Aligned incentives

Regulatory and financial incentives must align to support integration and partnership working, including developing local community and place-based services. However, healthcare leaders are concerned that the short-term political focus on recovery at the level of individual organisations will undermine the partnership working required to hold IHO contracts. National and regional oversight must encourage a shift from sector-centric thinking to a whole-system approach rooted in population health management and outcomes. This requires a more future-facing oversight regime that avoids punitive measures and incentivises collaboration.

Authorising IHO host providers based on FT status, combined with an oversight regime that relies on organisational league tables encourages a return to organisational sovereignty and competition, not collaboration. The 10YHP implies that both competition and collaboration are king. But can the NHS coherently hold two organising principles? 

Until recently, trusts were increasingly taking on stretch targets or ‘load balancing’, which involved them carrying higher risk to help improve system-wide operational and financial performance. We have significant concerns that organisations will be less willing to do so when judged individually and competitively. For instance, the NOF’s financial override led to downgrades for numerous previously high-performing trusts, discouraging the kind of collaboration described. Similarly, abolishing system control totals for all providers removes a key mechanism for shared financial responsibility, reinforcing individual organisational success or failure.

To give IHOs a chance to succeed, there must be a transformative move away from the current command and control culture, which combines central routine performance management, guidance and political intervention. 

A strong emphasis on individual organisations also makes it harder to shift from recovery to transformation. While local leaders generally understand the desire to concentrate efforts toward short-term operational priorities and recovery, they are increasingly worried that the current balance between recovery with reform will undermine progress toward the government’s three shifts and the viability of IHO contracts. 

The longer-term commitment to focus on outcomes and effectiveness alongside access and value for money over time is welcome. But if IHOs are to flourish, the government cannot wait until the system has recovered before making necessary changes. As an acute leader put it: 

“If the oversight framework is genuinely interim and the FT assessment and future framework goes back to an operating model that promotes collaboration and integration then I can support the idea of short-term pain for long-term gain.” 

If IHO performance is to be judged against the Medium Term Planning Framework and the NOF, both will need to evolve in lock step with the roll out of IHOs to ensure that they incentivise delivery of the left shift, increased allocative efficiency and improved population health outcomes. The current metrics and targets in each are reminiscent of an activity-based model. Without this alignment, we remain concerned about how the current model can support or meaningfully measure the success of IHOs.