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What are provider network governance options?


Delivering integrated care requires single multidisciplinary teams with all the relevant skills as described in Chapter 6: How do we innovate a new model of care working with users and carers? and that can be held to account for the outcomes described in Chapter 5: What are the outcomes to be delivered? This requires more than an effort in coordination of front line professionals.

For these teams to be successful, they require a clear line management structure, which needs to be supported by a formal network structure of provider organisations so that teams can be performance managed and resources allocated to where they are needed most. The working group considered six governance structures for provider networks that could be used to support integration and improved care models.

The available structures vary chiefly in the degree of integration they support and the difficulty of setting them up. In addition, some face regulatory constraints that limit their applicability.

Structures that facilitate lower levels of integration typically

  • Are easier to implement
  • Maintain existing care models and processes where they have been successful
  • Preserve existing skill sets in the environments they have been built for
  • Increase the ability of the system to support competition between providers

However, structures that increase levels of integration typically

  • Improve the ability for single decision-makers to reallocate funds to deliver the best possible care irrespective of the setting it is provided in
  • Create a single point of accountability to commissioners
  • Increase the ability for shared services to improve the effectiveness of the whole system
  • Reduces the degree to which provider self-interest motivates decision-making


A working group of providers, commissioners and lay partners discussed the proposed options for provider network structure. They were strongly in favour of moving towards a more integrated organisation, in the form of a corporate joint venture with other providers. In fact, many of the service user representatives were surprised to learn that care is not already provided in this way.



Providers agree to cooperate informally where there are benefits for the population.

There are no formal governance structures and all decision-making is by consensus.This option does not support the vision or ambition for Whole Systems Integrated Care. It could support some new interventions and models of care but would not enable capitated budgets. It was therefore discounted as a viable option by the working group.


See Supporting Material A: Discussion 
Paper Compendium for more detail and for case examples of the models



Providers are commissioned separately for a service. They agree contracts between themselves to manage financial flows, joint decision-making, sharing staff and information governance. No new organisation is set up and individual partners stay accountable for clinical outcomes.


  • Straightforward to set up, even when it has significant goals such as sharing staff, because there are no new legal entities that need to be established
  • No tax implications or competition law issues, because it makes use of standard contracts instead of shared ownership


  • Collectively managing multi-disciplinary teams is harder because there is no new legal entity or single organisation clearly responsible for hosting, shared staff and shared management
  • Difficult to amend resource flows within the life of the arrangement as each provider retains service contract with commissioners, which makes it harder to innovate with models of care
  • Participants can not ring-fence the rest of their organisation from any legal or financial liabilities arising from the venture


Prison healthcare

Primary and secondary healthcare in prisons is contracted using a cooperative joint venture. Each provider retains its own contract with commissioners. In addition, all providers and the commissioners enter into an ‘overarching contract' which is a simple cooperation agreement. This obliges the providers to cooperate with each other and nominates a ‘coordinating provider'. The coordinating provider roles include being the single point of payment receipt from commissioners for all the providers and monitoring performance against KPIs set out in the contract.

This model could be adopted for care out of prisons. The provider network would need an overarching contract that nominates member providers to perform certain roles, such as line management of a multidisciplinary team.

Source: DAC Beachcroft



A new organisation negotiates one contract and receives and distributes payments to owner/partner organisations. It could also manage shared services. Individual partners stay accountable for clinical outcomes.


  • The new organisation is able to manage multi-disciplinary teams, can hold contracts in its own right and is able to provide shared services such as IT, administration and accountancy services
  • This model allows shared control across providers as peers because of the non-hierarchical structure
  • It allows more flexibility to adjust working arrangements without recontracting because the shared organisation is co-owned
  • The new organisation that can been ‘seen and felt' which gives recognition to seriousness of new provider network


  • The new organisation might create an environment in which accountability and control are too distributed and no-one is really in charge
  • Setting up the new organisation would take time. This is a novel approach and performance bonds, separate contracts with member providers and/or use of Pioneer status will be needed to comply with NHSE standard conditions
  • NHS Trusts would need to use Pioneer status to secure approval for participation in a corporate joint venture from the DH and the National Trust Development Agency
  • VAT would be payable if the joint venture provided any social-care services. This is because there is an exemption for VAT for medical services and for services provided by public bodies. However, to integrate social-care the new organisation would need to hold a contract for non-medical services. There are some ways to avoid this.
    • Register the joint venture as a public body, which is difficult, time-consuming and would require Pioneer status to increase chance of approval
    • Register the joint venture as a charity, but would require a board of trustees who were independent of the providers necessitating a loss of control.
    • Separate out the contract for non-medical services and have it held by the providers, but managed by the joint venture. Pioneer status would need to be used to agree that these arrangements do not constitute a partnership under which VAT would still be payable.


