Pooling budgets and agreeing risk share to develop coordinated care

Creating shared public accountability through pooling budgets

Public sector organisations are held to account over their finances, and have robust internal governance systems to oversee the spending of public money. Person-centred, coordinated care is only successful when governance systems can support similarly strong financial accountability across organisations.

Section 75 of the NHS Act 2006 allows partners (NHS bodies and councils) to contribute to a common fund which can be used to commission health or social care related services. This power allows a local authority to commission health services and NHS commissioners to commission social care. It enables joint commissioning and commissioning of integrated services. See Risk sharing/S.75 agreement for more guidance.

Case studies: pooled budgets working to deliver improved outcomes

Pooled budgets are not a new concept to health and social care – below are several examples of where pooled budgets have been implemented and have delivered better outcomes for people who use services.

• Case study: Greater Manchester Open

  Single budgets underpin a range of health and care devolution initiatives. In Manchester, the most advanced health and care devolution programme in England to date, the Greater Manchester Health and Social Care Partnership now controls £6 billion of health and social care funding made up of:

  1. the commissioning budgets for CCGs;
  2. the social care budgets of the 10 local authorities in the Greater Manchester area; and
  3. some of NHS England’s budget for specialist commissioning and primary care.

  The shared vision is to deliver the greatest and fastest improvements to the health and wellbeing of Greater Manchester’s 2.8 million population.

  In terms of governance, the Greater Manchester Health and Social Care Partnership Board includes members of the Greater Manchester Combined Authority (GMCA), 10 local authorities, 12 CCGs, 15 NHS providers, NHS England, representatives from primary care, patients, third sector providers, fire and rescue services and the police and Crime Commissioner. It is underpinned by a joint commissioning board and provider federation.

  NHS England awarded Greater Manchester £7.5 million to drive forward integration of health and care records

• Case study: Southend Open

  Southend was involved in the Integrated Care and Support Pioneers Programme, having been selected in November 2013. As part of their ambition for a truly integrated health and social care system, local organisations in Southend sought to change the way that health and social care was commissioned and undertook work to develop their vision for an integrated commissioning function.

  Local organisations in Southend have a strong track record of working together, first through a strategic alliance and then via the joint executive group, made up of the Council, CCG and provider organisations. In 2014, Southend CCG and Southend-on-Sea Borough Council agreed a memorandum of understanding setting out the basis for a longer-term commissioning relationship. In 2015, a joint commissioning team was formally brought together with the appointment of a joint associate director of integrated care commissioning and a head of integrated care. The services specifically targeted included mental health, learning disabilities, frail older people’s care and children’s services, with a single point of referral and access service, with a pilot complex care coordination service which went live in 2016.

  Since the start of the programme, Southend-on-Sea was assessed regionally and nationally as being a mature health and care system.

  See Options for integrated commissioning: beyond Barker

• Case study: Croydon Open

  The Disabled Facilities Grant (DFG) is an integral part of the Better Care Fund, with an allocation of £505 million in 2019/20 to fund housing adaptations for elderly and disabled people. The grant supports areas to think strategically about the use of home adaptations and technologies to support people to live independently at home, and to take an integrated approach to improving outcomes across health, social care and housing. This is a short example of how the grant has been used in Croydon.

  To facilitate the safe discharge of a long-term hospital patient in Croydon, a number of major repairs and adaptations were required to be made to his home to improve accessibility and prevent injury. He was offered an interest-only loan to undertake the repairs and adaptations. As a wheelchair user, he also needed adaptations to the property to enable ground-floor living, and a ramp to provide wheelchair access.

  The Croydon Staying Put home improvement agency caseworker, in conjunction with the surveyors, arranged a programme of work, including renovation work through the council’s interest-only loan, an energy loan for central heating, major adaptations for a shower and wheelchair accessible kitchenette, and a front access ramp, funded by the Disabled Facilities Grant.

