The route to integrated healthcare: part two

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Part two: Commissioning integration

Published 15 June 2016

The Government has stated that it wants to see innovation and that there is no single definition for integrated care. So it is up to local stakeholders to decide on the best fit. Expectations are high. The Cities and Local Government Devolution Act – the wellspring of Devolution – allows for the transfer of statutory powers and functions, such as health commissioning, from Clinical Commissioning Groups (CCGs) to local authorities.

And while local authority budgets have been slashed, health budgets have increased. If no ring-fencing is put in place some observers have expressed concerns that NHS money could be spent on other council activities. In that climate commissioners, in the NHS or local authorities, are keeping pools of cash separate and keeping control of them to preserve sovereignty. And while most NHS providers are allowed to run a deficit to ensure continuity of service, local authorities must balance their books.

However, commissioners will still be able to rely on existing legislation to drive integration. Section 75 of the NHS Act 2006 still underpins pooled funding when working out a local approach to achieving integration. “The onus remains on organisations on the ground – not just in practice but to provide all the structures and governance to make it happen. That can be challenging for organisations that feel they are firefighting and short of money and resources,” says Anne Crofts, a Partner at DAC Beachcroft.

But the 2012 Health and Social Care Act, which opened up the NHS market to independent care providers, also bars providers from being commissioners. Some perceive this as a barrier to achieving what Crofts calls “the Holy Grail of integration”, the development of Accountable Care Organisations (ACOs) as standalone entities holding a capitated budget which could bring together primary, secondary care, mental health and social care. Crucially, to be really effective, ACOs would also need to be able to commission as well as provide services.


“Any ACO or Accountable Care System has to stay on the right side of the line between provider and commissioner. CCG as a commissioner can’t currently delegate its commissioning function to an ACO provider,” says Crofts, although it could in principle be possible for the ACO to manage some of the CCG’s functions.

Then there are legal and financial challenges to establishing an ACO that sits outside of the “NHS family” of public authorities and is subject to private law and tax rules. GP practices have always held this status, but bringing them together in new companies with traditional NHS providers brings new issues, such as the ability to recover VAT and ensure appropriate insurance cover, for the NHS parties. It may take some time for these issues to be worked through at a central level.

Good governance is vital where CCGs want to come together, adds Hamza Drabu, DAC Beachcroft Partner. “In some places large numbers of CCGs want to collaborate with potentially multiple voices around the table. Managing those relationships and ensuring they have sufficient governance expertise support to ensure effective and lawful decision-making is vital. The consequences of getting it wrong, not consulting properly for example, could be a judicial review.”

While new legislation to address this conundrum is unlikely, NHS and social care leaders want more political support so they can forge ahead in forming new collaborations without fear of legal challenge.

Former NHS Confederation Chief Executive Mike Farrar recommends a dose of pragmatism. “There are issues that relate to the legal basis of what we are trying to do, in many areas – European laws on commissioning and procurement, the establishment of organisations that take money for primary as well as secondary care, and transforming general practice where there are national contract guarantees. Getting the legality of it right is very important. The way that I would see it is that we should try to get the things in place and require the lawyers, as we go along, to make that legal.”

Farrar cites the example of Personal Medical Services contracts which were introduced in 1998, when GPs were parachuted into practices with serious staff shortages. “At the time that was ultra vires but the lawyers and courts made it right. So if we want people to innovate we need them to do the right thing and then demand quickly that the law is adjusted or amended. Of course the issue that then comes into play is that if it is secondary legislation i.e. regulation change, that can be adjusted very quickly but if it is primary legislation that is more difficult. That is where someone has to take a view as to what level of risk we take.”

To discuss the issues raised in this section, contact Anne Crofts on +44 (0)20 7894 6531 or

Part two: commissioning integration

Part three: contracting and corporate structures

Part four: procurement and competition





Anne Crofts

Anne Crofts

London - Walbrook

+44 (0)20 7894 6531

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