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Quality assurance in payment by results contracts

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

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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=”” target=”_self” position=”left”]You can download the full literature review here[/button-blue]



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.


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:

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This final post summarises the most important lessons to bear in mind if you are involved in commissioning, investing in or providing a payment by results-funded scheme.

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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.”

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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.

2 responses

  1. I was put off the prototype toolkit because it was framed for commissioners.

    I disagree with your assessment (appreciating that it may be drawn from a Lit Review but there are few recent published peer-reviewed papers) on certain points.

    Long term unemployed disabled actually performed well on WP in that there is no previous programme of any significance that performed better. The idea that higher needs clients are ‘parked’ is a phallacy because the outcome payment for these clients can be multiple times higher than the average fee for client progression into work. The reality is that long term unemployed disabled people can take longer to help than the two years allocated on the WP.

    I’m not sure the assumption that PbR will deliver a high quality service is correct. Unless quality of some description is defined in the programme design, qaulity can be a very subjective concept. In the Work Programme, the DWP set minimum performance levels and in addition providers were asked to set the performance levels they think their bid will achieve.

  2. Tam

    Thanks very much for your feedback. I’ve received a lot of constructive criticisms which I will seek to address in the next version.
    I definitely agree with your comment about the commissioner bias which I am seeking to rectify.
    I do agree that in many cases people with complex needs would need longer than two years to progress to employment. However, the issue of parking on the Work Programme features in much of the (admittedly limited) literature.
    I hope you will feel able to comment on the next version which should be live next month.
    Best Wishes

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