EXECUTIVE SUMMARY
B
leddyn Rees is a lawyer working in the healthcare sector, acting as an advisor to both purchasers and providers within the ecosystem. Drawing up a contract is what
lawyers call ‘risk allocation’. Rees explained that in healthcare, the concept of risk is not easily understood, and so healthcare is in its infancy in terms of contracting compared to many other sectors. There are many examples of contracts that have failed because the risk transfer between the two parties is fundamentally flawed. Integrated care needs to move on from
just meaning primary and secondary care i.e. GP services and hospital services. In reality, social care, education and housing services need to be integrated together. From a government perspective the purchase and provision of these services needs to be thought of as a whole. So, how do you contract for integrated
services? The first typical payment model that exists in the market place is block grant type funding. In this case the government will give a certain amount of money to a hospital and the hospital runs itself on this grant. The problem with this is there is no incentive to be efficient. The UK tried to solve this using payment by results, but this has led to manipulation of the system to make more money. Traditional health contracts consist of a
commissioner overseeing a whole series of healthcare providers in areas such as acute care, primary care and social care. These can be private sector, public sector or both. The problem with this setup is it involves a large number of separate contracts, each of which must be coordinated by the commissioner to deliver effective integrated care. Managing these types of complex contracts is not an easy skill, and the public sector currently lacks the experience do so effectively. This lead to the forming of an alliance. The overarching relationship in an alliance is a
series of organisations collaborating to deliver integrated care. Beneath this overarching relationship are bilateral contracts between parties that deliver the services, these contracts can be different – block funding, payment by results etc. The model is thus infinitely flexible. With one contract at the top, you have a shared risk-reward framework, you can align objectives and financial incentives, and you have collective accountability. This contractual framework can bring about
massive change in innovation. At the heart of these alliances, mature relationships between organisations have to be nurtured, and it is
“With an alliance, you have
a shared risk-reward framework, you can align objectives and financial incentives, and you have
collective accountability”
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