Key points
The government’s 10 Year Health Plan has put the shift from hospitals to community through a neighbourhood health service at the heart of its reform agenda.
While many of our members have been working in this way for years, they require clarity on certain aspects of the approach to neighbourhood health before they can move forward at pace. A core component relates to the contractual mechanisms for neighbourhood health, which are set to roll out from 2026.
This report outlines how the contractual mechanisms for neighbourhood health can evolve, clarifying their purpose and suggesting a number of core principles to guide policy development on multi-neighbourhood provider (MNP) contracts.
Key to developing successful contractual mechanisms will depend on addressing longstanding challenges that have hampered previous contract design, including fragmented leadership, governance uncertainty, financial sustainability and avoiding overtly top-down approaches.
To make the MNP contract both attractive and effective, healthcare leaders recommend ensuring true co-design; long-term incentives and flexible funding models; transparent governance structures; and mechanisms to balance short-term pressures and long-term population health goals.
However, to ensure that these contractual mechanisms really drive a shift towards neighbourhood health, they need to be ambitious in scope. Small, incremental tweaks to the system will fail to implement the radical changes that are needed to shift the current model of care and deliver a sustainable healthcare system.
Background
An effective neighbourhood health service requires integrated health and care services and a workforce at the most local level – within neighbourhoods. Although some places have already made progress in developing an integrated local approach to NHS, social care and voluntary, community and social enterprise (VCSE) provision, the direction of travel represents a new way of working, where integrated working is the norm rather than the exception. The aim is to:
- prevent unnecessary hospital and care home stays
- strengthen community and primary care, enabling the delivery of care closer to home
- connect citizens to wider services includes social care, VCSE and public health.
These are set out as the foundations of enabling neighbourhood health and neighbourhood working to thrive alongside a focus on leadership, public service reform and improvement support.
Following the publication of the 10 Year Health Plan, focus has now shifted to its implementation, seen through the launch of programmes including the National Neighbourhood Health Implementation Programme. From September 2025 to March 2026, the Department of Health and Social Care and NHS England will work with 43 places, to accelerate the work that is planned or already happening in many areas of the country, through learning together, sharing solutions, tackling challenges and delivering improvement. The programme will also seek to examine common barriers to implementation as well as understanding the impact this way of working can have on managing demand on NHS services – all of which will inform future policy.
The recently published medium-term planning framework sets out some immediate areas of focus. Neighbourhoods should improve GP access and reduce unwarranted variation, reducing unnecessary A&E attendances, non-elective admissions and bed days for priority cohorts (frailty, care home residents, end of life) and shifting planned specialist care closer to home. High-functioning systems can go further, setting up integrated teams for other groups including children and young people, mental health and learning disabilities, autism and ADHD.
NHS England, and the Secretary of State for Health and Social Care, have been quick to label the planning framework as ‘the most ambitious plan the NHS has published in a generation’. However, given the ambitious scope of the 10 Year Health Plan, those wanting radical financial changes will be disappointed. The NHS Payment Scheme for 2026/27 only proposes minimal changes, with more substantial changes for neighbourhood working expected towards the end of the parliament.
Indeed, the plan recognises that changing financial flows is a crucial enabler in delivering neighbourhood health services. Put bluntly, without better alignment of financial incentives, model of care will not shift towards more preventative care in the community.
The long-running tensions between recovery and reform continue to play out, with some leaders concerned that radical action would destabilise the system and others arguing that the biggest risk to the NHS is not making fast-enough change.
Population-based contracting mechanisms
The need for a financial ‘rewiring’ of the health and care service was long trailed by key Labour figures leading up to the 2024 election. It was seen as critical to making the shift to a preventative neighbourhood-based service. NHS leaders have called for payment reform to better support integrated care and have been exploring new innovative payment mechanisms. However, there is reason to be sceptical about the pace of change. The structural complexity of health funding and funding flows, combined with the short-term pressures on acute services, makes large-scale reform challenging. Political realities, and indeed the current political cycle, also play a role. Preventative investment is unlikely to yield immediate, tangible results, making such decisions harder to justify in the face of public and media scrutiny.
A core component of driving the shift of resources from hospitals to community-based preventative care is the contractual mechanism to deliver neighbourhood working. The 10 Year Health Plan outlined the introduction of two neighbourhood provider contracts, which are set to roll out from 2026.
The single neighbourhood provider (SNP) contract maps onto the primary care network (PCN) population footprint of 30 to 50,000, while the second type, ‘multi-neighbourhood provider’ (MNP) contracts, will be used to cover populations of 250,000 or more. The ambition here is to unlock new benefits of scale through joined-up back offices, data analytics and quality improvement infrastructure.
