Alliance Contracting in the NHS
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Alliance Contracting in the NHS

An acute NHS Trust, a mental health and community services NHS Trust and GP Federation ("the  Providers") were seeking advice on the development of one of the first alliance contracting regimes in the NHS.

This involved commissioner and provider organisations delivering community based elective care across two large CCG areas, collectively known as the "Alliance Participants" or the "Alliance", which included:

  • Two Clinical Commissioning Groups;
  • An acute NHS Trust;
  • A mental health and community services NHS Trust; and
  • A GP Federation with membership of local GP providers.

Key features

We were instructed to advise the acute NHS Trust, the mental health and community services NHS Trust and GP Federation ("the  Providers") on the development of one of the first alliance contracting regimes in the NHS. The key aims of the venture were to:

  • Develop integrated ways of working across the Alliance based on a shared risk and reward framework, unanimous decision making, aligned objectives and a requirement to act in a way that was 'Best for Project';
  • Ensure that community based elective care is delivered in the most clinically appropriate setting;
  • Remove duplicate or unnecessary steps in existing patient pathways and improve communication across health organisations within the region;
  • Increase value for money of existing services and achieve cost savings across the local health economy; and
  • Make better use of existing real estate and facilities.

A collaborative approach was required for this project to complete. To create an alliance contracting model, there is a requirement to remain within the boundaries of the mandatory framework for NHS contracts. It was necessary for the Providers to negotiate the suite of contractual documents presented by the Commissioners within that mandatory framework, whilst also seeking to reflect the alliance arrangements. The contracts included:

  • Alliance Agreement – an overarching agreement entered into by each of the Alliance Participants which sets out the 'rules' of how the Alliance should work, how decisions are made and what each party's responsibilities are as part of the Alliance. This Agreement is also the mechanism by which services are moved from one provider to another (e.g. from the acute NHS Trust to the mental health and community services NHS Trust) by virtue of a Work Allocation Schedule.
  • In order to incentivise delivery of cost savings in line with the Alliance Objectives, the model included an opportunity for incentive payments to be released where it can be shown that the cost of providing particular services (utilising the NHS costing guidance) is less than the amount paid under the National Tariff, with such incentive payments to be re-invested into the services.
  • Services Contracts – individual service contracts between each Provider and the Commissioners (based on the NHS Standard Contract) set out the detail of all services being delivered by the Providers at the outset of the Alliance. The Provider responsible for each individual service line (e.g. diagnostics) is identified in the Work Allocation Schedule included in the Alliance Agreement.
  • Lease of Assets – an agreement entered into by the acute NHS Trust as agent for the Providers and one of the CCGs on behalf of both Commissioners, which details the terms on which various assets owned by the CCGs and third parties are leased to the respective Provider(s) delivering the services.

Overcoming the challenges

The overarching principle of the Alliance is for all Alliance Participants to act in accordance with the 'Best for Project' principle. Clarity on the Alliance's goals, objectives, investment fund and KPIs (including the consequences of succeeding or failing to deliver them) is crucial in order to minimise conflict between them and any Commissioners' rights to override the 'Best for Project' requirement in certain circumstances.

At present, the NHS Standard Contract must be used by CCGs and NHS England when commissioning certain health services. However, this form of contract may only be held by one provider and is not drafted (and cannot be amended) to allow for multiple providers under the same contract. For this reason, the separate Alliance Agreement and Work Allocation Schedule is necessary to promote an alliance approach.

To achieve true integration of the services, the parties would ideally share risk and reward via pooled budgets. However, due to the structure of the NHS Standard Contract, as well as separate funding lines, the Alliance Participants retain some separation under this model and, as consequence, need to consider limitation of liability and indemnity provisions within the Alliance Agreement. 

The Providers also had to consider the legal and commercial risks associated with the application of TUPE upon commencement of the contracts and in respect of any future reorganisation of services under the Alliance.

For further information on the related models of care:

Primary and Acute Care Systems

Multi-speciality Community Providers

Enhanced Health in Care Homes

Urgent and Emergency Care Networks

Acute Hospital Collaborations

Accountable Care Organisations

Commissioning Integration