IHO contracts: emerging insights for NHS providers

This briefing shares emerging insights and considerations from provider trusts on the introduction and development of integrated health organisation (IHO) contracts. It aims to support trusts as they assess the opportunities, challenges and outstanding questions around IHO contracts, and to inform policymakers as they continue to shape and refine this evolving policy. 

Drawing on conversations with NHS Providers members, trust documentation, and early learning from frontrunner trusts, this briefing considers the case for change, the potential scope and scale of IHO contracts, and their implications for contract design and pathway development. It also examines how the policy aligns with the emerging NHS operating model and what this means for providers, ICBs and the national team.  

Key points

• IHO contracts present a potential major shift in how care is organised, moving from activity‑based contracting to population‑based models that give providers responsibility for outcomes and resource use across whole populations.  
  
  
• Although recent guidance issued by NHS England has set out the initial detail around population health delivery models, including IHO contracts, there remain key questions about how IHO contracts will operate, be authorised, and impact existing partnership working. This creates uncertainty for trusts wishing to evaluate their potential risks and benefits. 
  
  
• The purpose and value of IHO contracts needs clearer national articulation to avoid misalignment with other policy areas, and to ensure they are used to solve defined problems, improve outcomes and reduce inequalities. 
  
  
• The scope and scale of IHO contracts will shape how effectively their aims can be delivered. Focusing exclusively on geographical population footprints and neighbourhood-level models could potentially limit their ability to deliver wider pathway transformation. 
  
  
• Eligibility criteria should move beyond AFT status alone. Otherwise, it risks widening the gap between high‑performing and more challenged systems, particularly where performance issues stem from local context rather than organisational capability. 
  
  
• Roles and responsibilities between national teams, regions, integrated care boards (ICBs) and providers remain unclear, posing risks to strategic leadership from ICBs and coherent implementation. 
  
  
• IHO contract design must allow form to follow function, giving providers flexibility to determine subcontracting, partnership and governance models that best support integrated, preventative care. 
  
  
• There is potential for unintended consequences for the provider landscape, including increased complexity through multiple overlapping contracts, and impacts to organisational dynamics including collaboration and competition. 
  
  
• As set out in the recent guidance, early contracts should be used for learning, with national policy remaining flexible and iterative as real‑world implementation reveals what works and where friction arises. 

The ambition to improve population health outcomes and deliver greater value for money has led to the development of population‑based contracting models. These models aim to shift delivery from reactive, activity‑based approaches towards arrangements that hold providers accountable for meeting the needs of whole populations. Integrated health organisation (IHO) contracts represent one of the most ambitious attempts to redesign how resources are allocated and how care is organised around populations and places.  

The introduction of IHO contracts forms part of the wider shift set out in the 10-year health plan (10YHP), which positions population based contracts as a key mechanism for enabling a "left shift" towards preventative, proactive models of care and for supporting the development of a neighbourhood health service. The approach builds on accountable care models, both internationally and from initiatives such as the vanguard programme, but takes a contractual route, rather than creating a new organisational form. 

However, national policy on IHO contracts remains limited. While recent guidance sets out the intended purpose and expected impact of IHO contracts, it also states that “NHS England will work alongside the first wave of IHO contract holders to test the model and develop a pipeline for wider rollout…” leaving trusts and system partners to interpret and explore the model as policy continues to evolve. 

The 10YHP focus on neighbourhood‑level care and the shift toward strategic commissioning by ICBs will be facilitated by new population health delivery models. IHO contracts sit alongside single neighbourhood provider (SNP) and multi-neighbourhood provider (MNP) contracts; however, the detail of how these contracts will be implemented, and the unique contribution of these contracts is not fully set out either.  

IHO contracts will initially be available only to high performing foundation trusts, with IHO designation linked to the Advanced Foundation Trust (AFT) programme. A small number of trusts have been selected as frontrunners to help shape the AFT assessment process, IHO designation criteria and the emerging contractual framework. Their experience will be critical in testing assumptions, identifying required capabilities and clarifying what it means to hold a whole population budget under a single contract. 

To support clarity, this briefing uses the following definitions (as set out in recent guidance from the government and NHS England: Neighbourhood health framework and Fit for the future: towards population health delivery models) 

• Population‑based contract models will be commissioned by ICBs and enable providers holding these contracts to work in new ways, beyond organisational boundaries to improving outcomes and managing resources across the defined population, with incentives aligned to prevention, early intervention and reducing unwarranted variation. 
  
  
• IHO contracts will give providers a whole population health budget for a geographically defined population, underpinned by a contract. 
  