The government expects to see at-scale providers, including primary care collaboratives and GP federations, alongside NHS trusts taking on the MNP contract and expanding their ability to support general practice to establish strong infrastructure and deliver at-scale interventions using population health data. This will need to be done in true partnership with local organisations with a focus on communities and improving their local population, rather than simply reducing the pressures on healthcare services.
Neighbourhood health contracts will need a payment mechanism that incentivises and rewards joint working and early intervention. The NHS Confederation has proposed a risk-weighted capitated ‘Year of Care’ payment for a population cohort to a lead provider, with the option of including a variable element tied to local agreed outcomes metrics, which could operate at a multi-neighbourhood level. The choice of payment mechanism, or mechanisms, will be the most crucial part of neighbourhood contracts.
Alongside the two neighbourhood contracts, the 10 Year Plan also introduces integrated health organisation (IHO) contracts. In our recent report, healthcare leaders described IHOs as containing three main elements: 1) a capitated contract commissioned by an ICB which transfers responsibility for the health outcomes of a whole population to a ‘host’ provider, 2) with sub-contractual arrangements between a host provider and partner providers which cover the delivery of care services beyond those delivered directly by the host, 3) enabled by a locally agreed mechanism that ensures collaboration and shared decision-making across all providers.
IHOs are essentially a new form of accountable care organisation (ACO) – something which has precedent internationally. IHOs provide a mechanism for aligning financial flows and incentives to enable the NHS to shift more spending toward earlier and more cost-effective interventions. The 10 Year Health Plan states that the opportunity to hold an IHO contract will be open only to high-performing ‘advanced’ foundation trusts. While the intention is for IHOs to be universal by 2035, as of November 2025 only two organisations currently qualify to apply for this designation: Northamptonshire Healthcare NHS Foundation Trust and Northumbria Healthcare NHS Foundation Trust.
How do the different contractual mechanisms fit together?
The current General Medical Services (GMS) contract will remain in place, with the 10 Year Health Plan outlining a commitment to look at longer-term contract reform including a recently announced six-month review of Carr-Hill. At present the current GMS contract does not include a financial incentive for reducing downstream activity, unlike many capitation-based payment models. Other payments for general practice, including QoF, have over time become part of their core payments model and become increasingly complex, with a mix of input, output and outcome metrics.
The SNP will need to focus on providing the resource to ensure the delivery of general practice, with sufficient delivery to meet demand, managing patients with multiple long-term conditions, and utilising population health management tools to avoid unplanned admissions. It must also support collaboration across neighbourhoods and places, and bring together wider system partners including VCSE, social care and local government.
The MNP will be required to provide the framework for delivering joined-up integrated care. The contract could be held by any care provider selected to act as the ‘integrator’, responsible for ensuring the effective delivery of neighbourhood working and operating at a level of scale, while drawing on local knowledge, experience and relationships.
The new neighbourhood contracts and IHO contract perform different, but ultimately complementary, roles. The neighbourhood contracts seek to overcome fragmentation in the delivery of out-of-hospital care, whereas the IHO contract, while also looking to end fragmentation, will aim to shift resources towards neighbourhoods.
Integrated care boards (ICBs) in their role as strategic commissioners, are responsible for commissioning and overseeing contracts with neighbourhood providers, ensuring they are aligned with local population health needs and delivering integrated high-quality care.
A different arrangement may exist in areas where ICBs have commissioned IHO contracts. IHO contracts will need to cover a larger population than the SNP (and MNP) contracts, so it is possible that the IHO host provider could commission SNPs for their population. The relationship between an MNP contract holder and IHO will likely depend on the scale of the population that they are providing for.
NHS Confederation members have spoken about the levels of uncertainty and concern around how these models will interact in practice. For instance, some questions remain about whether an MNP can coexist in the same area as an IHO and how resources, including funding, would be split between them. This will require clarity in forthcoming policy documents. See appendix for an overview of documents expected to be published from December 2025.
Overview of different contractual mechanisms
General Medical Services (GMS)
- The government remains committed to the GMS contract.
- As of December 2025, the contract will undergo a consultation, with changes being prepared for implementation from April 2026.
- There is a longer-term commitment to reform the contract, which will be linked to a review of the Carr-Hill funding formula which has now commenced.
Single neighbourhood providers (SNP)
- SNPs are based on current PCN footprints that are geographically aligned with neighbourhood footprints, with a recognition that where PCNs don’t naturally align to a neighbourhood there may need to be some adjustments to PCN footprints.
- The contract will be for enhanced services. Core general practice will continue to be commissioned through the nationally negotiated contracts (GMS/ PMS/ APMS). The contract is voluntary, so PCNs don’t have to contract for an SNP and could keep separate practice level GMS and PCN-level DES.
- It will therefore be important to clearly define what constitutes core general practice, as SNPs are expected to deliver neighbourhood health services for populations of around 50,000. Health and wellbeing boards (HWB) will be required to agree neighbourhood footprints that will be used as the basis for delivery of services (within the HWB boundaries).
