Oxfam and the other agencies are working in very challenging circumstances and won’t receive full payment unless they hit their targets on time. This makes realistic pricing very tricky and raises the key ethical issue of how much risk to pass on to local implementing partners; or, if none, how to ensure their motivation.
All you need to know about PbR:
Here you can find over 150 posts tracking every major development in payment by results since 2011. You can see where PbR has succeeded and, more frequently, where it has failed across a wide range of sectors: offending, welfare, employment, substance misuse… If you’re looking for something in particular, try the search box below:
The issue of providers “gaming” PbR contracts is a hot issue in the literature. Commentators take different views with some stating that it is only rational and efficient for providers to focus on the outcomes incentivised by PbR payments to the best of their ability while others describe similar behaviour as “gaming.”
Designing PbR contracts can be a tricky business with plenty of examples in the literature of commissioners and providers wishing they had never signed on the dotted line. In addition to getting the outcomes and payment incentives right, two issues are particularly critical: the overall length of the contract and the he delay until, and interval between, incentive payments.
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.
commissioners are urged to consider whether potential providers have sufficient financial resources to bid for a contract which requires considerable initial investment and where payments are delayed until the achievement of outcome measures has been verified.
PbR and innovation This is the fifth post in a blog series looking at the lessons I’ve learned from a recent review of the payment by results literature. One of the main reasons that proponents of PbR champion the approach is because of its potential to stimulate new answers to old problems. But do PbR schemes stimulate innovation? [button-blue url=”http://www.russellwebster.com/Lessons%20from%20the%20Payment%20by%20Results%20literature%20Russell%20Webster%202016.pdf” target=”_self” position=”left”]You can download the full literature review here[/button-blue] [divider] New answers to old problems? Politicians and social investors have