Key points

The 10 Year Health Plan (10YHP) introduced integrated health organisations (IHOs) as a population-based contracting approach to improve outcomes for patients and improve value for money through greater allocative efficiency. 

IHOs are a way to align financial flows and incentives to enable the NHS to shift more spending toward earlier and more cost-effective interventions, helping to fix the NHS. 

NHS leaders describe IHOs as containing three main elements: 1) a capitated contract commissioned by an ICB which transfers responsibility for the health outcomes of a whole population within a defined geography to a ‘host’ provider, 2) with sub-contractual arrangements between a host provider and partner providers that cover the delivery of care services beyond those delivered directly by the host, 3) enabled by a locally agreed mechanism that ensures collaboration and shared decision-making across all providers. 

Based on engagement with over 30 healthcare leaders from primary care, community, mental health and acute providers and ICBs, this report presents considerations for local leaders and the government to develop IHOs across four components:

1. Contract – A capitated contract for a whole population awarded by an ICB to a host provider, which holds the IHO contract on behalf of a group of providers, then delivers and/or sub-contracts services, aligning financial incentives between providers to reduce downstream demand.

2. Structure – A high-performing foundation trust as the ‘host provider’ will need collaborative structures to work with other care providers in partnership including local government.

3. Governance – While an IHO will not be a new legal entity, the host provider’s governance should adapt to focus on improving population health and the sub-contracting of services from other providers, not just service delivery and organisation performance.

4. Behaviours and leadership – Beyond hard mechanisms, the success of IHOs will depend on trust, relationships and shared purpose across partners. Leadership should be about convening, not controlling.

Host providers, collaborative arrangements and expected outcomes should be agreed locally, rather than imposed from above. While the first wave of IHOs might be authorised centrally, they should in future be initiated by ICBs.

However, misaligned national policy risks thwarting IHOs. The National Oversight Framework’s financial and performance metrics are too focused on individual organisations, disincentivising collaboration between organisations needed to deliver an IHO contract. 

Barriers in competition should be addressed, in consultation with the Competition and Markets Authority, and legal changes made to better enable social care and public health services to be included in IHO contracts in future.

While IHOs are intended to improve allocative efficiency and financial performance, limiting IHO contracts to only ‘high-performing’ foundation trusts risks exacerbating performance variation and inequalities. A clear pathway is needed for organisations with lower performance in some areas, but strong leadership capability and partnerships, to hold an IHO contract.