Making sense of payment by results

 PbR increasingly common — and still controversial

In 2015, the National Audit Office identified 52 schemes containing an element of PbR in the UK, worth a total of £15 billion of public money. The current and next Work Programmes, the private probation contracts and a large proportion of new contracts in the homelessness and substance misuse sectors all contain at least an element of PbR with income dependent on reaching specified outcome targets.

The association of many PbR schemes with very robust cost-cutting and/or the privatisation of previously public markets has caused considerable controversy and confusion which has enabled researchers to reach opposing conclusions about the same initiative. For instance, those who saw the Work Programme as being primarily about helping long term unemployed people back to work with the least investment of public finances assessed it as successful — the Work Programme performed at the same level as the programmes preceding it, but was £41 million (2%) cheaper. Conversely, those who thought it was designed to get people with entrenched difficulties such as disability or addiction into work, concluded that it failed.

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New interactive tool

I’ve just finished developing an interactive tool to assist commissioners and providers to decide whether a payment by results approach might be an effective way to commission a particular service. The project is funded by the Oak Foundation, an international charitable trust.

As part of that project, I undertook a review of the PbR literature examining nearly one hundred research studies. You can download the full literature review here.

The review formed the evidence base for the construction of the tool which was developed with the help of feedback from dozens of commissioners, providers, academics and policy-makers across a wide range of sectors (alcohol and drugs, complex needs, criminal justice, health, homelessness and worklessness).

The purpose of the new interactive tool is to help commissioners, investors and providers consider whether it might be appropriate to use PbR for a particular service. The tool asks key questions on both the rationale for using PbR and key elements of the contract such as defining and validating outcomes and guarding against common PbR problems such as “creaming and parking” and unintended consequences.

The tool provides immediate feedback, followed up by summaries of key research. Everything is evidence-based and the tool is completely free to use.

The explainer video below gives you a quick summary of the tool:

You can check out the tool itself at www.PbR.russellwebster.com

All feedback very gratefully received.

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