Quality assurance in payment by results contracts

Assuring quality in PbR contracts

This is the 11th post in a blog series looking at the lessons I’ve learned from a recent review of the payment by results literature.

In PbR contracts providers focus relentlessly on outcomes in order to ensure that they get paid. A common consequence is that while those service users most likely to achieve these outcomes may receive a very high quality service, there is a risk that two groups may get a much poorer service than usual:

1. Those who require the input of high levels of resources in order to achieve the specified outcomes, and are therefore deemed too expensive to help. An example is people with long term disabilities on the Work Programme.
2. Those who are likely to achieve the outcomes without help and are therefore given a much more basic service so that resources can be directed elsewhere. An example is low risk offenders under the new probation system known as Transforming Rehabilitation.

This post examines what the literature says about ensuring a quality service within a PbR contract.

[button-blue url=”https://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]

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Assumptions

Theoretically, a pure payment by results approach should require minimal monitoring and evaluation. Provided that commissioners have set the right outcomes and are confident that the prescribed way of measuring them is accurate and robust, then the success of a scheme can be gauged simply by whether the provider achieves the outcome targets.

The assumption that goes with this is that a successful PbR scheme will deliver a high-quality service —- or how else could it achieve its outcomes? Therefore, as well as minimal monitoring and evaluation, there is an associated belief that there is little need for quality assurance systems.

However, as stated above, a key lesson from the literature is that PbR contracts tend (especially when funding is as tight as it typically is with many current contracts) to focus resources on those service users who can be most cost effectively helped to achieve the prescribed payment targets.

Therefore, it is recommended that commissioners take a pro-active approach to ensuring that those who are harder-to-help (frequently the most vulnerable service users) receive a good quality service otherwise they may be “parked” and receive a minimal intervention.

A practical approach

The challenge for commissioners therefore is how to adopt a light touch to performance monitoring while ensuring that all service users receive a good quality service.

Many would argue that light-touch performance monitoring — a focus on measuring outcomes, rather than scrutinising inputs and outputs — is integral to PbR.  A less onerous and prescriptive performance monitoring system allows providers to adopt different approaches and releases considerable provider resources for service delivery.

However, the risks of “parking” mean that it is often important for commissioners to require a minimum delivery standard. In the Work Programme, for example, bidders were required to propose their own standards.

User feedback

It is the role of commissioners to decide how to assure that these minimum delivery standards are met. Most commentators recommend a third party approach; although this need not be overly onerous. Most good quality providers across a range of different sectors will typically integrate service user feedback into their own quality assurance systems. Indeed, in PbR contracts providers are often particularly keen to get a grip on what elements of their delivery are (and are not) successful in order to fine-tune their service provision to ensure that they meet their outcome targets.

In this situation, commissioners may wish to arrange for a third-party audit of a sample of service user feedback to ensure that all users are receiving a good quality service.

Conclusion

The main message from the literature is that commissioners need to be proactive in ensuring that PbR providers deliver a good quality service — particularly when service users include vulnerable groups.

Next week’s post turns our attention to what the literature tells us about getting the structure and length of PbR contracts right.

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