Multi-neighbourhood providers (MNP)
- At-scale contract and delivery.
- MNPs will be responsible for coordinating consistent service delivery across multiple neighbourhoods.
- They will require subcontracting or collaborative agreements with SNPs.
- The MNP contract is designed to provide greater stability for providers, particularly as services such as outpatient care transition into neighbourhood-based delivery.
Integrated health organisation (IHO)
- The aim of the IHO contract is to redesign care pathways, shift resources from hospital to community settings and improve population health.
- The IHO contract will focus on both coordinating care and allocating resources.
- The ICB will commission IHO contracts where there is a qualifying host provider and they deem this the best method for integrating care and improving population health at a lower cost.
- The awarding of an IHO contract transfers responsibility for the health outcomes of a whole population to the host provider, which will be responsible for delivering the outcomes commissioned set by the ICB within the contract.
- The IHO host provider will deliver some services itself and manage the necessary subcontracting and collaborative arrangements to support delivery of the services for the defined population.
- As IHO host providers mature and hold the budget for the whole population, they will increasingly take on commissioning responsibilities.
The guiding principles of contractual development
As the Department of Health and Social Care and NHS England begin work to develop the contractual mechanism for neighbourhood health, the NHS Confederation has worked with members across our networks to examine the core principles that should guide the design of MNP contracts. The principles, agreed by the NHS Confederation’s Neighbourhood Health Steering Group of cross-network members, relate to the MNP and service delivery to meet the needs of each neighbourhood.
Collaboration
- Integrated teams with a mutual understanding of roles and responsibilities. Focusing on integrating services across organisational boundaries to deliver holistic person-centred care.
- Partnership working, fostering strong partnerships between NHS, local authorities, social care providers and the voluntary sector.
- Focuses on relationship-based, proactive care tailored to population needs.
Community empowerment
- Decision-making authority, empowering neighbourhoods to make decisions that reflect local priorities.
- Establish mechanisms for true community involvement, using community insights and lived experience to design and improve services.
- Building on local assets and networks, enhancing community resilience.
Transparency
- Ensure there is publicly accessible data that outlines key performance metrics, decision-making timelines and accountability reports.
- Build trust and embed accountability mechanisms so communities can hold services to account.
Equity
- Develop measurable outcomes that establish clear, measurable outcomes that ensure consistent quality of care across all neighbourhoods.
- Focus on strategies to reduce health inequalities within and between neighbourhoods.
- The national policy landscape will need to ensure the subsequent policy will support the pooling of resources and shared accountability, incentivising collaboration across organisational boundaries.
What our members want to see
The development of MNP contracts offers an opportunity to reimagine how care is delivered at a local level. These contracts offer a platform to move beyond fragmented models and towards integrated, population-focused systems that are rooted in the needs and aspirations of communities.
1. Strengthening the voice of primary care
MNP contracts can amplify the influence of primary care, particularly in areas with mature GP federations or primary care collaboratives that bring in pharmacy, dentistry and optometry. By embedding primary care firmly within system-level planning and delivery, these contracts offer a route to greater sustainability and consistency in care delivery – reducing unwarranted variation and ensuring that local voices shape local services.
“You can genuinely get general practice, community pharmacy, optometry and dentistry coming together to deliver services together.” - Primary care member
2. Building shared purpose across partners
MNPs should aim to foster deep collaboration, creating space for providers across the NHS, local authorities and the VCSE sector to establish shared goals, mutual accountability and a collective commitment to improving outcomes.
A primary care member described collaborative working as ‘one of the most rewarding things you can do when it goes well’. Community providers have also cited the opportunity to bring primary care and community services together to enable both sectors to support patients better.
Reflecting on their experiences of working with system partners to improve end-of-life care, they noted the imperative of putting 'needs at the centre of discussions, which has helped overcome traditional organisational boundaries with having the right people with the right attitude in the room’.
3. From outputs to outcomes
The MNP (and other contractual forms SNP/ IHO) offer an opportunity to think about what neighbourhood working really means. Rather than focusing narrowly on metrics including admissions and urgent and emergency care, the MNP should enable a reframing to define success in terms of what matters to communities. This population-level lens encourages a shift from a reactive service delivery to proactive, preventative approaches.
4. Aligning budgets to reduce inequalities
By supporting the alignment of pooled budgets, and with more flexibility and locally controlled resources, systems will be able to target investment where it will have the greater impact: supporting prevention, early intervention and community-led solutions.
5. Accelerating mental health transformation
MNPs offer a platform to accelerate existing neighbourhood-level mental health transformation. By enabling collaboration across mental health, wider NHS, VCSE and local authority services, these contracts can help embed mental health support more deeply into community physical health settings, making it more accessible, pro-active and responsive.
