Co-ordinated Contracting- An Enabling Strategy for the Development of Integrated Care Presented to the NZIHM & NZHA Conference

• Introduction
• Methodology
  • A Definition of Co-ordinated Contracting
  • Co-ordinated Contracting - Objectives
  • Co-ordinated Contracting - the Approach
  • A Framework for Co-ordinated Contracting
  • Key Factors for Success
  • Implementing Co-ordinated Contracting - RFP Framework
• Results
  • Application of the Framework to Implementing the Child Health Strategy
• Discussion
  • Experience Gained to Date
  • Barriers to Change
  • Impact on Efficiency and Effectiveness
  • Need to Engage Providers in the Development of Solutions
  • Information Requirements
• Conclusions
• References
• Acknowledgements
• Appendix A - A Generic Co-ordinated Contracting RFP
  • Section A
  • Section B

Introduction

In the recent past purchasers have evolved a range of contracting strategies, which have tended to address narrow service areas. While these have targeted efficiency it has been at the expense of the needs of patient and the achievement of health gain. A focus on individual provider needs, combined with a process of competitive tendering, has increased the fragmentation of service delivery.

Integration, with a greater emphasis on outcomes and quality, is proposed as a solution to these issues. This will be achieved through improving co-ordination of provider activity and removing gaps and duplications in services. Development of this approach in the short term is proving difficult, a problem not unique to New Zealand.

It is apparent that integrated services will be configured differently from today, but the detailed information required for contracting, including service specifications, pricing models, and quality measures, is currently not available. At the same time relationships between providers are rarely developed to a stage which permit the level of collaboration and co-operation required.

Midland Regional Health Authority (now a division of the Transitional Health Authority), one of four Government purchasing agencies, recognised that in the short term it was not in a position to contract for integrated services, but required an approach which generated the information and experience to remedy this situation, and at the same time facilitated the necessary change in purchaser / provider behaviour.

Co-ordinated contracting was developed as a response, and evolved from a feasibility study evaluating options for general practitioner (GP) budget-holding for secondary care services, which identified a number of important issues:

• Integration offered the opportunity to achieve efficiencies through the removal of duplications in service delivery and improve effectiveness through co-ordination in provider activity and the removal of gaps in service provision
• That improved integration of services would not necessarily be achieved through GP budget-holding
• That supporting evidence that secondary care budget-holding by general practice would improve efficiency and effectiveness was lacking
• Assumptions that the budget-holder would be a primary care group without exploring alternatives was unsound
• That a contracting framework was required through which services could be purchased, including service definitions, and pricing.

Further progress was made through a two month feasibility study to scope methods by which purchasing could achieve improved integration of care in the short term.

The outcome was the development and implementation of an enabling strategy termed ’co-ordinated contracting’. This paper describes the strategy in more detail, and outlines its wider applicability to the practical development of integrated care.

Methodology

A Definition of Co-ordinated Contracting
Co-ordinated contracting is an enabling strategy leading to integrated care. It is designed to provide information and assist the change management processes necessary to develop the purchasing of integrated services.

It is an operational framework which can be used to foster the delivery of quality, cost-effective services, where improved co-ordination between primary, secondary and tertiary health and disability support services is required. Public health services (such as health promotion) are integral to this process, along with improved links to non-health sectors.

There are two discrete dimensions by which co-ordinated contracting can be viewed:

• The vertical co-ordination of services to an individual, at different provider levels (eg primary / secondary care), for any given service
• The horizontal co-ordination of services to an individual, for multiple and varied needs and services.

Co-ordinated Contracting - Objectives
Co-ordinated contracting is designed to make progress towards the development of integrated services through achieving the following objectives:

• Engaging providers in the development of integrated care solutions
• Generating evidence that integrated service delivery leads to health gain
• Developing internal structures and processes, for both purchasers and providers, which will enable co-ordinated contracting to be achieved: clinical, information, finance and management
• Developing the information which will enable co-ordinated contracting for targeted services - definitions, purchase units, pricing, payment methods, contracting terms, and outcomes
• Developing co-ordination of provider activity: health, disability, clinical and support
• Developing improved communications and relationships between providers, and between purchaser and providers
• Developing and implementing pathways of care through provider driven protocols and guidelines
• Focussing on the quality of care - access, service, outcomes.

Co-ordinated Contracting - the Approach
Co-ordinated contracting recognises that the development of integrated services is best made incrementally, through manageable steps.

The process can be commenced by identifying areas of service delivery where gains in efficiency and effectiveness can reasonably be expected to result from improved co-ordination of provider activity.

To assist the implementation process a co-ordinated contracting framework has been developed. It assists identification of the priority service areas to be tackled, and outlines how providers may be engaged in the development of solutions.

