Commissioning for outcomes Tom Hampshire, PwC Sheena Nixon, Beacon Karen Foster, Cobic

Introduction  The NHS currently faces an unprecedented set of challenges - including a potential funding gap of up to £54 billion by 2021/22.  Existing payment systems within the NHS focus predominantly on rewarding organisational activity rather than the outcomes that matter to patients. This has created an episodic, fragmented model of delivery focussed on acute care, rather than an integrated, whole-system approach.  Policy trends within health and care point clearly towards closer integration of services between providers and care settings as a means to overcome these system challenges and fragmentation.  There is also a need to deliver value based care - that is, care which delivers the best outcomes at the right cost.  Outcome based commissioning - OBC - is an opportunity to meet these challenges through commissioning differently. OBC aligns incentives across the care economy to deliver the outcomes that matter to patients and the public. 1

A shift towards value based care  The central issue in the delivery of health care is the value of care delivered for patients and the public. health outcomes achieved cost of achieving those outcomes Value transcends organisational boundaries – it is must be a commonly held goal by all organisations involved in the delivery of care. Within the context of diminished resources, a focus on value is crucial - pressures on the NHS as whole are expected to grow at approximately 4% a year over the coming decade. Central to the delivery of value based care is achieving the best outcomes for patients, delivered at the right cost – OBC seeks to drive this shift through the way that we commission services across health and care. Value = 2

3 OBC seeks to drive this shift towards value Outcome based commissioning How does an outcome based approach drive value across the system? Aligning provider, commissioner and public goals Incentivising providers to innovate to deliver highly valued outcomes for patients Incentivising efficiency through the use of a capitated or bundled payment mechanism Removing perverse incentives for providers to deliver low value activity Removing barriers to shifting resource to where it produces greater value Working with stakeholders across the care economy to define outcomes that matter

Through this approach, OBC aims to achieve: 4

Broadly, there are two main approaches to OBC 5 1. Population based, using a capitated approach A provider – or group of providers – is allocated a capitated budget to manage all health needs for a defined population group. The contract may apply to the care for a local population within a specific geography, the care for a clearly defined segment of this population, or for a group of related conditions. These type of contracts are often referred to as COBICs - Capitated Outcomes Based Incentivised Commissioning. 2. ‘Pathway’ based approach Commissioning a single ‘pathway’ of care, making the provider(s) responsible for a person’s outcome related to a particular condition over a specified period of time. E.g. ‘Swedish hip’ model. Payment may include a capitated or bundled payment for all treatment relating to that condition. Providers are incentivised to choose the right intervention focussing on prevention and coordinate care across the pathway.

Understanding the outcomes model 6 What is an outcome? An outcome is defined as a health and/or social gain experienced by a person with an illness, as defined from the person’s, rather than the system’s or the clinician’s, perspective. An evidence-based approach The outcomes based approach for OBC organises outcomes into a hierarchy following that devised by Professor Michael Porter, Harvard Business School. Porter has developed an outcomes hierarchy that has three tiers of outcomes: health status achieved or retained, process of recovery and sustainability of health. Outcomes for the full cycle of health and care To ensure sustainability of health, it is necessary to develop outcomes relevant to the full cycle of healthcare, from an initial problem through to recovery.

Outcome hierarchy – Psychosis 7 Survival Degree of recovery / health Time to recovery or return to normal activities Sustainability of recovery or health over time Disutility of care or treatment process (e.g., treatment-related discomfort, complications, adverse effects, diagnostic errors, treatment errors) Long-term consequences of therapy (e.g., care-induced illnesses) Everyday activities: Extent to which I feel I am able to do activities without my illness getting in the way Timely Response: Extent to which I feel I have timely access to assessment & treatment; e.g. Extent to which I feel I receive help quickly so that things don't get any worse than they could have ; e.g. Extent to which I feel there is time to respond to relapse plans; e.g. Extent to which I feel illness can be prevented if early signs present Maintaining housing & employment: e.g. I keep my tenancy and employment status over time Maintaining relationships: e.g. Extent to which I feel my relationships have been maintained Degree of autonomy: Extent to which I feel I have control over my life (managing my own finances; running my own home) Degree of physical health: Extent to which I feel I can manage my physical health with my mental health Housing & employment: e.g. Housing, benefits & employment are in place for service user; e.g. Extent to which I feel I have safe and comfortable housing. Tier 1 Tier 2 Tier 3 Health Status Achieved or Retained Process of Recovery Sustainability of Health Prioritised Outcomes According to Tier

9 Psychosis suggested outcome indicators 8

Incentivisation 9 Incentivisation: Number of indicators  Manageable (not KPIs) Quantum of incentive  £ meaningful and material to the provider  Not destabilising  Different outcomes may carry different weighting. Thresholds  Baseline performance  Thresholds for Good, Improved and Excellent performance Pace of change  Develop for steady state  Phased implementation Gain share arrangements to share financial savings with providers and commissioners

What type of care is incentivised? 10 High value interventions – delivering care in settings where the best outcomes can be delivered at the right cost. Shifting resources to services in the community – delivering high value care will likely mean more services provided in the community and at home, where appropriate, rather than in hospital. A focus on keeping people healthy and in their own homes – investing in services to prevent emergency admissions to hospital, costly for both people and the system; supporting people to return home as soon as possible after a hospital admission; supporting older people to stay independent and in their own homes. Delivering outcomes that matter to people using the services – focussing on the experience of people using the services and achieving the outcomes that matter to them. Coordinated care – working in collaboration to provide a coordinated service across organisational boundaries and care settings.

Evidence from similar approaches elsewhere Selected whole system case study Measured benefits (case study specific)* Improved health outcomes Overall cost savings (where quantified) Reduced acute activity Reduced emergency admissions Reduced bed days and/or LoS Reduced rate of institutionalisa tion Improved patient experience Key method(s) driving integration Milton Keynes COBIC, UK % reduction in spend Capitation + Outcome measures La Ribera model, Valencia 25% reduction in spend Capitation + Outcome measures PACE, US 5-15% saving per capita Capitation Roverto Study, Italy 29% saving per capita Integrated provision Geisinger, US Not quantified Outcome measures Beacon Health, US Not quantified Capitation Veterans Health Administration, US Not quantified Capitation + Outcome measures * Blank boxes indicate the absence of evidence / measured benefits rather than the existence of negative outcomes 11

Any questions?

Group discussion: suggested questions What are the main opportunities that outcome based commissioning offers? Which service areas will be impacted by these approaches? What are the main risks from outcome based commissioning and how can these be mitigated? What support might community providers need to engage with commissioners about these approaches?