“The neighbourhood contract can bring different parts of the system together, recognising the value of working together.” Mental health member.
6. Financial incentives and sustainability
Contractual mechanisms alone are insufficient. Financial incentives will be critical to encouraging participation, reducing variation and embedding MNPs into long-term system planning. For instance, primary care members have reiterated that there must be incentives that draws providers into the neighbourhood contracts. Community members have also highlighted how block contracts have required them to provide more care for the same level of funding.
However, there is currently a lack of clarity and commitment around funding models, with many leaders calling for longer term resourcing to ensure success.
7. Risk of exclusion in top-down redesigns
Top-down approaches to MNP design risk excluding key partners, particularly general practice and the voluntary, community and social enterprise (VSCE) sector. Without inclusive co-design, MNPs may fail to reflect the realities of neighbourhood working and lose credibility among frontline providers.
Moving from a focus on the NHS to a greater cross-system collaboration
A fundamental challenge in developing the MNP contract lies in moving from an NHS-dominated model to one rooted in genuine cross-system collaboration. This requires governance arrangements that actively prevent the NHS voice from overshadowing others, ensuring equity across partners, particularly the VCSE sector and local government.
Clear guidance and expectations for integrated working are essential, alongside a commitment to co-production and equality that resists the temptation for statutory bodies to default to hierarchical behaviours. There is a risk of scepticism, with many healthcare leaders noting multiple decades of integration rhetoric without meaningful change. To break this cycle, systems must focus on enabling shared use of collective resources, not through rigid contracts but through flexible frameworks and incentives that promote collaboration.
Crucially social care, with mechanisms like Section 75 agreements on the Better Care Fund offering potential routes to align NHS and local authorities in order to focus on outcomes.
Balancing the need for short-term gains versus longer-term improvements in health outcomes
The balance between recovery and reform is one of the key tensions that the current government is facing. The immediate imperative to manage urgent demand, particularly in acute and emergency settings, can easily dominate planning conversations with the risk of overlooking moves to proactive service models.
The true value of the MNP should lie in its potential to truly shift the dial on population health through prevention, early intervention and community-led support.
Systems must therefore look to embed mechanisms that will be able to show progress on the three immediate focus areas for neighbourhood health (improved GP access and reduced unwarranted variation, reducing unnecessary non-elective admissions and bed days from priority cohorts and delivering more planned care closer to home), while investing in neighbourhood-level strategies that build resilience over time. This includes incentivising de-medicalised models of care, integration of social care and VCSE partners, and using metrics to signal a commitment to longer-term transformation.
Conclusion and recommendations
The development of contractual mechanisms for a neighbourhood health service presents an opportunity to truly embed integrated, community-focused care.
This approach should enable neighbourhood providers to work collaboratively across primary care, community services, social care and the voluntary sector, creating a model that priorities prevention, equity and personalised support. Designing contracts that incentivise population health outcomes – and therefore earlier, more cost-effective interventions – rather than volume of activity alone, lays the foundation for a system that addresses short-term service pressures while driving long-term transformation. Politically, this also represents a chance for the government to demonstrate visible improvements in access and outcomes, while signalling a commitment to bold reform rather than small, incremental ‘tweaks’.
The role of the MNP contract has understandably created a lot of interest amongst NHS Confederation members since outlined in the 10 Year Health Plan. If designed inclusively, MNPs can strengthen the voice of primary care, foster cross-sector collaboration and enable a shift from reactive service delivery to proactive, preventative models.
However, healthcare leaders have been clear that success will depend on addressing key challenges: fragmented leadership, governance uncertainty, financial sustainability and avoiding overtly top-down approaches.
To make the MNP contracts both attractive and effective, our members recommend:
- ensuring contracts are co-designed with a wide range of stakeholders including general practice and VCSE partners
- providing clear, long-term financial incentives for preventing worsening ill health and flexible funding models
- establishing transparent governance structures that support shared decision-making
- embedding mechanisms that balance short-term NHS pressures with long-term population health goals.
How the NHS Confederation is supporting members
Over the past 18 months, we have played a leading role in shaping and developing the neighbourhood health policy landscape. We will continue to contribute to the implementation of a neighbourhood health service, ensuring out members’ voice continue to shape national policy. As well as supporting the delivery of the National Neighbourhood Health Implementation Programme and wider 10 Year Health Plan delivery groups, we will be supporting with implementation across all of our member networks.
To drive forward our work on neighbourhood health, we have set up a steering group spanning the full breadth and depth our member networks. Alongside this, a reference group of operationally focused leaders has been established. These groups will provide input into our refreshed neighbourhood health influencing priorities, positioning and provide forums for ongoing reflections, ensuring members’ insights and perspectives steer our approach.
Further information on our work on neighbourhood working and access to a range of resources can be found at our neighbourhood working hub.
