Neighbourhood health: How provider collaboratives can "shift left" funding (without breaking the system)

A practical approach for collaboratives spanning primary care, community and acute providers to identify, cost and move resource from hospital activity into neighbourhood delivery under the new neighbourhood health framework.

The neighbourhood health framework is explicit about the direction of travel: a shift of care from hospital to community, organised around integrated neighbourhood teams, with clearer expectations on outcomes and accountability. Yet it’s equally clear (and many local leaders will recognise this instinctively, and it is the thorniest area to negotiate and document) that the hardest part isn’t writing the vision but moving the money

By a "left shift" in funding, most systems mean reallocating spend from acute pathways into neighbourhood services so that more demand is met earlier, closer to home, by multidisciplinary teams and community alternatives. It’s not just a question of "more investment in the community"; it’s a question of changing incentives and budgets so that provider behaviour aligns with the intended model of care.

Why the "left shift" is hard (and why collaboratives matter)

Neighbourhood health is often sold as common sense. In practice, it runs into four predictable barriers:

• Different funding streams and rules across primary, community and secondary care, with national contracts that are slow to flex locally.
• A timing mismatch. Neighbourhood interventions may reduce demand over years, while acute pressures are immediate.
• "Savings" that don’t cash. Lower admissions don’t automatically release cash unless capacity is actively taken out (beds from acute hospitals, clinics, workforce, estates etc).
• Risk and accountability. If activity (and income) falls faster than costs, who carries the financial hit and who benefits if outcomes improve? 

This is where a provider collaborative spanning primary and secondary care can add real value. When the same group of providers agrees the pathway redesign, the investment case and the risk/gain-share mechanism, the left shift stops being an abstract policy aspiration and becomes a governed programme with measurable outputs.

Approaching the funding shift: Activity, cost and funding flows

While there may be a need for honest discussions on the financial benefits associated with predominantly preventative activities, even before considering any shift in activity, it’s important to first define how that shift would be assessed. This requires answering three key questions: what happens today, what it costs, and how funding currently flows.

More specifically, and drawing on some of the most positive examples we’ve supported our clients with, we would advocate an approach whereby you:

1. Choose your "left shift" pathways (starting small): Frailty, end of life, COPD/heart failure, diabetes, MSK, children’s outpatients, urgent community response and virtual wards are common starting points.
2. Quantify current demand: Admissions, bed days, outpatient first/follow-ups, A&E attendances, ambulance conveyances and community contacts split by neighbourhood where possible.
3. Convert activity into cost using agreed reference points (contract values, service line reporting, reference costs). Be explicit about marginal vs average cost because only some costs are ‘releasable’ in-year.
4. Map funding flows: Identify which budgets pay for what (acute contract income, community contracts, DES/ARRS, integrated care board-held budgets, local authority contributions, VCS grants).
5. Identify constraints: National contract rules, workforce supply, estate, digital/information governance limitations, and clinical risk that limits what can safely move.

Recognising the portfolio of shifts rather than a single "big bang" shift

It’s rare to see one dramatic budget move. Instead, we tend to see a portfolio of shifts with different time horizons.

Examples include:

• Tier 1 shift (0–12 months): Funding shifts based on savings that are most plausibly cash-releasing (eg, enhanced urgent community response reducing short stay admissions; strengthened discharge-to-assess; virtual wards with clear substitution).
• Tier 2 (12–24 months): Shifting funding based on savings that arise from redesigned planned care and outpatients (eg, specialist advice and guidance; community diagnostics; neighbourhood clinics run with shared protocols; single points of access).
• Tier 3 (24+ months): Shifting funding based on savings associated with prevention and wider determinants (eg, proactive case finding, smoking cessation and respiratory pathways, falls prevention, social prescribing/VCS capacity) where the case is primarily outcomes and inequality reduction. 

Mechanisms to move the money: From aspiration to executable deals

The neighbourhood health framework points to new organisational and contractual routes (including single neighbourhood and multi-neighbourhood arrangements, and the potential for delegated commissioning through integrated health organisations). Whilst these may dictate a “left shift” in funding, the practical options for a provider collaborative typically include:

• Aligned incentives (light touch): Partners keep existing contracts but agree shared objectives, data, operational changes and a modest transformation fund.
• Gain/loss share (medium): An agreed formula reallocates part of financial benefit (and/or pain) linked to activity shifts and outcomes often with floors/ceilings and phased implementation.
• Lead provider/subcontracting model (stronger): One provider holds a contract and subcontracts others, enabling tighter management of delivery and spend (but requiring robust governance and transparency).
• Alliance contracting (strong): Multiple providers and commissioners share risk and governance under a single alliance agreement, with joint decision-making and a shared financial envelope.
• Pooled/aligned budgets (where lawful): Bringing budgets together around a cohort/pathway to reduce ‘cost shunting’ and fund integrated delivery.

Whichever route is chosen, the collaborative should be able to answer who decides, who carries risk, how disputes are resolved, how data is shared, and how frontline clinicians shape the redesign. Without that, a left shift can become a series of unilateral cost pressures rather than a jointly owned transformation.

Making savings real through capacity change

Many left-shift programmes fail for a simple reason: activity reduces but costs stay put. The best provider collaboratives plan explicitly for capacity change, including:

Bed and ward reconfiguration (or avoidance of planned expansions) linked to agreed reductions in bed days.

Outpatient template changes (fewer follow-ups, different modalities, neighbourhood clinics) so savings aren’t re-filled.

Workforce redeployment: Shifting clinical time into neighbourhood teams, with clear supervision and governance.

Clinical threshold and referral management: Advice and guidance, single points of access, and shared protocols.

Double-running funding: Temporary investment to run the new model while old capacity is safely stood down. 

Metrics that trigger funding movement (and keep everyone honest)

Given the framework emphasises outcomes over organisational form, the collaborative’s credibility will rest on how it measures success.  

Good left-shift metrics typically combine: 

• Outcome metrics: Frailty outcomes, improved long-term condition control, end-of-life planning rates.
• Activity and utilisation: Admissions, bed days, outpatient activity, avoidable A&E attendances tracked by neighbourhood.
• Experience and access: Waiting times, continuity, health improvements and patient-reported experience where available.
• Inequalities: Distribution of access and outcomes by deprivation/ethnicity, and differential improvement over time.

In funding terms, consider using gates. For example, a fixed transformation fund in year one; then staged movement of recurrent funding only when activity shift and safety indicators are achieved, data quality is sufficient, and capacity plans are agreed.

Final thoughts

The neighbourhood health agenda will succeed or fail on whether local systems can move resource as well as move activity.  

Provider collaboratives that span primary and secondary care are well placed to do this because they can hold the clinical redesign, the operational changes and the financial mechanism in one place. Starting small appears eminently sensible whereby you build a credible baseline, pick an executable contracting route and manage the acute capacity consequences in parallel.

Disclaimer: This article is for general information only and does not constitute legal, financial or commissioning advice. Specific arrangements will depend on local contractual, governance and regulatory context. 

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