Chapter 8 - Introduction

Section 1

How you pay for health- and social-care encourages different behaviours. This is because people respond to incentives and risks. The payment model determines what incentives people have and how risks are shared. In order to succeed, Whole Systems Integrated Care needs to provide incentives and share risks so that providers work together to keep people well.

Across health- and social-care, significant funds flow to hospitals. This is because a large part of the payment system was designed to reduce hospital waiting lists and therefore encouraged volume. Changing pressures on the health- and social-care systems, in particular the rising prevalence of long-term conditions and more people living longer, mean that a new payment model is needed for Whole Systems Integrated Care. International evidence shows that payment reform is a crucial foundation to achieving whole system change. Without a new payment model, it will be very hard to get funding to flow differently and therefore to implement new models of care that improve outcomes.

A working group of providers, commissioners and lay partners has assessed four options and has broadly found capitation to be the best approach for Whole Systems Integrated Care, although a number of challenges must be overcome before it can be implemented. Capitation strongly incentivises providers by sharing risk and savings to widen their focus from a particular service to the broader wellbeing of individuals. If applied effectively at the right scale, it also reduces risk of overspend, enabling providers and commissioners to be more secure in the planning and management of services. However, it requires significant upfront investment for both providers and commissioners in management capabilities and information systems to track activity and costs at an individual level. Providers that do not succeed in keeping people well also risk financial deficits. These risks to providers must be managed, with the understanding that new ways of working must be developed.