Finance, incentives and integrated care: reflections from our latest Nine Pillars Forum

Jacque Mallender and Volker Amelung approached the issue from different perspectives, but there was a striking amount of common ground. Both returned repeatedly to the fact that funding arrangements shape behaviour. If organisations are paid for their own activity, carry their own financial risk and remain accountable primarily for their own budgets, it is entirely rational for them to optimise their own part of the system. Integrated care asks them to organise differently: share responsibility, work across boundaries, invest earlier and sometimes accept that the benefit of an intervention may appear somewhere else.

That tension is familiar to anyone working in integrated care, but the discussion brought out something more specific. We have spent a great deal of time experimenting with new models of care, but finance is still too often considered after the model has been designed. Volker argued that the service model and the payment model need to be thought about together from the outset. There is no single financing mechanism that will work everywhere; the right approach depends on the problem, the context and the behaviour we are trying to encourage.

Jacque made a similar point from an economic perspective. We already have a range of tools including budgets, activity payments, performance incentives, capitation, gain sharing and bundled approaches. The important question is how those tools are combined around the change we are trying to make. Her view was that strategic commissioning and purchasing matter at least as much as choosing a particular payment mechanism.

One part of the conversation focused on the difference between funding integrated care on top of existing services and actually being prepared to move resources. It is relatively easy to fund another pilot. It is much harder to decide that resources currently sitting in one part of the system need to move somewhere else.

Volker was very clear about this. If integrated care is always an additional layer of expenditure, it may improve care, but it will struggle to make sense financially. The harder work is creating the space to reallocate existing resources, for example, from later intervention towards prevention, community care or other forms of support.

Jacque’s example from integrated child health in London showed exactly what this can mean in practice. The model had evidence behind it, professional support and leadership commitment. Yet when clinicians started working differently, the existing payment system became a barrier: the hospital was still being paid for activity delivered through the old model. Making the new approach work required changes to contracting, purchasing and the way money followed the service. It also required trust and leadership across organisational boundaries.

That example reinforced an intrinsic element of IFIC’s Nine Pillars in that they are all interdependent. Finance cannot be separated from governance, information, leadership, relationships or shared purpose. A technically clever payment mechanism will not achieve much if organisations do not have the data, authority, capability or trust needed to use it. Jacque put it neatly during the discussion: finance is an enabling factor, but the other enabling factors also enable finance.

We also discussed whether there are countries or regions that have got this right. There was no simple answer, and I found that reassuring rather than disappointing.

There are useful examples internationally, but both Jacque and Volker cautioned against looking for a single model to copy. What works depends heavily on the way the wider system is organised. Jacque pointed to international experience suggesting that mixed payment models, designed around a specific problem and context, are often more useful than searching for one universal approach. Volker similarly emphasised that incentives which work in one institutional environment may behave very differently in another.

Perhaps the question, then, is not “Which financing model should we adopt?” but something more practical: what are we trying to change, what is currently preventing that change, and where would resources need to move?

The final contributions from Jacque and Volker provided some direction. Jacque argued for moving away from automatically protecting the acute hospital baseline and towards multi-year arrangements that allow resources and gains to be shared. Volker also emphasised freeing budgets so resources can move across sectors, alongside better use of data to understand quality, outcomes and fair reimbursement.

For me, that brings us back to the purpose of the Finance Pillar. The aim is not integrated budgets for their own sake. It is financing that helps us provide more coordinated, preventative, equitable and person-centred care.

The question I ended the Forum acts as a useful test:

Are our financial arrangements helping the system organise around people, or are people still having to organise themselves around the way the system is funded?

Our next Nine Pillars Forum takes place on 7 October, when we will turn to Learning from Results and Impact. It should be a natural continuation of this discussion: once we change how we organise and invest in care, how do we know whether it is actually making the difference we intended?