The document discusses the challenges facing the NHS, including an aging population, rising rates of chronic diseases, increasing costs and resource constraints. It argues that the NHS needs bold, transformative solutions to reshape services at scale and pace. New commissioning approaches like outcome-based population commissioning are proposed to incentivize integrated care, better outcomes and value. Examples from places like Staffordshire aim to develop new payment models and contracts with lead providers to coordinate care for defined populations.

1. The Challenge for the NHS
NHS Commissioning & Procurement
29 April 14
Bob Ricketts
Director of Commissioning
Support Services Strategy

2. The Challenge for the NHS
1. The Challenge
2. Where should the NHS focus its efforts?
3. The pivotal role of commissioning
4. Commissioning & procurement for better
outcomes

3. 1. The Challenge
NHS faces unprecedented challenges to its sustainability:
•Demographic pressures – an ageing population
•Demand – incidence of LTCs (diabetes, dementia)
•Rising expectations – patients, public, politicians
•Quality – failures & gross variation
•Outcomes – still often poor comparatively & highly variable
•Resource constraints (potentially £30bn)
•Outdated & over-stretched delivery systems (across primary,
community & secondary care)
The NHS & its partners therefore need to find bold, transformative
solutions that reshape services at pace and at scale.

4. 1. The Challenge
“Nye Bevan’s NHS has failed to adapt quickly enough to changing
demography, lifestyles and disease profiles, as well as to
technological advances and rising public expectations. We face
decades of rising demand for health services from an ageing
population with a mix of long term chronic conditions, many of which
spring from an obesity epidemic.
AND
“We have … a health and care system that is both unnecessarily
expensive and poorly designed to meet modern needs”
Solving the NHS care and cash crisis: Routes to health and care
renewal
Norman Warner & Jack O’Sullivan March 2014

5. 1. The Challenge
“Health and social care now cost the public purse about £130 billion a
year … Yet services often fail to meet health needs properly for frail
elderly people, those with chronic conditions and around
preventative healthcare.”
“Hospitals are treating, in expensive settings, people who should
be – or should have been – cared for in more suitable and less
costly environments. Research studies suggest that 30 per cent or
more of the patients occupying acute hospital beds – most of them frail
and elderly – should not be there.
“This inappropriate care delivery model, largely unreformed since
1948, inflates NHS costs and limits many people’s potential to live
longer and healthier lives, given our tax base, the state of the public
finances, changing population needs and the implications of scientific
development.”
Norman Warner & Jack O’Sullivan March 2014

6. 1. The Challenge
“An affordability gap is opening up of at least £30 billion a year –
possibly more – within a decade. The status quo is becoming
economically unsustainable – given our tax base, the state of the
public finances, changing population needs and the implications of
scientific development. Meanwhile public expectations of services
continue to rise. We face a perfect storm.”
“The health challenge is to narrow a widening gulf between people’s
potential for longer, healthier lives and the disappointing reality of
what too many achieve. But any solution must also be affordable
and sustainable.”
Norman Warner & Jack O’Sullivan March 2014

7. 2. Where should the NHS focus its efforts?
Simon Stevens inaugural speech 1st
April:
•“[creating] the health system that can solve for the really
big challenges – dementia, obesity, inequalities, mental
health and well-being, personalisation and empowerment”
•“An ageing population with more chronic health conditions,
but with new opportunities to live as independently as
possible, means we’re going to have to radically transform
how care is provided outside hospital … our traditional
partitioning of health services no longer makes much
sense”

8. 2. Where should the NHS focus its efforts?
Simon Stevens inaugural speech 1st
April:
•Transformation
•Integration
•Personalisation
•Empowerment
•Partnership – “the power of place”
•Quality

9. 3. The pivotal role of commissioning
To deliver great outcomes for patients & value for taxpayers,
we need an excellent commissioning system:
•aligned around need & place
•clinically-led, driving-up quality now & leading service
transformation for the future
•enabled by at-scale, professional commissioning
support
One year on, we’re making good progress on each of
these …
but we need to accelerate & seize the opportunities to use
innovative commissioning & contracting to drive
transformation

10. 3. The pivotal role of commissioning
Simon Stevens inaugural speech 1st
April:
“We should also be expanding the commissioning impact
that high performing Clinical Commissioning Groups can
have – and certainly not wasting time on yet another drawn out
debate about whether there are too many or too few of them.
Instead let’s focus on actually making commissioning work.
Using the full tool kit that a National Health Service can in
theory provide. And in doing so, let’s test new commissioning
approaches – including in some geographies and for some
services bringing together primary, community, and specialist
care.”

