The art of the impossible – capitated budgets for long term conditions

As recently published in the Health Service Journal (29 August 2016), this blog from Sir John Oldham, Adj Professor Institute of Global Health Imperial College, and Jacquie White, Deputy Director Long Term Conditions NHS England, sets out the art of the impossible – developing capitated budgets for long term conditions.

The story starts with a visit to a car factory in 2010. There, one of us saw a continuous process of producing a vehicle with multiple competing organisations contributing seamlessly to that process. These organisations were tied in by a common quality specification for the whole process, and a contractual alignment of financial incentives (and disincentives).

At the time we were delivering the National Long Term Conditions QIPP programme around the three evidence based drivers: risk associated with the target population; integrated teams at a local level delivering the care; and maximising the number of people who could self-manage. It was clear that if we wished to create more seamless care we had to tackle perverse incentives and barriers for joint working.

Payments based on individual episodes of care were leading to fragmented approaches to service delivery. Within this, key performance indicators, contracts and workforce planning were all done in isolation leading to inefficiencies and silo working. Much of this has to change if integrated care is to be a reality experienced by patients.

Our idea was to have a single capitated budget (a budget calculated per person) for the whole process, with a common quality specification that had to be owned and delivered by all organisations involved. The financial incentives would be aligned behind commissioner determined common outcomes. The Year of Care capitated budget was our proposal. The idea was to allow care to be provided based on a person’s overall needs as opposed to the specific diseases they have.

Whilst the issue was shared by national leads, the initial response was that it was too complicated, couldn’t be done. As with any transformational change, the idea also challenged vested interests. We respectfully disagreed that the task was impossible, and the Long Term Conditions (LTC) Year of Care Commissioning Programme was born. We gained enough senior support to fund eight pilot health and care economies across the country with a range of different geographic and socio economic characteristics selected to test the concept. 80% of health and care economies responded to the invitation to be one of the eight.

Our initial plan was to develop the detailed mechanisms in the first year, hold a shadow year in the second, and be live in the third and fourth. The first year, starting in 2012, was an experimentation of methods to identify appropriate patient groups. At the time there was very little data available at a granular level so the sites collected their own to assess need, service utilisation, and cost and to help us build a collective picture at a population level, thereby starting to develop a population diagnostic for LTCs. Detailed analysis soon proved that the number of LTCs is the most stable method of identifying the population that would have most benefit from proactive preventative care.

In the second year at the same time as the health and care reforms hit, the sites persevered and used this method to test its application on local populations and further understand the impact of multi-morbidity on current and future service models. This was supported using a simulation tool to model current and future delivery options. The teams also undertook recovery, rehabilitation and reablement (RRR) clinical audits to identify the point at which the individuals’ needs change and they could transition from acute care.

In the third year, some of the momentum was lost due to the reforms. Sadly some of the teams were unable to continue due to extensive changes in their own organisations. The remaining teams focussed on improving their data quality and linkage, building an integrated dataset of activity and cost, developing dynamic dashboards to aid planning and delivery of care, developing a shared care record and whole population analysis which uncovered the crisis curve – this is where patients have high total annual cost of care in the year they were identified and lower total annual cost of care in both the previous and following years. Whilst the impact of Information Governance (IG) restrictions severely hindered the pace at which sites could move forward, local solutions were found.

During years three and four some teams started to re-design the delivery model, some planned new ways of jointly commissioning care between health and local authority and some started to shadow test budgets for locality teams. Lessons learned supported capitated budgets for LTCs being included in the national pricing strategy, the development of national change programmes, offered new mechanisms for data sharing across health and care, created some solutions for IG at both a national and local level, and tested new contract approaches. The national data has been used by the Health and Social Care Information Centre and in Commissioning for Value packs. Reports from the Kings Fund, Health Foundation and Commission for Whole Person care all support capitated budgets for people with multiple long term conditions. In other words, capitation budget has become a mainstream need, is attracting global interest.

Learning has now been used to produce a practical handbook for wider implementation. A future where more patients with multiple conditions get the seamless care they desperately want and need.


Jacquie White, Deputy Director for Long Term Conditions, Older People and End of Life Care

Jacquie White is NHS England’s Director of System Development for Primary Care and System Transformation.

She has over 15 years’ experience of working in and supporting health and social care teams to improve the quality of services for and with their local population.

Having started her career in fund holding in a small rural general practice, Jacquie has worked across the public sector at a local, regional and national level.

She has significant experience of both commissioning and provider development and of supporting teams to integrate care across organisational boundaries.

Adj Professor Institute of Global Health Imperial College.

Sir John Oldham qualified at Manchester Medical School in 1978 and worked in various teaching hospitals, culminating as a GP trainee in inner city Manchester, before becoming a partner in a general practice.

Until recently he was National Clinical Lead for Quality and Productivity at the Department of Health He is also a member of the National Quality Board for the NHS in England, which sets the strategic direction for quality and safety in the NHS and the priorities for NICE. He has recently been appointed as Chair of an Independent Commission on Whole Person Care.

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  1. Paul Streets says:

    Really important piece. Until we focus on whole people over institutions we’ll fail on outcomes and budgets. But it takes real courage and great comms with the public because to do that means accepting our expensive acute services are shibboleths we can ill afford as currently configured – much as we must value them for when things go acutely wrong & when we need specialist and elective care. But whole person budgets should shift the spend upstream…and for MPs what that means is taking real political courage. If we can fix that problem the rest may follow….

    • KASSANDER says:

      I don’t QUITE understand your point nor some of your concepts
      E g
      # What are whole people?
      # What are whole person budgets?

      Some of the main reasons Our=NHS is in the parlous state it’s in is that Governments have sloughed off the responsibilities that used to be held by the SoS who was in turn answerable to MPs
      The SoS has STP-ed the financial resources available to Our=NHS (STP in this case = Slash, Trash and Privatize)
      The Morrisonian model of Public Ownership now crushes any real involvement of P&P in the Governance of their own possession.
      In Christian, never mind Social, Democratic countries Boards consisting of
      1/3 Gov’t appointments
      1/3 Elected employees
      1/3 Elected Clients = P&P
      We don’t and won’t have that now the PM has slammed the door on her earlier plans
      Ms Cummings & Ms Singh eliminated the online voice of P&P in a dawn raid last Spring on NHS Citizen-Gather
      If a new version ever arrives it’ll be a toothless pet poodle

  2. KASSANDER says:

    Dear, Sir John Oldham and Jacquie White

    At a rough guess, what % of the population do you think would be able to follow and understand, this article, please?
    How do you come to your conclusion?
    If it’s not > 75%, what are you going to do about it?


  3. Roger says:

    has there been an independent evaluation of the pilots?
    does this constitute conclusive evidence to justify implementation?
    does anyone else in the world do this?
    does america do this anymore?
    aren’t we turning the clock back to pre internal market?
    if so, what is to overcome the perverse incentive to not provide healthcare?