Turning challenging contract negotiations into trusted relationships

System partners and regulators in Sussex were dissatisfied with the constant struggles and entrenched views in their historic assertive transactional contract management. They sought an alternative approach. A collective strategic decision was made that an Aligned Incentive Contract offered a better way. 

The new approach would allow the system to develop a relationship based on trust and respect. This would enable Sussex to deliver better services and outcomes for people finding solutions together within a constrained budget. 


Assertive transactional contract management had always been the way providers and commissioners had operated across Sussex, despite little evidence of its success. The perverse nature of the National Tariff did not help, with Payment by Results incentivising providers to carry out as many steps and procedures as possible, driving up cost. 

Very often providers and commissioners took opposing positions, viewing things from their own organisational view, rather than what was best for the system. Providers needed to charge as much as possible to maximise income and commissioners needed to challenge spend to meet their budgets.

The challenge

Western Sussex Hospitals NHS Foundation Trust reached a position in 2018, after many years of robust discussion regarding each year’s contract value, where formal dispute resolution was required. Relationships between commissioners and providers suffered as a result, with a consequential erosion of trust. 

System partners and regulators dissatisfied with the constant struggles and entrenched views needed an alternative approach.

There was a strong feeling that, at a time when policy context and financial conditions were changing, a continuation of the transactional approach would lead to more of the same, and the system transformation required would not be achieved. 

Something had to change. 

Our approach

Following the dispute resolution, Western Sussex Hospitals and its commissioners came to a collective decision that there had to be a better way.  Looking to their neighbours, Portsmouth Hospitals NHS Trust, they learned of a novel contracting approach, supported by SCW, and adopted from a Bolton innovation.

Sussex providers and commissioners took the strategic decision to adopt the same approach called an Aligned Incentive Contract.

This was as much a contract of behaviours as of activity, with the approach of ‘we will think well of each other’ enshrined in the contract. Through this approach, they would avoid any antagonistic behaviours or perceived game playing. By fostering a relationship based on trust and respect, they would find solutions together within the constrained budget. 

The new approach would enable Sussex to deliver better services and outcomes for people.  Organisations would shift from focussing on transactions to innovation, which would support the delivery of their priorities, prevention and out of hospital care, targeting investment across primary, and community care.

The three major providers in Sussex - Western Sussex Hospitals NHS Foundation Trust, Brighton and Sussex University Hospitals Trust, closely followed by East Sussex Healthcare Trust, moved to an Alliance Incentive Contract. This provided a different basis of payment from simply counting activity, a move which had the backing of NHSEI.

The outcome – joint working and shared goals

With the change to the new way of working, relationships between providers and commissioners improved significantly. Staff learned about each other’s roles and there was a blurring of lines between organisations where they shared secondments and worked out of each other’s offices.

Although not easy, trust has been rebuilt between providers, commissioners and SCW’s contract managers. There is joint working and shared goals. 

Removing this need to deal with ongoing disputes has given the Trust more headroom to concentrate on operational issues and manage services properly. In April 2016 Western Sussex Hospitals NHS Foundation Trust became the first multi-site hospital trust to be rated ‘Outstanding’ by the Care Quality Commission. This status has been maintained since the move to the Aligned Incentive Contract.

Since the launch of the Aligned Incentive Contract, Western Sussex Hospitals have joined up with Brighton and Sussex University Hospitals to form University Hospital Sussex NHS Foundation Trust. This merger was made smoother by the fact that they had adopted very similar contracts and providers across the Sustainability and Transformation Partnership (STP) had acknowledged the importance of working to a collectively shared STP budget.

The culture change needed should not be underestimated. Changing ingrained views to understand that the tariff is not the only game in town is a huge task. This new way of working created a foundation for Acute Providers to work together as a Collaborative.  The Sussex Acute Care Collaborative is chaired by the WSHFT/BSUH Chief Executive Officer and is a key initiative to facilitate system-wide collaboration and acute transformation across Sussex. 

This joint way of working set Sussex up well for working as an STP. The creation of the Integrated Care System in April 2022 will just be a consolidation of what they are already doing.

Find out more about the programme by contacting This email address is being protected from spambots. You need JavaScript enabled to view it.

 Ref: B33 Sussex Aligned Incentive Contract v2

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