The route to integrated healthcare: part three

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Part three: Contracting and corporate structures

Published 15 June 2016

Integrating health and social care is like assembling a giant set of three dimensional jigsaws across the country. Each local health and social care economy will have its own specific forms and functions within it, but each will need to come together to deliver the aims of the NHS Five Year Forward View (5YFV).

Ideally, the bulk of the commissioning role of the Clinical Commissioning Group (CCG) would be delegated to providers holding a capitated budget in some form of Accountable Care System (ACS) for them to manage the supply chain to provide integrated services. This would leave NHS England and CCGs with very strategic roles, saying ‘here is the budget, these are the desired outcomes, off you go’.

Some of the Vanguards are looking to see if providers in an accountable care structure can hold and manage capitated budgets. DAC Beachcroft Partner Hamza Drabu feels that with community, primary care, mental health, social services and acute services all operating under different contracts and payment models, “to try to aggregate and make sense of them and devise from it a unified capitated budget is challenging, but possible”.

ACSs formed as standalone corporate entities may run into tax issues - particularly around recovery of VAT, which is being looked at on a national level to find a solution.


In the meantime, Drabu says that a number of local health systems are considering setting up “companies limited by shares, or Limited Liability Partnerships (LLPs) which come with the usual tax and pensions issues, and regulatory questions that need to be worked through”.

With these questions in mind, Drabu advises: “Form must follow function when designing new models of care. Start by thinking about what services you wish to include in the ACS, your clinical model and your desired outcomes, rather than starting with legal form. That way, you are more likely to achieve your aims and outcomes.”

Looking at one example of a Care Homes Vanguard that has brought together a NHS Trust, GPs, a Foundation Trust, the local authority and the voluntary sector, there are number of lessons that can be learned.

The Vanguard is considering an alliance arrangement – not a genuine risk share – but a sort of halfway house approach that is gaining favour.

It starts with a memorandum of understanding (MoU) with a view to developing and defining roles and responsibilities of individual partners and, if all goes well, formalising the legal arrangements as an alliance agreement.

But the key is in building relationships and aligning ideas and aspirations at the outset.

Many of these alliance arrangements can bring together existing individual contractual arrangements. “There can be a complex web of contractual arrangements in place with different providers and commissioners; alliance arrangements can wrap around these contracts already in place,” says Drabu.

Key to the integrated planning of ACSs are the 44 leaders of Sustainability and Transformation Plan (STP) “footprint” areas covering England, who are charged with breaking organisational barriers, bringing together all stakeholders and developing a local STP which must demonstrate how each area will pursue the “triple aim” set out in the 5YFV – improved health and wellbeing, transformed quality of care delivery, and sustainable finances.

Yet there are issues to resolve: “How will STP governance fit with CCG governance? What will the role of the STP footprint be to drive integration? And will there be winners and losers?” says Drabu.

To discuss the issues raised in this section, contact Hamza Drabu on +44 (0) 20 7894 6411 or

Part two: commissioning integration

Part three: contracting and corporate structures

Part four: procurement and competition





Hamza Drabu

Hamza Drabu

London - Walbrook

+44 (0)20 7894 6411

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