  The property was badly cluttered with years of hoarding, and was cleared using the reablement funding from the Better Care Fund, as well as fitting clean, safe flooring in the kitchen and bedroom, and a new bed.

  The success of this case was joint work with the occupational therapist, surveyors and other health care professionals. He is now able to live independently, with a minor care package from social services.

Place-based budgets: Overview of models and options for placed-based budgets

Whilst s75 agreements are a requirement of the 2019–2020 Better Care Fund Policy Framework, there are other models and options available for place-based budgets that can be considered for localities moving towards integrated care. These are listed below:

Seat at the table

Under this model:

• it is possible to align budgets
• it is possible to create bespoke risk/gain share arrangements locally between NHS England and CCGS e.g. through joint contracts.

Joint arrangements

Under this model:

• it is possible to pool budgets using s13V (between NHS England and CCGs), or pool budgets using s75 (between health bodies and local government)
• it is possible to create bespoke risk/gain share arrangements locally between partners to the s13V or s75.

Delegation

Under this model:

• budgets would be delegated to a group of bodies under a 13ZB arrangement (must include local government partners)
• it is possible to create bespoke risk/gain share arrangements locally between the partners to the delegation agreement.

Devolution *

Under this model:

• the budget would be transferred to local government under a s105A transfer order
• as the function (including responsibility for overspends or underspends) would be fully transferred to local government, risk/gain share arrangements with NHS England would not be applicable).

* NB: There are three options for devolution under the Cities and Local Government Devolution Act. We have only included the option of a full transfer of functions.

Sharing risks and rewards

Pooling resources requires investment decisions from a range of different stakeholders. In the context of financial pressures, each participating organisation will need to consider costs and benefits, as well as risks and rewards. Across the system, it is critical to establish how risks and benefits will be shared and develop a plan for how gains and potential losses will be distributed. Gains and losses are calculated as the difference between the baseline (expected cost) of delivering care to a defined population and the ‘out-turn’ (actual cost).

Developing a robust plan for risk and reward sharing requires answers to two key questions: How can we incentivise better system outcomes and what will happen if plans don’t materialise? Sharing risks and benefits of integrated care: quick guide sets out the building blocks.

1. Transparency – baseline and performance measures can be tracked. This needs to be proactive and regular, so that issues can be dealt with ‘in-flight’. There should, at minimum, be a review every quarter.
2. Common purpose about the desired outcomes for the local population and how services will be reshaped to meet those outcomes. There should be a focus on system and individual outcomes – the rest will come through efficiencies.
3. Build a shared understanding among leaders, staff, partners and people – how can each partner influence the risks and benefits and work together to drive collaborative working? This also involves considering what ‘levers’ to use, such as, for example, the Commissioning for Quality and Innovation payments framework (CQUINS), incentive payments and delayed transfer of care reimbursements.
4. Clear and pragmatic governance arrangements setting out decision-making and accountability structures, with shared leadership at political and executive levels.
5. Trust and strong working relationships – the personal chemistry between local leaders is as important as formal plans and strategies.

Five steps to agree risks and benefits: establish risks and benefit share agreements

1. Identify relevant parties who should be involved in sharing benefits and risks. (Governance)
2. Establish any circumstances that might affect the risks and benefits that each organisation can own, and any factors that might prevent them from taking on certain elements of a risk. (System context)
3. Agree priorities and objectives of each party and the risks and benefits to achieving this individually. (System context)
4. Use information from step 3 to agree collective priorities and objectives. (Governance)
5. Agree collective net risks and potential benefits of achieving objectives. (Governance)

Checklist for pooling budgets

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Further reading

Pooled budgets must be soundly based and follow the appropriate accounting arrangements. In the Better Care Fund ‘Support and resources pack for integrated care’ (NHS England) there is information about section 75 pooled budgets, including what is required to make them work effectively, other joint financing options, general considerations and what should be included in partnership agreements.