  
• SNPs will deliver services through integrated neighbourhood teams, within a defined single neighbourhood, enabling primary care to take on new neighbourhood services that are not contracted. The SNP contract will support the contract holder to work closely with practices to deliver care to the registered patient lists of the neighbourhood population.
  
  
• MNPs will coordinate the consistent delivery of services across multiple neighbourhoods, including delivering services directly at a larger scale than a single neighbourhood. The MNP contract will support the design and coordination of neighbourhood health services in their footprint and allow for new risk-sharing approaches to incentivise neighbourhood providers to deliver preventative care.
  
  
• Strategic commissioning is the role of ICBs in setting system‑wide priorities, shaping service models, allocating resources and holding providers to account for outcomes. This focuses on population health, long‑term planning and value rather than transactional contracting. 

This section draws on feedback from trust leaders who are actively weighing the case for IHO contracts and how they might be implemented. These conversations took place prior to the publication of Fit for the future: towards population health delivery models. 

Clear case for change

Trust leaders are clear that any move towards an IHO contract must start with a well‑defined, outcomes‑focused case for change. While key policy questions remain, particularly around the evidence base and intended outcomes, providers see potential value in the model. A capitated budget could help align clinical strategy with financial flows and create stronger incentives to shift care upstream and into community settings. 

However, IHOs are not the only route to achieving these aims. Providers and ICBs will need to have a clear understanding of why an IHO contract is the right mechanism for their system, and what unique contribution it offers compared with alternative approaches. Without this clarity, IHOs risk being viewed as another contractual reform rather than a meaningful lever for transformation. 

There is relevant experience to draw on. International accountable care models, the primary and acute care vanguards (as set out in NHS Confederation’s report Towards integrated health organisations), and lead provider arrangements in specialised mental health, learning disability and autism services all demonstrate the potential benefits of providers holding budgets for defined pathways or cohorts. But the specific IHO model of delegating a whole‑population budget to a single host provider remains largely untested. 

Healthcare leaders emphasise that form must follow function. Systems will need to be explicit about the problem an IHO contract is intended to solve, the outcomes it should deliver, and why this approach is preferable to alternatives. Agreeing this purpose upfront is essential to avoid misalignment when contracts are designed.

Scope, scale and design of IHO contracts

Policy intent

Current policy proposes that IHO contracts will allocate a whole-population health budget to providers within a defined geography, with the ambition that eventually ’…all areas of the country [will] be covered by an IHO contract.’ With neighbourhoods positioned as the organising unit of the 10YHP, the guidance clarifies the intention that IHO contracts are to be aligned with neighbourhood footprints, and used as contractual tools to support place‑ and system-based partnerships.  

The 10YHP described integrated health organisations, not contracts, as the mechanism for holding whole‑population budgets, positioning high‑performing foundation trusts to take responsibility for the full health budget of a local population, through longer‑term, capitated arrangements. Framing IHOs as a contract rather than a new organisational form may create greater flexibility for providers to collaborate around a shared population and set of outcomes. It may also help overcome fears of organisational takeover, particularly among primary care leaders. This raises a wider question about how other existing partnership models such as place‑based partnerships, provider collaboratives, alliance arrangements and provider groups, could be strengthened or formalised through an IHO contract where they already demonstrate maturity and shared purpose. 

Alternative approaches

However, trust leaders caution that a singular focus on whole population budgets risks overlooking opportunities for IHO-like capitated contracts to operate at different scales. In some systems, a contract covering a defined population cohort or service pathway across a wider system footprint may be more impactful and better aligned with existing provider configurations and system plans to improve population health outcomes. Given the variation in geographies and provider landscapes, focus on neighbourhood‑level integration may narrow the potential of IHO contracts. Providers with strong local relationships may be well placed to hold IHO contracts. But specialist providers and ambulance trusts, operating across larger footprints, may struggle to demonstrate the neighbourhood‑level expertise the policy currently prioritises. Indeed, the recent guidance is explicit in stating that ‘we anticipate that community, mental health and acute trusts could all be eligible to be designated as IHO contract holders.’ 

If there is limited flexibility through the IHO policy, trusts and systems, as they are now, will continue to look for alternative contractual mechanisms to achieve similar aims. Providers and ICBs may want to explore lead or host provider arrangements, or other models that enable providers to take greater responsibility for the budget and pathway configuration for defined cohorts or pathways where this adds value. 

Given the financial risk associated with IHO contracts, there may be merit in ‘starting small’ by focusing providers holding budgets for defined pathways or cohorts through lead provider arrangements, and ‘building up’ to holding the budget for a whole geography. 