A Framework for Co-ordinated Contracting
The following generic framework is suggested as a tool to assist the implementation of co-ordinated contracting in any relevant service area:

1. Define goals, and objectives.
2. Identify the service(s) to which co-ordinated contracting is relevant.
3. Describe the key elements comprising the current service, service specification, purchase units, volumes etc.
4. Identify the key deficiencies within the current service, eg secondary care access difficult, poor co-ordination of community services etc.
5. Identify information required before co-ordinated contracting is possible, eg purchase units, pricing, unbundling, pathways of care etc.
6. Identify areas targeted for improvement, eg primary / secondary interface, community support etc.
7. Determine discrete implementable elements.
8. Specify areas where provider input to the change process will be sought.
9. Specify the available support resources - people, finance etc.
10. Outline timings, management, monitoring and evaluation.
11. Generate a development plan, based on the above.
12. Develop request for progress (RFP), for areas where provider input is required - see below.
13. Implement RFP process.
14. Select provider(s) for demonstration sites.
15. Agree project plan, including evaluation.

Key Factors for Success
An essential element of the strategy is to separate the purchasing process from the development process. Projects should not involve budget-holding until purchasing, pricing and contracting issues have been satisfactorily resolved. This enables greater innovation as providers are aware that revenue is not immediately affected.

Key outputs are the delivery of information to enable the service to be specified and priced for purchasing, along with evaluative data on impacts, costs and benefits.

It is recommended that progress is made through development projects undertaken by working with providers in demonstration sites. As a primary objective is the development of co-ordinated services, any project should involve the participation of all significant providers and require a demonstration of their commitment to work together collaboratively.

The developmental nature of the projects should be made absolutely clear, stressing their limited duration, their evaluative nature and the procedure to be followed before any movement to new forms of contracting.

Additional control of the projects can be gained by splitting the development process into two phases. Phase I would be approached as a scoping exercise; project participants identify the specific services they would target for improvement. Phase II is the practical implementation and evaluation of Phase I recommendations, progress to Phase II being conditional on Phase I meeting criteria defined in advance and agreed with the project partners.

Implementing Co-ordinated Contracting - RFP Framework
To engage a wide range of providers in the process, a form of RFP can be used to select the providers and demonstration sites (see Appendix A).

Important elements include:

• Definition of goals and objectives
• Description of the key elements comprising the current service
• Identification of the areas for gain within the current service, eg secondary care access difficult, poor co-ordination of district nurse activity etc
• Identification of service areas targeted for improvement, eg primary/ secondary interface, community support etc
• Specifying areas where provider input to the change process is sought, and the nature of the input required - Phase I / Phase II
• Specifying the project deliverables - Phase I / Phase II
• Specifying the available support resources
• Outlining timings, management, monitoring, evaluation, information and contractual requirements.

Results

Midland Health recently developed strategies for Child Health and Mental Health which focus on improving the health in the Midland region. As the strategies required a high level of co-ordination between all the parties involved, co-ordinated contracting was used to assist the implementation process.

Application of the Framework to Implementing the Child Health Strategy
Project objectives were identified to be the improvement and co-ordination of services for children in defined localities by:

• Developing provider interface in well child, primary medical care and secondary services
• Developing community support services for children with special needs.

Two phases were identified for each project, with the expectation that applicants would complete both phases of either one or both projects. Deliverables for each phase were identified:

• Seventy expressions of interest were received, followed by 17 formal responses from a variety of child health organisations across the region. Of these, 15 met the basic criteria and were put through the full selection process
• Five groups were short-listed, including two from one area who decided to present collectively, a decision which was encouraged in the spirit of the project. Each group was given the opportunity to present to the selection team.

The intention had been to select two partners, however, the quality of responses was such that additional funding was made available enabling four projects to be undertaken, through three partners (including the joint proposal). Phase I projects were therefore established in Tairawhiti, the Waikato and Rotorua.

In each case the successful candidates had made joint proposals which included all key providers of child health services, who had demonstrated an understanding of the project requirements by identifying areas for service improvement which would lead to health gain locally, yet also have wider applicability.

At the time of presentation, Phase I has been completed with each group presenting its report on time and outlining recommendations for a model of co-ordinated care which can be tested in Phase II. The reports have been evaluated by Midland Health, and discussions are presently under way to finalise approaches for the next phase.

Discussion

Experience Gained to Date
All groups have identified that the three month time frame for Phase I was too short. Much of the work was undertaken by providers, who were also fully occupied in the delivery of patient care.

The support resource requirements have also been significantly greater than expected, in particular project management time both from the project groups and from Midland Health. This is partly due to the novelty of the process, and the consequent lack of experience on how progress could best be made.

More importantly, however, has been the time required to manage relationships. If the project were to have achieved nothing else, it has illustrated the critical importance of relationships in the process of integration. The time and effort required in this area should not be underestimated.

