Designating advanced FTs and IHOs

The 10YHP announced that a small number of new IHOs will be designated in 2026, with a view to them becoming operational in 2027. This is expected to involve at least a two-stage authorisation process: first becoming an ‘advanced FT’ and then becoming an IHO host provider (see box 1 for a summary of what we know). While a government-led approach may be necessary in the initial wave of IHO authorisations to meet the government’s deadline of 2026, we believe that, in the future, this process should be initiated by ICBs. This approach will ensure a more informed decision about which model will best meet the needs of local populations, based on ICB and host provider capabilities. 

Local NHS leaders are also concerned about a misalignment between the ambition and timescales for ICBs’ and providers’ readiness to effectively take on IHO responsibilities, particularly due to pressing operational, financial and structural challenges. One community leader said: 

What we know about the authorisation of advanced FTs and IHOs

• The first wave of trusts are expected to be assessed for advanced FT status shortly. Our understanding is that advanced FTs refer to a new status attached to the existing FT framework, as opposed to a new legal form of NHS provider organisation.

• The selection process for advanced FTs will be overseen by a panel of independent members.
• Advanced FT authorisation will be based on excellent delivery on waiting times, access, quality of care, financial management and higher levels of productivity than their peers, as well as a proven track record of, and commitment to, working in partnership to improve health outcomes.
• The NHS Oversight Framework, provider capability assessments and CQC assessments will likely inform the measurement of these areas.
• Advanced FTs will have the opportunity to hold an IHO contract, alongside the freedom to control board composition, strategic autonomy, financial freedom and raising capital.
• The initial criteria include an ability to meet core standards, improve population health, form partnerships with others and remain financially sustainable.
• The first IHOs will be designated in 2026, with a view to them becoming operational in 2027.
• It is not clear whether the independent panel will also oversee IHO designation. 

Annex 2 of the draft Advanced Foundation Trust Programme guidance provides detail of what requirements trusts seeking integrated health organisation contracts will have to meet, subject to consultation.

Reward for the best performers or solution for struggling systems?

The 10YHP pitches the ability to hold IHO contracts as a reward for the ‘very best FTs’, rather than a potential solution for struggling systems where an innovative way of allocating funding may have the greatest impact. Healthcare leaders have mixed views on this. 

On one hand, it is important that the host provider is in a strong starting position, with an ability to provide assurance to the DHSC and NHS England that it can provide high-quality care and have a strong handle on key operational and financial challenges. In the words of one ICB leader, it must be: “a really mature organisation with a mature set of leaders and really good governance throughout. They need to be financially stable and sustainable and to be able to demonstrate a good record on all other things - other operating issues, quality, etc. They need to start from a strong position and not be an organisation under support.” 

On the other hand, given their purpose is to improve allocative efficiency (and in turn financial performance), those with the greatest need (and deficit) could stand to benefit most from the IHO model, potentially adopting a mixed model of high performers and those with greatest need. 

Given IHO host provider status will exclusively be a ‘reward’ in the short term, it will be important for the centre to set a longer-term pathway and corresponding support programme that ensures holding an IHO contract become an opportunity available to all. NHS England’s support programme should extend to both the first wave of IHO designates in 2026/27 as well as leaders (including from ICBs) in more challenged systems who are interested in holding an IHO contract in the medium term. Otherwise, there is also a risk that performance variation and inequalities are exacerbated.

Many NHS leaders view holding an IHO contract as an end state to work up to, not an immediate or short-term endeavour. As outlined in section 1.4, there are alternative models that would also allow systems to make progress towards more integrated and cost-effective care and may help build the foundations needed to hold an IHO contract in the future. 

Capability should trump operational performance

The government’s definition of ‘high performing’ trusts and the competencies needed to host an IHO contract must align. This criteria should include the suitability not just of the host provider, but also the capability and performance of the ICB and other providers within the system. Both organisational and system capabilities should be the most important consideration in assessing IHO readiness. 

Designating the host provider

Candidate FTs should have a strong track record in collaborative and integrated working. Performance in service delivery at a single point in time might not be the best indicator of readiness to run, contract and manage a wide range of services to improve the health of a geographically defined population.

Despite this, several local leaders feel that the approach being taken nationally to the host provider role has focused more on the highest performing organisations, regardless of the wider system and collaborative working. These tend to be larger acute and specialist providers, rather than those necessarily most capable of taking on the role. Some worry that the requirement to first achieve FT status may not result in the right organisations becoming the host provider. In the words of one acute trust leader:

Local leaders described a range of competences they thought would be needed to be an effective IHO host provider. These could form the basis of the authorisation process involved in becoming an IHO. 

• Financial and organisational maturity
  • Maintains financial balance.
  • Shows organisational robustness, including dispute resolution and shared decision-making.
• Governance and risk management
  • Operates within a statutory framework that enables corporate formation and robust governance.
  • Capable of managing risk and making strategic decisions at scale.
• Understanding of commissioning
  • Demonstrates a clear grasp of the commissioning cycle and the ability to engage effectively with commissioning processes.
  • Has the ability to manage a range of contracts, guided by a commitment to improving population health outcomes, while managing any conflicts that arise based on organisational interests.
• Collaborative leadership
  • Demonstrates strong backing from system partners and a proven track record in partnership working and prioritising place-based outcomes over organisational interests.
  • Provides infrastructure to support mature, collaborative decision-making and conflict resolution.
• Population health capability
  • Demonstrates expertise in population health management and addressing health inequalities.
  • Actively engages in prevention and left-shift strategies aligned with the 10 Year Health Plan, including evidence of redirecting resources from acute care into primary care, community, mental health services, including VCSE services.
  • Access to and ability to use comprehensive data for population health analysis.

However, the current National Oversight Framework (NOF), provider capability assessment and CQC’s assessment framework do not adequately assess these capabilities. Some trust leaders are concerned that their league table position will prohibit them from exploring an IHO in their area. This means an updated or bespoke authorisation process will be required by the time the first IHOs are designated. This may follow a phased or gateway approach with multiple stages.

Most healthcare leaders believe that many of these competencies require more development – particularly to meet the core requirements for delivering population health management. It may also be necessary to transfer staff from ICBs to the host provider, particularly so they have sufficient understanding of the commissioning cycle. 

ICB capabilities 

ICBs play a vital role in commissioning IHO contracts, which means ICB capabilities must form part of the IHO authorisation process. This includes their ability to discharge their four core functions as defined in NHS England’s model ICB blueprint and strategic commissioning framework. In our State of ICSs report, ICB leaders told us they feel confident in fulfilling their first two new functions: understanding local context and developing a population health strategy. ICBs already have varied and comprehensive ways of understanding their populations and are already responsible for producing five-year strategies and implementation plans. But they recognised that organisational development and upskilling are required to fulfil their payer, market-shaping and impact-evaluation functions.

ICBs capabilities in the short term will be impacted by reorganisation, following the requirement to reduce their budgets by 50 per cent. And with ongoing uncertainty about the future of some of their other statutory functions, ICB leaders are concerned about investing in and building strategic commissioning capability while maintaining the capacity and capability needed to meet their core statutory obligations. The NOF and capability assessments do not apply to ICBs in 2025/26 but will do so from 2026/27. Without a formal ICB oversight regime in place, it is difficult to see how this could be assured in the short term. Before the first IHO host providers are designated in 2026, this should be addressed in a robust and transparent manner so that IHO designation is conducted in an evidence-based and transparent manner.