Wider policy and system considerations

Any contractual approach will need to build on existing service networks and align with new Modern Service Frameworks (MSFs) - condition specific frameworks intended to translate strategic ambitions into service expectations. The Strategic Commissioning Framework and recent guidance on population health delivery models asks ICBs to "use MSFs to create the evidence base for new integrated models of neighbourhood care that maximise value".  

These frameworks could create an opportunity for providers and their ICBs to explore the foundation for some IHO-like contracts at scale, supporting consistency, aligning with service footprints and enabling providers to take responsibility for defined populations.  

Trust leaders are also conscious of the wider system implications - community interest companies, VCSE organisations and primary care providers will need clarity on their role within IHO models. There will need to be clear contractual underpinning to define responsibilities, manage risk and ensure accountability across subcontractors. Primary care presents a particular challenge: although there are a handful of mature at-scale organisations and collaboratives that are themselves providing services at scale and supporting partnership sustainability, without more fundamental reform to primary care contracting, population‑based budgets may struggle to deliver the full ambition for neighbourhood working. 

However, the central test for any IHO contract is what it is intended to achieve. The 10YHP and Fit for the future: towards population health delivery models are ambitious about the potential of IHO contracts to transform service delivery, shifting activity out of hospitals, strengthening community‑based care and enabling more preventative, upstream interventions. The question for providers and ICBs is whether an IHO contract can unlock forms of pathway redesign and integration that existing mechanisms have struggled to deliver. 

Eligibility to hold an IHO contract

The 10YHP states that organisations holding IHO contracts should be the "best new FTs", now called Advanced Foundation Trusts (AFTs), and that the contracts “will only ever be able to be held by NHS organisations”. The underlying assumption is that because AFTs have demonstrated financial discipline and operational grip, NHSE can have confidence that they can manage a whole‑population budget. However, while AFT status may signal organisational maturity, it does not automatically confer the capabilities required to hold an IHO contract. Managing a whole‑population budget, holding higher levels of shared risk, designing models of care to improve population health outcomes and overseeing multi‑provider arrangements are capabilities that most providers cannot yet evidence. Several trusts noted that they would expect to draw on ICB expertise to fill these gaps, but ongoing restructuring and resource pressures make this increasingly challenging. 

This raises a broader question about whether AFT status is the right gateway. There is a strong case for widening eligibility, as set out in our joint response to the AFT consultation earlier this year. Trust leaders warn that the current approach risks widening the gap between high‑performing and more challenged systems, particularly where performance issues stem from local context rather than organisational capability. For some challenged systems, a population-based contractual mechanism may support system partners to explore opportunities to transform care pathways, allocate resources more efficiently and join up services across organisational boundaries, provided the leadership capability is in place.  

Ultimately, IHO contracts should be available to the organisations and partnerships where populations stand to benefit most, and which have or can access the requisite skills. Trust leaders will want to see the national policy evolve as IHO contracts are developed and implemented. In parallel, development support for contract‑holding providers and ICBs will need to be available and iterated. There may also be potential in the future for mature neighbourhood providers to deliver an IHO contract, either by partnering with a statutory NHS organisation, working within an NHS organisation, or by forming a new NHS organisation. 

Crucially, until there is further evidence to suggest that IHO contracts are the best mechanism for improving population health outcomes, they should not be positioned as the only or default model. Organisations not eligible for AFT status or IHO designation may wish to build on existing place‑based partnerships, or explore other contractual mechanisms, such as single and multi-neighbourhood provider contracts. 

Aligning with the new NHS operating model and potential impact on the provider landscape

Clarifying roles as part of the emerging operating model 

The introduction of IHO contracts is taking place within the context of changes to the NHS operating model. The emerging operating model aims for a clearer division of responsibilities: the centre sets national strategy, regions oversee performance and assurance, ICBs act as strategic commissioners, and providers remain accountable for delivering care. How these roles relate to the award, design and delivery of IHO contracts, expose some unresolved questions and tensions.  

The extent of ICB discretion in procuring IHO contracts is key amongst these. While NHSE national and regional teams will ultimately decide which organisations are eligible to hold IHO contracts, there is uncertainty about who ultimately decides when and where an IHO contract will be awarded. If ICBs are being asked to be the strategic commissioner within their systems, their authority may be undermined if they can only award contracts to organisations approved by the centre and the region. It is also unclear whether ICB discretion extends to deciding not to award an IHO contract to an organisation deemed IHO-ready.  

