This is a guest post by Dr Laura Johnstone.
A 7-stage framework
Payment by Results provision is an increasingly popular way to address social need. £15B-worth of schemes in the UK public sector had a PbR element (NAO 2015). Despite this, there is no framework for target achievement in PbR. Therefore, PbR provision can have:
- Insufficient insight into the operating environment
- No congruence between the principal and agent
- Outcomes that are hard to validate and attribute.
Original insider research about target achievement in Payment by Results provision created a seven-stage framework to achieve this. This research reflected upon the Stakeholder Theory, Agency Theory, Payment by Results and management practices literature; specifically that relating to the Delaware Substance Misuse Programme, London Rough Sleepers Project and Team GB’s Olympic and Paralympic Programme. The research then collected and analysed ‘Troubled Families’ data from Local Authorities One, Two, Three and Four (LA1, LA2, LA3 and LA4), which are located in the Northeast, Southeast and Northwest of England.
This framework is dynamic and applicable locally, regionally and nationally to all PbR provision across the public sector wherever target achievement and the provision of value to stakeholders is required. Thus, it can be applied in policing and law enforcement; defence and homeland security; health – in settings as diverse as GP practices, hospitals and Clinical Commissioning Groups; primary, secondary, further and higher education; and training and employment.
The applicability of the tool across a breadth of public sector PbR provision renders it commercially viable. There will be less wastage in schemes managed by the framework. Less wastage creates efficiencies for the principal and means that the agent can effectively utilise more of the available outcome funding. This offers further positive outcomes. The resulting efficiencies can fund other Payment by Results schemes led by the principal, create additional jobs for the agent and generate further good outcomes for other service users.
Step One – Stakeholder Analysis – the commissioner develops insight into the operating context before designing the Payment by Results provision. This insight includes identifying the stakeholders who will affect/be affected by the programme’s targets and upon whom the survival of the provision depends. The commissioner examines relevant good and bad practice, scans the horizon for legislation or other initiatives that can affect the provision and identifies internal and external changes and challenges to its success.
Step Two – Principal Identification – the commissioner identifies the optimum principal from the ‘real world’ of the PbR provision who can provide the financial resource, act as a ‘responsible’ party and has a good record of overseeing provision of this type.
Step Three – Agent Identification – the commissioner and the principal identify the optimum agent to act as a ‘responsible’ party, act in the best interest of the principal and present the principal with the ‘value’ anticipated.
The ‘Expert Body’ is then established. This makes the framework practical and individual to each PbR scheme. This cohort of experts comprises key stakeholders from the ‘real world’ of the provision including the commissioner, the principal, the agent, the service users and academics with experience of PbR and the specific need. The Expert Body exists for the programme duration but its makeup may alter in response to the changing environment. It views the programme through the lens of Agency Theory and PbR best practice; specifically National Audit Office (2015) and Webster (2016), which are outlined below.
The Expert Body:
- Sets the direction and the work carried out by the agent in exchange for an agreed fee
- Agrees the principal and agent’s shared goals, shared attitude to risk, shared course of action and a clear outcome-based contract to safeguard the successful management of the PbR provision.
The provision will have:
- Clear expectations for performance
- Challenging but achievable outcomes upon which to base payment
- Effective incentives for agents
- Regular monitoring and intervention mechanisms to miminise the impact of agent failure
- Processes to evaluate how the PbR programme has improved service delivery and overall value-for-money (National Audit Office 2015).
The challenging but achievable outcomes will meet the six key characteristics of a successful outcome:
- Clear and quantitifiable
- Factor in deadweight
- Target individuals or cohorts
- Be segmented (Webster 2016).
Step Four – Strategy and Operations Implementation – puts in place the above.
Step Five – Delivery – the agent begins to deliver the programme to the target audience and:
- Builds on the key worker/navigator role to engage, motivate and effect change with disadvantaged, complex service users
- Seconds operational staff from elsewhere to improve outcomes in specific areas
- Acts as a consortium of agents to enhance service delivery and create efficiencies
- Trains and mentors the entire local workforce
- Prevents financial risk from cascading down to smaller, more vulnerable subcontractors.
Step Six – Data Collection and Analysis – the Expert Body regularly collects and analyses quantitative and qualitative data against the clear outcome-based contract to identify flaws in the five previous Steps and the alterations required to keep target achievement on track.
Step Seven – Findings and Action – the Expert Body feeds the findings from the data analysis upwards into every step of the process to minimise the impact of agent failure and ensure the good management of the PbR provision. These mechanisms can include revisiting any one or all of the previous steps to ensure that the programme is practical, benefits from on-going reflective improvement during its delivery and informs subsequent PbR provision.
Please share your views on the framework via the comments section below, you can also get in touch direct with Dr Laura Johnstone by email.