Frequently Asked Questions

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Commissioning for outcomes is a relatively novel approach within the health service in England, and understandably the public want to know exactly what this style of commissioning means for our NHS. To help provide clarity on COBIC contracts, particularly the implications for the role of private sector bodies, we’ve complied responses to some of the more common misconceptions that exist.

We want to hear your thoughts on this topic – please comment below, or join the debate on Twitter, using #COBICWAY.

1. Do COBICs require procurement on the open market?

This is not always the case. The law and guidance from Monitor is clear – competition is only required where it serves the interests of patients, and regulations do not impose competition on the NHS1. CCGs and other commissioners are free to choose who they let contracts to. Some have chosen to go to open competitive tender when letting COBIC-style contracts. Others have chosen to let COBIC contracts to incumbent providers without competition.

As an alternative to competitive tendering we have seen the development – with support from Monitor – of the ‘Most Capable Provider’ (MCP) mechanism to robustly test the ability of a provider and any potential partner providers to respond to the commissioner’s contract specifications. Assessing a provider in this way essentially allows existing providers ‘first bite of the cherry’. And, if the incumbent provider does not have all the skills and capabilities required, the MCP process also allows them to choose which partners they want to work with in order to deliver the full range of contract requirements.

2. Do COBICs require the use of private healthcare providers?

It is clear from the answer above, that there is no need to use private providers to deliver COBIC contracts, unless that is what the commissioners want to do. Under an outcomes-based contract, commissioners are free to contract with a range of providers – including NHS, private and voluntary sector organisations. It is unlikely that any single organisation – whether NHS, private or independent – could successfully deliver all aspects of a COBIC by themselves and they will need to work in partnership with other providers. Where there is concern that COBICs have the potential to undermine NHS providers, particularly district general hospitals (DGHs), it should be noted that CCGs can stipulate during the tendering process that their local DGH is a mandated provider, as part of the partnership supply chain or alliance.

Organisations across these sectors bring different skills, and have the potential to contribute in a variety of ways to the delivery of an outcomes-based contract. NHS organisations have traditionally been the trusted and recognisable face of healthcare delivery for local people over many years and represent the NHS spirit that the public loves. Voluntary sector organisations offer much experience in helping people care for themselves and keeping people independent at home. Private sector organisations such as BUPA, BMI and Care UK have many years of experience operating under NHS contracts, and offer skills that may not be otherwise available within the public sector such as logistical management, clinical organisational development and most notably, a greater level of commercial experience. The latter can be of particular benefit to DGHs, where they may lack capacity and capabilities to really develop their own commercial strategy.

3. Is the prime provider model the only option for COBIC?

No it’s not: the model of provision should be secondary to the nature of the outcomes required, and should be the one that supports providers best to deliver against commissioners’ specifications. Multi-year capitated outcome incentivised contracts make new demands on providers. Specifically, they require providers to be able to coordinate the care of individuals along pathways and across settings. They also require an element of population health management i.e. providers need to be able understand the population they are responsible for, so, at the level of the individual, they can understand risk of future ill health, service use and cost, and thus devise and deliver interventions that reduce these risks.

In many health economies, it is unlikely that one single provider will be able to respond effectively to all of these demands. They will need to identify partners to provide the skills and capabilities that they currently lack.

There are various ways in which commissioners can commission the combined efforts of a partnership of providers. The two most common approaches are a) prime contracting in which the commissioner lets a single contract to an organisation that then coordinates the work of the other providers in the partnership, or b) an alliance contract in which the commissioner lets separate contracts to each of the providers in the partnership, but sets and incentivises common goals across the partnership and sits alongside them in the partnership. What these contracting mechanisms have in common is that the both result in commissioners letting multi-year capitated outcomes-based incentivised contracts.

4. By undertaking outcomes-based contracts, aren’t commissioners delegating their commissioning responsibilities and placing power elsewhere?

With COBIC, commissioners are not abdicating their responsibilities, but essentially redefining them. In lieu of ‘micro-commissioning’ – where CCGs tend to over-specify services – outcomes-based commissioning empowers providers and creates the space for them to innovate and better met the needs of patients. Ultimate responsibility still lies with the CCGs – they are accountable for spend, and for the clinical outcomes that the consortia or partnership of providers will produce.

The commissioner’s role becomes more strategic. They are responsible for understanding which outcomes matter most to the public, whose money they are spending (they need to allocate resources between different groups of the population e.g. children and the elderly), they need to identify providers who understand those outcomes and have the capability of delivering them, and then hold them to account.

The relationship between the commissioners and providers is based on trust – that commissioners are best placed to know the total amount of resource available for care of the population covered by the COBIC contract, and providers better placed to know how to use that resource in the most efficient way to deliver the outcomes expected.

In doing so, commissioners want to identify and model best practice from around the world and challenge their providers to meet or exceed the standards set elsewhere. This is a different form and approach to commissioning – but it is very far from an abrogation of responsibility.

5. Isn’t it really difficult to measure the success of capitated outcomes-based incentivised commissioning?

Capitated outcomes-based incentivised contracting often requires new measures to determine success. Much work is under way in England and internationally on designing and validating new measures of patient outcomes and health status for use in this way. However, there are already a number of measures and indicators that can be incorporated and that can effect change.

The first measurement that can be made is adherence against the capitated budget of a COBIC. COBIC contracts are calculated on the predicted levels of population and service demand. The fact that the budget is capitated on a relatively fixed per patient basis encourages providers to look for better ways of delivering services and also enables the delivery of savings over the lifetime of the contract.

Validated indicators can be sourced from a number of places including national surveys, academic and pharmaceutical research, charities, and international sources. Crucially, COBIC allows for service user satisfaction to be assessed. Although sometimes relatively crude, even the existing measures of patient quality of life and experience of care can drive demonstrable changes in the nature of care delivered.

6. Won’t segmenting populations by age or disease just replace one set of silos with another?

There is growing consensus that a shift towards outcomes-based commissioning at scale is required. Ideally, whole population segments would be considered together – for example children, or adults with long-term conditions. But such a large shift in business model, and cultural practice would be difficult in a single step. Commissioning bodies and providers need to be able to start with manageable population segments or pathways, for example, musculoskeletal services, to allow testing of capabilities and capacity, and essentially get stakeholders used to working in this way. Segmentation, or stepwise action should be viewed as a means to an end – towards a more fully capitated model of commissioning and provision.

7. Isn’t it expensive to develop outcomes-based commissioning?

Changing the way in which services are provided, towards outcomes-based commissioning, does require upfront investment by commissioners. CCGs may often require legal advice, procurement support and assistance with organisational development to shift to a new way of doing things. But when considered as a proportion of the overall programme budget – which can be around £1000 per capita in many CCGs – the cost implications of getting outcomes-based commissioning right, usually at less than 0.3% of the overall contract value, seem not unreasonable. Moreover, as outcomes-based commissioning gains traction, the greater commissioners’ knowledge and skill base becomes. Organisations within the NHS, and beyond, will be in a position to learn and borrow from one another; the more learning and resource that are shared, the less costly it becomes.

1. Monitor (2013) Briefing note: Substantive Guidance on the Procurement, Patient Choice and Competition Regulations https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/283506/BriefingNoteDec13.pdf [Accessed October 2014]