A fuller discussion of the legal options concerning VAT can be found in Supporting Material G: Legal Issues Compendium


Bangor Beacon Community Accountable Care Organisation (ACO) is a partnership of 9 hospitals in Eastern Maine in the United States that serves 22,000 people benefiting from Medicare (all over 65). The care model focuses on people with long-term conditions. The ACO holds providers to account for the total care costs, and has transitioned to a capitation model where 50% of reimbursement is from risk share contracts. The key changes the ACO has coordinated across partners are:

  • Adding nurse case managers to each primary care practice – they are responsible for developing care plans, assessing the need to involve other professionals, coordinating transitions of care, providing patient education and overseeing home care services
  • Improved information systems: Patients have electronic health records which support:
    • Automatic alerts that are sent to nurse case managers every time someone visits A&E or is admitted to hospital. This supports the case manager immediately begin coordinating services to support discharge and alert the GP.
    • Electronic home monitoring so team can remotely track patient vitals (e.g., pulse, blood pressure) remotely and support automatic medicine dispensers
  • Improved performance management systems such as analyses to identify best practice that can be shared and regular meetings supported by up-to-date population outcomes information
  • The ACO has had positive impact on care quality and costs, including:
  • Improved diabetes outcomes with a 45% decrease in the percentage of patients with HbA1C >9
  • Improved chronic health failure outcomes with 9% increase in percentage of patients with blood pressure under 130/80
  • A&E visits and hospital admissions from the target group have decreased ~40% twelve months after the new interventions
  • 3% total cost savings in the first three quarters as a Pioneer ACO operations.



A single existing provider is commissioned for a population group, receives a capitated payment on behalf of the network and then subcontracts services to other providers in the network. The prime contractor takes on financial accountability, coordinates care, and manages integrated services.


  • The prime contractor provides one clear point of accountability to commissioners
  • The prime contract can create a management structure for multi-disciplinary teams, drawing contractors into those teams.
  • The model is well tested in the CCG contracting environment and compatible with NHSE standard terms
  • Providers can allocate performance risk amongst themselves
  • It is easier for smaller organisations, like third sector organisations, to provide health services than through current tendering processes which could favour larger providers


  • The model relies on one provider being willing and able to take on increased risk
  • One organisation needs to take primacy which could create conflict with partners
  • The subcontracting relationship makes it slightly harder for multi-disciplinary teams to function as a single team
  • There are competition law considerations when the prime contract has a dominant position in the market, which impose an additional administrative burden to demonstrate that arrangements comply with Patient Choice regulations and are in best interest of individuals' and tax payers'


Bedfordshire Musculoskeletal (MSK) integrated service was established in October 2013 and is being managed under a prime contractor model. Circle, an employee co-owned healthcare group, holds a contract worth £120m to provide MSK services over 5 years. They are financially and clinically accountable to commissioners for the whole pathway and sub-contract with partners to provide all the required services within an integrated care model. These partners include:

  • Local GP Networks to ensure they provide assessment, investigation, management and onward referral
  • Pennine MSK who provide community based specialist triage and management
  • Acute centres to coordinate outpatient and elective procedures with other providers

Circle are monitored by commissioners on a range of specific outcomes, including:

  • Quality: 85% of the proportion of people aged 65 and older will be at home three months after leaving hospital for community rehabilitation
  • Experience: 85% of service users will rate their overall experience as good or very good by 2015

At the time of publication, the impact of these changes has not yet been reported.

Source: Health Service Journal - http://www.hsj.co.uk/news/commissioning/ccgs-line-up-raft-of-prime-contractordeals/5062260.article#.UxmkET9_trU



This option has much in common with the prime contractor model, but the broker does not provide any services itself. An existing organisation which does not provide care services would act as a coordinator and performance manager for existing providers. It acquires financial accountability but subcontracts all services. The third party broker would likely be a private sector organisation, such as Virgin Care who perform this role in Devon for Integrated Children Services.


  • The advantages of a prime contractor
  • It allows specialised, e.g., analytical, skill-sets because the third party broker can hire dedicated teams to support coordination
  • A neutral broker may be preferred by other organisations to an existing provider because it will be independent
  • A third party may have large capital reserves compared to existing providers that support significant risk sharing arrangements with commissioners


  • Creates an additional managing layer between commissioning and provision as for a corporate joint venture, because the contract holder is not a public body or a direct provider of welfare services, it would be liable for VAT, unless it were registered as a charity
  • Contracting third party organisation to provide integrated model may increase risk that commissioners simply outsource problems and spend to another organisation to solve without fully understanding population needs or economic impact of changes resulting in destabilisation


Virgin Care – Integrated Children Services in Devon

In March 2013, Virgin Care was awarded a three year contract for integrated children services in Devon. The service supports 2,400 children with disabilities, children's mental-health services and school nurses and health visitors. Virgin Care is accountable for the outcomes and financial performance of the contract. They will manage existing staff transferred from existing health- and social-care organisations, along with contracting other providers to deliver an integrated service.