11. 3. The pivotal role of commissioning
The new commissioning architecture offers unprecedented
opportunities for innovation:
•Clinically-led commissioning
•Strengthened partnerships with local government, especially
around ‘place’
•Renewed focus on integration (Better Care Fund)
•Opportunity to re-design primary care (Primary Care+)
•Growing regulatory support for innovative commissioning &
contracting’
•Strategic planning (the ‘5 year plans’ – opportunity to “work back from
where we want to be”, not incremental steps from where we are)

12. 3. The pivotal role of clinical commissioners
Clinically-led decisions are the cornerstone of the commissioning
system with every GP practice across England a member of the new
clinical commissioning groups. Patients benefit from the unique role
of general practices which are based at the heart of local communities
and have an expert knowledge of local people and their needs and the
variation in the quality of local services. Clinicians are able to work with
their colleagues and partners in redesigning outdated services using their
knowledge of clinical risk, best practice and improved quality and
outcomes.
Lean and patient focused CCGs can draw on evidence-based practice to
deliver services that offer the best outcomes for patients, adding value
through effective local clinical leadership and engagement

13. 4. Commissioning for outcomes
Simon Stevens – “let’s test new commissioning approaches”
Why?
•Traditional approaches to commissioning & contracting are unlikely
to incentivise or enable bold, transformative solutions that reshape
services at pace and at scale
•Hard to challenge existing models of delivery, working &
relationships
•Organisational silos impede effective joint commissioning & budget
pooling
•Contracts & payments focus on activity & individual institutions, not
the whole delivery system; perverse incentives
•Hard to attribute (& reward) improvements in outcomes to
fragmented cohorts of individual providers
•Difficulty of securing ‘cashable savings’ from ‘upstream’ changes &
interventions

14. 4. Commissioning for outcomes & value
“let’s test new commissioning approaches”
We need approaches which …
•Incentivise high quality integrated pathways which deliver high
quality ‘joined-up care’
•Make the best use of resources (NHS-funded, LAs, communities,
users)
•Reward delivery of the best outcomes for users, carers &
communities (social value)
•Address demand risk explicitly
•Catalyse new configurations/partnership of providers
•Include, not marginalise, non-NHS partners

15. 4. Commissioning for outcomes
What’s on offer?
•Outcome-based population commissioning (‘OBC’): a key vehicle to
drive transformation & secure better outcomes, service integration and
value for specific populations or groups (e.g. frail older people with
multiple, complex problems; EoLC), or re-balance incentives by paying for
outcomes
NB: Often conflated with commissioning for outcomes –
OBC is one end of a spectrum of approaches

16. 4. Commissioning for outcomes: OBC
What is OBC?
Work in progress:
Draft narrative on OBC
NHS CA Quality
Working Group
(Paul Husselbee)

17. 4. Commissioning for outcomes: OBC
Integral to core OBC model are:
•Identifiable & measurable outcomes
•That those outcomes can be linked to desired behaviours
•That those behaviours can be incentivised through payment
systems
•Spans primary, community & secondary care (compatibility with
‘Primary Care Plus’ models?)
•At-scale for populations (but can be done on a smaller scale,
introducing a % payment for specific outcomes)
•More mature & long-term relationship with providers (7+ year
contracts)
•‘Lead provider’ or ’Alliance’ contracting

18. 4. Commissioning for outcomes: OBC
Key components of fully-developed OBC:
•Population-based (frail older people, multiple complex problems;
EoLC) or major pathway(s) (MSK)
•Outcome-focused capitation payment
•‘Lead provider’ or ‘alliance’
•Provider(s) co-ordinates care planning & delivery
•Provider(s) takes on much of the demand risk
Still emerging, but examples: Bedfordshire (MSK),
Cambridgeshire (range of services for older people), Staffordshire
(cancer & EoLC for 1m+), smaller-scale: Oxfordshire & Milton
Keynes (sexual health; substance abuse)
Peterborough Social Impact Bond (re-offending)

