A single provider takes a Extensive contracting arrangements responsibility for providing or required within and between principal Principal sub-contracting care within a and contractors provider pathway levels of risk, with principal (contractor) No organisational change providers taking on most risk and required, assuming an subcontracting existing provider becomes model (Prime the principal provider, and Vendor or all other existing providers Prime can play a role in care Contractor provision model) No (HR/VAT) associated with implementation Incentivises performance by Performance incentives may linking payment to outcomes encourage adverse competition Collaborative approach, Absence of a defined structure brings particularly around risk reliance on good relationships sharing between partners, therefore may not Capitated No organisational change be sustainable outcomes required Difficult contracting arrangements as based Links well with the desire to each entity is responsible for contracts move to a capitation funding delivering its own services but jointly (COBICs) model (see later) accountable for the delivery of outcomes Requires understanding of total spend in order to calculate capitations Funding models Key benefits Key Encourages organisations Places greater focus on the use of with above average costs to specialist care, therefore may detract lower these towards the investment from preventative and average community based approaches Helps to promote provider Based around rewarding activity Payment by productivity rather than outcomes Results Some scope for varying Does not encourage generation of national prices to promote savings across the system, risk innovation and integrated sharing or integrated care care Current system works best for most Easy to implement as providers, who may be unwilling to system is already in place move away from this approach Promotes stability for Does not incentivise productivity or commissioners and savings across the system providers as budget is set at Value of contract is not usually linked Block/ rolling the start of the year to the level of needs/ risk within the contracts May encourage providers to local population innovate when working in a fixed budget
Principal provider (contractor) and subcontracting model (Prime Vendor or Prime Contractor model) A single provider takes a responsibility for providing or sub-contracting care within a pathway No organisational change required, assuming an existing provider becomes the principal provider, and all other existing providers can play a role in care provision No (HR/VAT) associated with implementation Extensive contracting arrangements required within and between principal and contractors levels of risk, with principal providers taking on most risk Capitated outcomes based contracts (COBICs) Incentivises performance by linking payment to outcomes Collaborative approach, particularly around risk sharing No organisational change required Links well with the desire to move to a capitation funding model (see later) Performance incentives may encourage adverse competition Absence of a defined structure brings reliance on good relationships between partners, therefore may not be sustainable Difficult contracting arrangements as each entity is responsible for delivering its own services but jointly accountable for the delivery of outcomes Requires understanding of total spend in order to calculate capitations Funding models Key benefits Key Payment by Results Encourages organisations with above average costs to lower these towards the average Helps to promote provider productivity Some scope for varying national prices to promote innovation and integrated care Easy to implement as system is already in place Places greater focus on the use of specialist care, therefore may detract investment from preventative and community based approaches Based around rewarding activity rather than outcomes Does not encourage generation of savings across the system, risk sharing or integrated care Current system works best for most providers, who may be unwilling to move away from this approach Block/ rolling contracts Promotes stability for commissioners and providers as budget is set at the start of the year May encourage providers to innovate when working in a fixed budget Does not incentivise productivity or savings across the system Value of contract is not usually linked to the level of needs/ risk within the local population
Contracting%20models.docx