Annex 2. Learning from past experiments with accountable care

ChenMed, USA

ChenMed, under the Medicare Advantage model in the US, creates financial incentives for providers to keep people healthy and out of hospital. Organisations can compete for Medicare funding to cover the healthcare costs of a population cohort of over-65s, suffering from complex health needs and/or high levels of deprivation, to keep the population healthy. These organisations are typically either health insurance companies or health and care providers.

ChenMed receives upfront funding for the total annual cost of patients, allocating a small proportion to administrative functions. They have the freedom to divide the rest of the funding as they see fit across enhanced primary care centres, a central office providing shared functions and external costs linked to acute care, specialist referrals and medications. ChenMed is allowed to keep all surpluses and fund deficits, meaning they bear 100 per cent of the risk, particularly as they provide funding for all the acute care and medications their patients receive.

The annual cost of a patients’ care is risk-weighted according to a range of factors, including age and the number of conditions, and determined by evidence of a relevant diagnosis with the appropriate treatment in progress.

ChenMed focuses on improving patient outcomes and experiences and increasing care at home through investing in primary care and prevention. For example, they provide 20-minute appointments, on-site X-ray and ultrasound as well as interventions to address patient health barriers and needs, such as social workers and cooking classes. 

Despite patient cohorts having similar complex health needs, ChenMed averages 1,324 inpatient hospital days per 1,000 patients over 65 compared to an average of 2,220 across Miami and 2,236 in England. This demonstrates the value of their preventative and proactive integrated out of hospital care.

Reference: NHS Confederation (2024) Unlocking Reform and Financial Sustainability: NHS Payment Mechanisms for the Integrated Care Age.

OptiMedis, Germany

OptiMedis is a population-based integrated care model in parts of Germany that is based on a ‘shared savings contract’ between an integrated network and sickness funds (payors).

Providers do receive reimbursement payments, but the integrator reimburses some additional services, like comprehensive check-ups, to improve quality of care. The contract considers differences between expected costs and the real healthcare costs of the network’s defined population as ‘savings’ that can be shared between the provider and payer. The share of savings the integrated network receives is used to finance further integration efforts, including performance bonuses and operations of the regional integrator. Any remaining profits are re-invested in the regional healthcare system.

There are minimum quality standards that must be complied with, ensuring that there is no under-provision of services to generate savings. This creates a financial incentive to invest in the delivery of high-quality, efficient, preventative care. 

According to the OECD, this model of care is suggested to lead to an additional 146, 441 life years and 97,558 disability-adjusted life years by 2050 in Germany. Over the same period, cumulative health expenditure savings per person are estimated at €3,470 in Germany.

Reference: NHS Confederation (2024) Unlocking Reform and Financial Sustainability: NHS Payment Mechanisms for the Integrated Care Age; Reforming Financial Flows | NHS Confederation

The Alzira Model, Valencia

Under the Alzira Model, a provider received a fixed annual sum per local inhabitant (capitation) from the regional government for the duration of the contract to offer free, universal access to a range of primary, acute and specialist health services. 

Alzira was vertically integrated, with Ribera Salud (a healthcare management group) managing and aligning primary and hospital care. A single capitated budget gave a fixed annual amount per patient, regardless of services used. Patients had the freedom to be treated elsewhere, but their treatment would be paid for from the Alzira budget. The aim of this was to incentivise higher quality and service from provides to secure local patient loyalty. The incentives were aligned towards prevention and long-term conditions, ensuring population health was the model’s key consideration.

Ribera Salud was held accountable for clinical outcomes and patient satisfaction by the performance regime with the potential for both profit and financial penalties, although profit was capped at 7.5 per cent with any excess returned to the health authority. The model emphasised seamless IT, with Ribera Salud investing heavily in health information systems to connect primary, secondary and all care services.

This model resulted in consistently better results in Alzira compared with other hospitals in the Valencia region, across indicators such as A&E admissions, readmission and patient satisfaction.

However, the contract was terminated after nearly 20 years by Valencia’s health authority due to financial concerns, governance failures and politics. The services have since reverted to public ownership.

Reference: Michael Wood, The Search for Low-Cost Integrated Healthcare: The Alzira Model From the Region of Valencia (NHS Confederation, 2011).

Northumberland

In 2017, Northumbria Healthcare NHS Foundation Trust attempted to establish an accountable care organisation (ACO) that would bring together acute, community, mental health and adult social care services under a single contract. The aim was to improve coordination, efficiency, and outcomes through a unified, population-based approach. However, the initiative faced legal, governance and structural challenges - particularly around accountability and the complexity of integrating multiple organisations - and ultimately did not proceed.

Instead, the trust shifted to a vertically integrated care model. It established Northumbria Primary Care (NPC), a not-for-profit company wholly owned by the trust, which now runs several GP practices. This model allows for closer alignment between primary and secondary care, shared infrastructure, and more coordinated service delivery. While not a formal ACO it achieves many of the same goals, such as integrated care pathways and population health management, through a more pragmatic and locally governed structure.

Dudley

In 2017, Dudley aimed to establish a multi-specialty community provider (MCP) through a procurement process. This was subsequently termed an integrated care provider (ICP) and became the Dudley Integrated Health and Care NHS Trust (DIHC). The ambition was to create a new multispecialty integrated community provider (ICP), that would bring together primary care, community services, mental health and adult social care under a single organisational umbrella. This model aimed to deliver more coordinated, outcomes-focused care for the local population, supported by a long-term contractual framework and a shift in risk and accountability across the system.

However, shortly after launching the new trust, NHS England rejected the business case for the full integrated care provider model. The initiative ultimately faltered due to a combination of poor inter-organisational relationships, resistance from local providers and a lack of support from regulators. Many clinicians perceived the ICP as an attempted organisational takeover, which led to mistrust and disengagement. Without a clear mandate or the authority to exercise its intended statutory functions, the trust struggled to gain traction. The fragmented interpretation of the ICP’s purpose across system partners undermined the collective endeavour.

Given this combination of factors, there is a perception that MCPs and ICPs may have been the right idea, but at the wrong time, and without the necessary political support to come to full fruition the trust was dissolved in late 2024.