Source: Virgin Care website - Guardian: http://www.theguardian.com/society/2012/jul/12/virgin-care-children-nhs-devo



A single organisation delivers the full care pathway for targeted population segments.


  • Easiest to operate a single multi-disciplinary team
  • One clear point of accountability for commissioners
  • The provider has more ways to manage performance because they can use pay and promotion to reward staff within the organisation
  • Greatest flexibility in allocating resources


  • This model represents the greatest change from the current situation
  • It would take substantially longer to implement than other options because it would involve building a new organisation
  • The new organisation would have an effective monopoly. This would make it hard to manage failure of the organisation and reduce external pressure to deliver the best care for individuals because of a lack of other alternatives


Intermountain Healthcare have 33,000 employees working across 22 hospitals and 185 healthcare facilities (including primary care centres, ambulatory care centres and retail clinics) in Utah.

In total, they employ 700 of Utah's 4,600 doctors. They begun implementing a care management operating model in 2001 focused on older people with long term conditions that includes:

  • Salaried GPs who follow care protocols developed by expert care pathway teams
  • Nurse care managers who work in each GP practice to assess, educate, motivate, and track patients. Nurses can follow the care protocols to make independent prescriptions and referrals
  • Web-based electronic medical records are shared across all healthcare facilities, including hospitals. The information system provide evidence-based recommendations to address care gaps and organises referrals and tests from patients into one screen for doctors to approve

The impact of these changes has been:

  • Outcomes: 3.4% reduction in two-year mortality of high-risk elderly patients
  • Resource use: 10% reduction in hospitalisations, with greater reductions among subset of complex chronic patients


Shared goal contracting is an arrangement where providers enter an agreement to work cooperatively and to only share gains if everyone achieves the objectives. The key principles are to:

  • Share financial accountability for outcomes so "everyone wins, or everyone loses”
  • Resolve disputes without litigation

Shared goal contracting can be built into the design principles of any of the six options for provider network structure.

This form of contracting is sometimes called Alliance Contracting. There has been a lot of discussion about adopting this approach in the NHS. It is originally based on a model from the Australian building industry, where partners had shared goals for a project (such as completing by a deadline) and a proportion of their payment was determined by everyone meeting these goals. It encouraged greater collaboration and coordination as it was in everyone's interest to do so.

It was later adopted for health- and social-care in Canterbury, New Zealand where it is called alliance contracting. Under this arrangement local health- and social-care commissioners and providers agreed contracts with incentives payments that could only be shared if everyone met outcome targets. This provided strong incentives for organisations to cooperate and support partners in difficulty, rather than immediately assigning blame or watching other organisations fail. The Kings Fund published a case study on the system which can be found at http://www.kingsfund.org.uk/publications/quest-integrated-health-and-social-care.

At the moment, alliance contracting as a technical legal form cannot be adopted in the UK, because it was developed from a system which does not make the same distinction between provider and commissioner as in the UK. However, regardless of the governance model, its principles of shared goals and collaboration can be adopted. In the longer term, it may be possible to adopt true alliance contracting either by NHS England agreement or by having a local authority as a lead commissioner.

More information on Alliance Contracting is available in Supporting Materials G: Legal Issue Compendium


The best choice of network model will be different for different provider networks. The main priority is to select the structure that best supports the care model that improves outcomes for service users. As a rule, greater integration makes it easier to create the multi-disciplinary teams that whole systems care requires.

However, networks need also consider:

  • Relative size of providers: if a larger provider is responsible for the majority of services, a prime contractor approach might be suitable
  • Scale: large systems involving many providers will find it more difficult and complex to agree closely integrated governance arrangements
  • Favoured working arrangements: for example where there is desire for a relationship of peers, a cooperative agreement or joint venture might be best.
  • Other networks: if providers plan to participate in multiple networks, full integration becomes more challenging
  • Timeline: because they involve creating new legal entities with new ways of working, joint-ventures are more suitable on a longer time horizon. Fully integrated models take longest.
  • Flexibility: for well-established care models, less flexible arrangements like cooperative agreements might be suitable
  • Legal concerns: because of regulations concerning incorporation, NHS trusts will find it complicated at present to be able to participate in corporate joint ventures. In addition, corporate joint ventures and fully integrated organisations may need to pay VAT if social-care is provided. Please refer to Supporting Material G: Legal Issues Compendium.

These considerations should motivate a holistic consideration of the appropriate structure and are too dependent on the particular nature of the local environment to be reduced to a simple logic. However, the flow-chart below suggests how some of the considerations might lead you to choose particular options.


  • Have you got other types of providers involved in your network?
  • Are you clear which structure is your preferred model?
  • How will you start planning?