This is the 10th post in a blog series looking at the lessons I’ve learned from a recent review of the payment by results literature. When outcomes are the basis for payment, it is important that the provider receiving the payments is responsible for achieving the outcomes. Targets should not be unduly influenced by external factors (such as the state of the economy for Work Programme type schemes) or by the work of other agencies who are not receiving payment from the contract.
This post examines what the literature says about attributing outcomes.
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Payment by results purists argue that it is unimportant whether outcomes can be attributed to the work commissioned by providers or not. They contend that as long as commissioners specify the outcomes they desire, how these are achieved are immaterial – if reoffending or unemployment drops, why worry about the reasons?
The converse of this view is, of course, that providers bear all the risk of PbR schemes and if targets are missed because of factors outside of their control, they will not be paid for the services they have delivered.
In the real world, views tend to be more pragmatic. The operation of the Work Programme, especially in its early years, was very challenging because of substantial changes in the economy.
An official DWP evaluation found that six months after the Work Programme went live (October 2011), the estimated number of referrals leapt from 2.5 to 3.3. million unemployed people. This not only meant that it was much harder to get long term unemployed people into work at a time when job losses were rising all over the country, but it also caused serious capacity problems for providers who were only just developing their services.
Some researchers also argue that reconviction rates are not an accurate indicator of real-life reoffending since the official data can also be affected by police clear-up rates, or the time taken to prosecute serious cases in particular. National and local policing initiatives focusing on a particular type of crime can cause spikes in reconviction data.
There is, however, a consensus that the most problematic issue relating to attribution is where a number of agencies are working with the same service user – as is often the case in PbR schemes which are frequently targeted at people with complex needs (offenders, homeless people, drug and alcohol dependents etc.).
Different providers still too often receive different pots of money to work towards different outcomes with the same clients. This can make for very confusing and expensive provision and arguments over which intervention achieved a certain outcome where the reality is often that people with complex needs require a co-ordinated approach which addresses all their different problems.
As yet, there does not appear to be a solution to this issue apart from the Prime Provider model where the lead delivery agent is responsible for designing a supply chain to meet the full range of end users’ needs and for negotiating a share of the payments for success.
The most useful advice is for commissioners to consult with their peers in other sectors well in advance of the procurement process to see whether a co-commissioning approach is possible and, if not, whether outcomes can be aligned. Again, this process is always enriched by consultation with potential providers and service users.
Next week’s post turns our attention to the controversial issue of ensuring quality in PbR contracts. PbR drives providers to focus exclusively on outcomes and, frequently, on those outcomes which are easiest to achieve, which can result in vulnerable, harder-to-help groups being neglected. The post looks at what the literature can teach us about ensuring the protection of these client groups in PbR contracts.
I reviewed the literature as part of a project funded by the Oak Foundation to develop an interactive tool to assist commissioners and providers to decide whether a payment by results approach might be an effective approach to commissioning a particular service.
The tool is now live – please check it out at: www.PbR.russellwebster.com