Hybrid integrated funding pilots are used where no single payment mechanism can support the full complexity of a service model. Instead of relying solely on capitation, activity, or outcomes-based funding, these pilots combine multiple approaches to reflect different aspects of delivery. While this can improve flexibility and alignment, it also creates significant operational complexity. As explored across the Impact Insights Hub’s integrated funding pilots and its wider focus on new service models, hybrid funding models succeed only when roles, responsibilities, and financial flows are clearly defined and actively managed.
Why hybrid models are emerging
Many integrated services cannot be funded effectively through a single mechanism. For example, core coordination functions may require stable grant funding, while service delivery may be better suited to activity or outcome payments. Hybrid models allow funders to combine stability with performance incentives.
However, combining funding streams increases the risk of duplication, gaps, and confusion. Providers must manage multiple reporting requirements, accountability frameworks, and financial flows.
What makes a hybrid model credible
A credible hybrid model clearly defines what each funding stream covers and how they interact. It must also include governance structures that prevent overlap and ensure accountability.
Operational example 1: Hybrid pilot for community health coordination
In day-to-day delivery, a pilot uses grant funding for care coordination infrastructure and outcome payments for reduced hospital use. Teams must track both operational activity and outcome performance.
This practice exists because coordination functions are difficult to fund through activity alone.
If absent, coordination may be underfunded, reducing effectiveness.
The observable outcome includes improved coordination and reduced hospital use.
Operational example 2: Behavioral health hybrid funding model
In routine delivery, a pilot combines activity-based payments for treatment sessions with outcome payments for recovery metrics. Providers must balance service delivery with outcome achievement.
This practice exists to align funding with both activity and results.
If absent, providers may focus on one at the expense of the other.
The observable outcome includes improved recovery rates and consistent service delivery.
Operational example 3: Housing and health hybrid funding pilot
In day-to-day practice, a pilot uses grants for housing support and outcome payments for stability. Teams coordinate across sectors to achieve results.
This practice exists because housing stability requires both upfront investment and sustained outcomes.
If absent, funding gaps may undermine delivery.
The observable outcome includes improved housing stability and reduced service use.
Governance and funder expectations
Funders expect hybrid models to include clear roles, accountability, and reporting. Providers must demonstrate how different funding streams interact.
Oversight bodies require transparency and coordination across funding mechanisms.
Why this model matters now
Hybrid integrated funding pilots reflect the complexity of modern service delivery. When designed well, they combine stability and flexibility. When poorly designed, they create confusion and inefficiency. Strong governance is essential.