The experience has been equally challenging for the purchaser. The partnership approach has required a reduction in the usual level of control, and placing trust in the ability of the providers to deliver. The reward has been a marked change in the purchaser provider relationship, which has enabled collective problem solving through a joint approach to issues faced. As a result productivity has increased.

Each project has reinforced the need for collaboration through the establishment of a steering group, with wide provider representation. This group has been responsible for the overall management of progress, and accountable for all key decisions, but supported for day to day activities by a project manager.

Resources have been made available to each project group through a contract with one of the participating providers holding this responsibility on behalf of the steering group. As a result, a diversity of models has evolved. Contracts have been held with an Iwi (tribal) health organisation, a crown health enterprise (CHE) and a primary care group. Contracting with the steering group would be preferable to maintain balance, however, it is not possible until they develop a more formalised structure. This may eventuate through Phase II developments.

There have been a number of philosophical debates over the value of tackling integration through incremental steps. Some groups have wished to identify a complete integrated care model and commence by putting in place the significant infrastructure required for management.

Compromise has been reached through an agreement that the available resources for the process are limited and therefore need to be used wisely. This accepts the need to test the key elements of the proposed models first, and only to expand them on the basis of evidence of an ability to achieve health gain. However, the funding requirements, which are limited to administrative support and exclude the purchasing of services, exceed the budget available. Co-operation in this matter will also be required if the recommendations are to be fully implemented.

Barriers to Change
The successful achievement of integrated care requires significant changes in behaviour by purchasers and providers. A number of barriers to progress have been identified:

• The need to define, communicate and achieve buy-in to the future vision
• The need to tailor structure and processes to best achieve its future tasks
• The limits on available time, resources and skills
• The gaps in information, knowledge and experience required to move from the present to the future
• The need for mature, open, trusting relationships.

Those involved in the projects have observed that inter-provider relationships used to be much closer before the recent health reforms. This is difficult to verify, however, it is possible to identify that in a competitive environment providers will protect their turf to preserve their existence.

This is in conflict with the need to collaborate in order to better co-ordinate services. The problem may be compounded where providers have different objectives or hold different philosophies. Concern exists that integration will lead to assimilation. Nonetheless, all groups have commented that as a result of the Phase I process, they have a much clearer understanding of other providers’ roles and responsibilities, and have a forum through which they can discuss issues and resolve differences.

Impact on Efficiency and Effectiveness
Current purchasing strategies aim to deliver efficiency and equity within single strata, ie the community, primary care, secondary care. This approach perpetuates traditional service demarcation.

There are an increasing number of service areas where improvements in efficiency and/or effectiveness require co-ordination of activity between different providers and service strata. Co-ordinated contracting offers a way of beginning to address this need, however, there is insufficient evidence yet available to state how successful the model will be in achieving these objectives.

Need to Engage Providers in the Development of Solutions
It is readily identifiable that in the future, co-ordinated services will be configured differently from today. Effectiveness will be achieved by providing care which meets the needs of individuals, while delivering health gain.

Success is dependent on the quality of interaction between patient and provider. While a funder / purchaser must be responsible for planning and specifying the services contracted, it is too far removed from the critical patient / client interface to identify services’ changes which will improve effectiveness.

The detailed information required must come from working closely with those providers who have a knowledge of this process.

Diagram 1 - Purchaser / Provider / Patient Relationship

Information Requirements
At the operational level, the purchase of services delivering integrated care requires detailed information on key parameters which include the following:

• Integrated pathways of care
• Management protocols
• Service specifications
• Purchase unit definitions
• Relevant prices and payment methods
• Appropriate contracting terms and conditions
• Outcome definitions
• Quality definitions
• Information requirements.

While progress is being made on collecting and collating much of these data, it is not available in the detail required to specify and price significantly reconfigured services. It is important that this strategy addresses these shortcomings, however evidence that this can be achieved will not be available until Phase II is commenced.

Conclusions

The indications at this stage are that co-ordinated contracting, as an enabling strategy, has been positively received by providers, has engaged them in the development of solutions to health care delivery issues, and has facilitated the establishment of new relationships between providers, and between purchaser and providers.

The practical application has required more time and effort to implement than was envisaged, which has been of particular concern to the provider groups involved. From the purchasers point of view progress to date has required significant involvement with each project group, participating in decisions, providing guidance and resolving issues.

The most significant barrier to progress encountered to date has been the limited relationships between those involved; providers and purchaser. It is clear that successful development of integrated care will require improvements in this area, in particular trust and communications.

Nonetheless very real progress has been made. New relationships have been established and communication channels opened. In addition practical implementable solutions to service delivery issues have been identified, which have a good probability of achieving health gain.

The real test for the strategy is yet to come. It is unclear whether progress towards the purchasing of integrated services can be maintained and what the impact on efficiency and effectiveness will be. More information will become available once Phase II commences, however, the signs at this point are encouraging. Success will require wide commitment to the process of change, along with the dedication of time, people and funds to the project.

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