Supporting People and Payment by Results

In my view, this evaluation is further evidence that Payment by Results is a very promising approach which is best initially developed in times of prosperity as a way of driving up performance rather than, as currently appears to be the case, as a budget-cutting lever in times of austerity.

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Ten pilots

Earlier this month (October 2014) the Department for Communities and Local Government published its evaluation of its Supporting People payment by results pilots.

There were ten pilot schemes in Birmingham; Cheshire West and Chester; Derbyshire; Islington; Kent; Lewisham; Sheffield; Stockport; Southend-on-Sea; and Torbay  local authority areas although only in two areas (Derbyshire & Stockport) were a substantial number of contracts let on  PbR terms.

Commissioners had the flexibility to adopt Payment by Results models of their choice. However, in practice there was limited variation. The dominant model was a 80% core payment and 20% performance uplift to a capped maximum value.

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Inconclusive

Like PbR pilots in many other spheres, the evaluation has proved inconclusive – the intended assessment of outcomes compared with non PbR areas didn’t happen. This is not the fault of the evaluators but a reflection of the huge changes in the funding and organisation of public services in England and Wales over the last five years. Substantial reductions in budgets meant that outcomes and targets were repeatedly changed, making an outcome evaluation all but impossible.

Nevertheless there are some, increasingly familiar, lesson to be learnt.

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PbR Strengths

  • Costs have gone down and outcomes up, although it’s not possible to attribute these improvements directly to PbR.
  • PbR is a real opportunity to innovate in service delivery, particularly around more tailored support planning.

And Weaknesses

  • The costs of setting up and monitoring PbR schemes can be appreciably higher than non-PbR contracts.
  • There was too much flexibility in how PbR terms were applied, for example commissioners were very lenient in the application of targets and were prepared to meet providers’ request for new indicators to measure progress, rather than stick to the agreed PbR outcomes.

Conclusions

There remains potential in PbR approaches, particularly where commissioners and providers actively collaborate in designing schemes which focus on client outcomes. However, successful schemes require a clear and sound rationale and considerable time to establish. Other learning points include:

  • Contract terms need to be transparent and providers need to be clear about the cash flow implications.
  • The number of outcomes should be limited.
  • Milestones or measures of “distance travelled” are useful for service users but problematic to monitor and audit.

In my view, this evaluation is further evidence that Payment by Results is a very promising approach which is best initially developed in times of prosperity as a way of driving up performance rather than, as currently appears to be the case,  as a budget-cutting lever in times of austerity.

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Payment by Results
Getting payment by results contracts right

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.

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