Accountable Care Organis[z]ations Get Different Look in Olde England

Robert Royce

Britain’s National Health Service (NHS) might appear to be the ultimate accountable care organization with cradle-to-grave coverage and all the health care services within it. However, in reality, it is bedeviled by interorganizational silos just like U.S. health care, and the NHS is only now venturing into accountable care.

However, the move toward accountable care in England has already gotten mired in disputes (and confusion) about what organizational form it should take and whether current proposals are legal. Even the name of the initiative has recently changed, after it was thought that the term accountable care organization would raise fears that commercial companies were going to come in and run them. They are now to be called integrated care systems (ICSs), which apparently is less threatening.

Robert Royce

Robert Royce

A major part of the drive for ICSs is to get to a point where large, geographically defined entities can be given a budget to spend and all the NHS organizations operating within that area have to agree to live within that. Paying for health care in this way is seen by some as the de facto abolition of the internal market, which was established in 1990 in England whereby different organizations within the NHS were supposed to compete for patients and create greater efficiency through competition.

The dwindling governmental enthusiasm for market-­based solutions is a reflection of the problems you get when you set up a system that encourages health care providers to deliver more services and then you have too little money to pay for it (the NHS is funded solely through taxation). This may not sound very encouraging for companies thinking of working with the NHS, but there remains a significant opportunity in the technical or “enabling” aspects of accountable care, such as helping to improve health outcomes by targeting specific health conditions or parts of the community and promoting integrated care through particular types of contractual arrangements.

Historically, the NHS has been poor at identifying people most at risk for developing chronic diseases and devising and implementing strategies for better management of that risk. Many people who work for the NHS have a fatalistic attitude toward patients. Partly, this is a conceptual problem: Patients who consume lots of resources and have multiple “attendances” are considered inherently unpredictable. But it’s also partly caused by a systemic avoidance of responsibility. Nobody sees it as their job—or even particularly in their interest—to try to proactively manage the problems generated by the high use of health care services by certain patients. NHS organizations (and staff) have a tendency to complain that there are inadequate resources to deal with demand, while making limited practical efforts to influence that demand.

One example would be the management of multiple attenders to emergency departments. Some are frail elderly and those with chronic conditions. But a fair number are turning up in emergency departments because of their chaotic lifestyles—alcohol and drug abuse and other forms of self harm. A multiagency approach is needed to break down populations into patient segments and then tailor services around them. Transparency of patient records between organizations and different analytical tools that link care and costs across organizations are needed. This may sound all very familiar to American readers.

At the local level, there is likely to be a significant capability gap, even if NHS administrators, doctors, and nurses want to address the issue. The NHS is currently struggling with both operational and financial performance; 88% of acute hospitals are in deficit. As such, the surprise is not that there is an interest in better ways to manage patient care and reduce utilization, but rather that there isn’t more interest.

English metrics

Ten ICSs were announced in June 2017 with another four added in May 2018. They cover about 11.5 million people, or roughly 20% of the English population. The actual organizational form these ICSs will eventually take (they vary considerably in how advanced they are and the services they render) is not clear, in part because NHS England is trying to shoehorn the changes into the existing regulatory structure, which, ironically, was changed in 2012 with the intention of ensuring these type of changes couldn’t occur! Still, we know that an ICS will not be a separate legal entity, but a voluntary grouping of currently separate organizations. One organization is expected to take the lead on behalf of the others as the prime contractor. This structure is meant to simplify governance and decision making, but the emphasis that is already being placed on the importance of prior good relationships between organizations highlights its potential to do exactly the opposite. The phrase “ICSs will move forward at the speed of trust” sums up the current approach, which may not bode well in what can be a markedly low-trust environment.

The contracting arrangements for these new bodies are being finalized. They are likely to be multiyear, with NHS England developing a series of incentives within the contract with the stated aim of a “greater focus on long-term population and system outcomes that reflect the longer term aims of new care models.”

The draft contract proposes that 2.5% of the budget be tied to the delivery on population health and quality metrics that measure things like the percentage of physically active adults and children who are overweight. Whether that provides a strong enough incentive is something that the American experience might help to determine.

Creating outcomes-based financial incentives poses many challenges: adjusting them for different populations, agreeing to a robust baseline, and attributing changes to specific providers and interventions. The NHS ICSs don’t need to worry about people changing insurers like American ACOs, but that still leaves questions about how to attribute and reward performance when the desired changes may take years to manifest themselves and about the often unclear connection between cause and effect.

The lack of incentives for staff to deliver on institutional objectives has been one of the defining features of the NHS. In my opinion, that lack looms as a major weakness of the current approach to delivering accountable care. The same could also be said of the problems in engaging the general public in the maintenance of its own health given that there are no charges for utilizing NHS services.

It’s unclear how serious the NHS will be about pursuing the stated objectives of accountable care. Despite all the aspirational talk about tackling fragmented health care delivery, prevention, and population health, I suspect it will remain largely focused on delivering the “big four”: balanced budgets and wait times in emergency departments, for elective procedures, and for cancer treatments. Nearly all NHS acute hospitals are failing badly on at least two of these—and some on all four. They will want to deliver (or at least significantly improve) in these areas and also to resolve long-standing issues with the sustainability of local services in both primary and secondary care. If the ICSs fail to do so, they will be destined to join the long list of ideas that have their day in the sun and then get replaced by the “next big thing.” The size of that list is perhaps another thing that connects both sides of the Atlantic, even if the content of the list is somewhat different.

Monopoly purchaser

There is also the small matter of the 97.5% of the budget to consider after the 2.5% tied to the delivery of numerous outcome and lifestyle indicators is taken into account. The NHS is a monopoly purchaser of care with centrally determined prices. Those prices (especially for emergency care) have been set too low to deliver financial viability. This is a very significant downside of a single-payer system and centrally directed reimbursement. If the tariffs are set too low, intentionally or otherwise, hospitals run at a deficit year after year. If set too high, then undue profits are made. With only one payer, either outcome may be inevitable.

In summary, there are significant opportunities for the two health systems to learn from each other and also some genuine commercial opportunities in discrete areas. The U.S. experience of the issues involved in bringing different organizations and different parts of the same organization to work together in pursuit of joint objectives and added value to health care are relevant. So, too, is experience in risk share contracts. Finally, a number of IT solutions, alongside expertise in data sharing and analytics, are also likely to be transportable. Despite this, whether the U.K. will take forward accountable care in a form recognizable to U.S. readers is unclear. Watch this space.

Robert Royce is an independent health care consultant and writer. He lives in Swansea, Wales.