While early contracts are being shaped closely with the national team, over time ICBs will need to be more fully involved in contract design, including setting outcomes for the contract to deliver. Indeed, there is a requirement in the Fit for the future: towards population health delivery models blueprint for ICBs to demonstrate they have begun implementing some “outcome-based contracts”. This is consistent with ICBs’ strategic commissioning role, but trust leaders are keen for greater clarity on how any commissioning functions will transfer to the IHO contract holder, how duplication is avoided and how accountability is maintained as responsibilities shift. ICBs are also still in the process of adapting to reduced staffing levels and tight running-cost envelopes: without targeted development support they may struggle to fulfil their role in relation to IHO and other population-based contracts effectively. 

Implications for the provider landscape 

These questions sit alongside wider implications for the provider landscape. While the shift from IHOs as an organisational form to a contractual model avoids immediate structural upheaval, it does not remove the question of how IHO contracts will interact with a changing provider landscape. Financial pressures and the trend toward integrated and combined provider organisations, mean provider consolidation through group models, shared leadership arrangements and provider collaboratives is ongoing. The scale at which IHO contracts are adopted will likely be a key determinant of how this evolves. If a group model were to hold an IHO contract, recognising that only one organisation would be legally accountable, arrangements could range from system‑wide contracts to those covering only parts of a footprint. Regional teams and ICBs will need to consider the wider impact on the provider market and monitor for unintended consequences.  

If IHO contracts become the norm, providers, particularly those covering large geographical footprints, have expressed concern about the potential for a highly complex contractual environment. A trust may hold (or be contracted via) multiple IHO contracts for different defined populations or hold an IHO contract for one population while being subcontracted by another IHO contract holder for a neighbouring population. This is in addition to services that will continue to be commissioned outside the scope of IHO contracts. Understandably, this raises concerns about the range of differing outcomes and incentives that will impact service delivery for trusts, and the potential for an unwieldy number of partnership arrangements. Trust leaders would like greater understanding of how this will affect organisational dynamics, collaboration and competition before the model is scaled further. 

Only a small number of IHO contracts are likely to go live initially, with the first expected from April 2027. These early adopters will provide essential insight into how IHO contracts develop provider relationships, influence market behaviour and interact with ICB responsibilities. 

While the direction of travel is becoming clearer, key policy questions remain. These will shape whether IHO contracts can deliver their intended outcomes and how providers and ICBs should prepare. The following questions represent the areas where national clarity will be most important. 

Clear case for change

• With the ambition for IHO contracts to ‘become the norm’, what evidence supports the use of whole‑population budgets to align incentives, shift care upstream and improve outcomes? 
  
  
• Given that whole‑population capitated budgets are less established than other accountable care models, what evaluation or learning processes will be in place before wider adoption? 

Scope, scale and design of IHO contracts

• At what scale (neighbourhood, place, multi‑place, system or patient/population cohort) would a capitated contract add the greatest value for services and populations, and what factors should guide decisions about footprint? 
  
  
• How should IHO contracts interact with existing organisational arrangements, such as integrated providers, group models, provider collaboratives, alliance models and networked service structures? 
  
  
• Should IHO contracts allow for different models (e.g., alliance‑style, lead provider, group‑based), or will national policy prescribe a single approach? 
  
  
• Will strong alignment with SNP/MNP contracts narrow the potential of IHO contracts, and will this close alignment with the neighbourhood ambition limit providers operating across larger footprints from leading these models? 

Eligibility to hold an IHO contract

• To what extent should eligibility for IHO contracts remain closely associated with AFT status? Does AFT status provide the assurance needed for awarding population-based contracts, and what are the alternatives? 
  
  
• How will ICBs and providers be supported to build the necessary capabilities to commission and hold IHO contracts? And how is it possible to assess whether pursuing IHO designation is the right strategic priority given the lack of evidence base and clear rationale for the model? 
• How will the evidence base for eligibility (including the NHS Oversight Framework and CQC assessment frameworks) be iterated to provide a more accurate measure of capability – not just performance – including evidence of strong partnership working?

Alignment with NHS operating model and impact to the provider landscape

• How will the balance of decision‑making authority be defined between the centre, regions and ICBs in awarding IHO contracts? 
  
  
• How should the wider impact of IHO contracts on the provider landscape, including consolidation, subcontracting and the risk of an increasingly complex contractual environment, be managed? Providers’ and ICBs’ views on this should be sought. 
  
  
• How will regional and national teams assure themselves that they have the appropriate oversight to identify unintended consequences from the widespread adoption of IHO contracts, such as changing provider dynamics, over‑centralisation or destabilisation of smaller providers?