19. 4. OBC - Staffordshire:
Leading-edge exemplar …
•Collaborative: 5 CCGs + Macmillan Cancer Support (strategic partner)
+ NHS England + CSU
•Outcome-focused & integrated services:
•At scale: key services for 1m people across the footprints of people 3
acute provider trusts. The biggest contracts yet tendered for integrated
NHS care
•Transformational : patient-centred re-design; joined-up care
•Innovative contracting: lead provider; 10 year duration

20. 4. Commissioning for outcomes: OBC
Assumes:
•Identifiable & measurable outcomes
•Those outcomes can be linked to desired behaviours
•Those behaviours can be incentivised through payment systems
•‘Lead provider’ or ’Alliance’ contracting
•Spans primary, community & secondary care
•More mature & long-term relationship with providers (7+ year
contracts)
•At-scale for populations (but can be done on a smaller scale,
introducing a % payment for specific outcomes)

21. 4. Commissioning for outcomes: OBC
Upside:
•Potential to deliver sustainable whole-system service transformation
•Better care co-ordination & planning> more ‘joined-up’ care, better
outcomes & value
•Strong synergy with integration
•Can catalyse & incentivise providers to work differently
‘Urban myths’:
•Doesn’t preclude personalisation or choice – embed in requirement for
‘lead provider’
•Shouldn’t freeze-out SME & SE participation - enable through sub-
contracting

22. 4. Commissioning for outcomes: OBC
Downside:
•Resource-intensive
•Long lead times
•Clarity re desired outcomes & behaviours crucial
•Requires commissioner collaboration at-scale
•Effective user engagement from the outset crucial
•May require substantial (and challenging) market development – will
be difficult if existing relationships are immature/tense
•For most commissioners, probably one OBC project at a time
•Funding double-running costs & deferred payment (SIBs?)
Is it the right approach for the problem? “Sledge-hammers &
nuts”

23. 4. Commissioning for outcomes: OBC
Innovative contracting models are emerging:
Lead Provider/Prime Contractor:
An arrangement where the commissioners issues a contract for a
care pathway to a single lead provider, and the lead provider is
then responsible for either providing, or subcontracting, the
care specified. It is suggested that this approach to contracting is
best suited to the complexity required to integrate care and enables
commissioners to bring together multiple providers of care into a
single pathway.

24. 4. Commissioning for outcomes: OBC
Alliance contracting:
An approach used in healthcare in New Zealand, which involves
commissioners issuing a single contract with a number of providers,
who share a common performance framework with collective
measures. This approach cannot be taken easily within the current
contract rules, but some areas are also starting to exploring it. In
this approach there is collective accountability for services
delivered, with providers judged on performance as a whole rather
than as individual components, thereby incentivising cooperation to
drive successful delivery of services. This approach was used in
the Year of Care capitation tariff pilots.
•Right Care Case Book, Accountable Lead Provider, 2012
•PWC, NHS@75: Towards a Healthy State, 2013

25. 4. Commissioning for outcomes: OBC
Attribute Lead Provider Alliance
Fit local culture Requires significant trust &
effective partnering
Probably easier to
implement where
relationships less
mature/damaged
Shift in risk from
commissioner
Substantial post-
mobilisation
Significant post-mobilisation
Requirement for
commissioners to co-
ordinate care & providers
Low Low for care
Low-Medium for providers –
accountability &
procurement processes
Resource intensity & lead
times
High High
Proof of concept in NHS Limited Very limited
Evidence base in NHS?
Evaluation?
Minimal Nil?
Fit NHS Standard Contract Can be accommodated Not currently
Deferred funding/pump Major problem Major problem

26. 4. Commissioning for outcomes: priorities?
• Accessible information on who’s doing what?
• Dissemination of early learning on best practice
• ‘Bulldozing’ the perceived & real blocks
• Optimising the opportunities (Better Care Fund; Innovation
Pioneers) for spearheading innovative approaches & forms
• Evaluation
Just do it!
Simon Stevens
“let’s test new commissioning approaches”