs to lower these towards the average Helps to promote provider productivity Some scope for varying national prices to promote innovation and integrated care Easy to implement as system is already in place Places greater focus on the use of specialist care, therefore may detract investment from preventative and community based approaches Based around rewarding activity rather than outcomes Does not encourage generation of savings across the system, risk sharing or integrated care Current system works best for most providers, who may be unwilling to move away from this approach Block/ rolling contracts Promotes stability for commissioners and providers as budget is set at the start of the year May encourage providers to innovate when working in a fixed budget Does not incentivise productivity or savings across the system Value of contract is not usually linked to the level of needs/ risk within the local population
Capitation Assists in avoiding inappropriate use of specialist care by encouraging the system to innovate and share risks Can be used to specify desired outcomes for a specific disease or pathway group, and expanded if successful Approach has been tried and tested in Kaiser Permanente Complex to develop for local population, particularly when a risk profile is used Implementation of this model requires providers to be integrated or working in an integrated way Cap and collar Promotes stability for commissioners and providers as budget is set at the start of the year Could provide an interim solution as it is relatively easy to implement, whilst moving to a more sophisticated model based on need May encourage providers to innovate whilst also incentivising productivity and savings in the system May require providers to take a greater share of the risks Value of contract is not usually linked to the level of needs/ risk within the local population Pooled budgets Promotes integrated working Assists with expenditure control and helps to avoid ‘cost shunting’ Relatively straightforward to implement Overspend may occur and dealing with this could be difficult if partner priorities change Value of contract is not usually linked to the level of needs/ risk within the local population Aligned budgets Flexible approach which can be used outside of formal partnerships and when there is a possibility of overspend, cost-shunting or changing priorities Relatively straightforward to implement More bureaucratic than a pooled budget Does not promote more integrated working Value of contract is not usually linked to the level of needs/ risk within the local population Reproduced from West Cheshire, Community Budget programme in GM Community Budgets Programme Health and Social Care Theme Narrative Report 2012-11-12