This is the second in my series of 10 commandments for payment by results.
Thy outcomes shall be few
Most payment by results pilot schemes are targeted at entrenched social problems.
These problems – troubled families, long term unemployment, re-offending and drug dependency – are complex by nature.
They require a coordinated response which addresses a wide range of issues.
For example, there are nine recognised pathways to reduce reoffending: housing, work, health, addiction, money, family and behaviour, with most offenders needing services that address at least 4 or 5 of these.
The rationale for using a PbR commissioning model is that by focusing on outcomes rather than activity, it’s possible to foster innovation and support new, holistic ways of tackling these social ills (see the 7th Commandment – Thou shalt promote innovation).
So, PbR funded interventions are a natural commissioning approach to tackle complex problems.
However, PbR schemes quickly run into trouble when the outcomes themselves become complex.
Complexity is the enemy of PbR
The outcome for the Work Programme is pretty straightforward – get people into sustained employment.
So is the outcome for the new Transforming Rehabilitation contracts – reduce reoffending.
The outcomes for the drug recovery pilots, on the other hand, certainly aren’t.
There are nine national outcomes and the commissioners in one pilot area have added an additional 27 (think twice about working as a drug commissioner or provider in this area).
The greater the number of outcomes, the more expensive they are to measure and the greater potential there is for perverse consequences as providers try to maximise their payments by hitting separate outcome targets.
There is a long-running debate in criminal justice circles about the best way to measure reoffending (search “binary” or “frequency” on this site for a number of different articles).
This introduces sufficient complexity to just one outcome measure.
As soon as you have multiple outcomes, you multiply these problems.
Clarity of purpose
Commissioning is all about clarity of purpose.
The 1st Commandment “Thou shalt commission for a single purpose” encouraged commissioners to be clear about their overall objective from a PbR funded scheme. It argued that we don’t know enough about PbR at the moment to expect one project to cut costs, improve quality and develop innovative methods.
The 2nd Commandment recommends that commissioners are equally clear about what outcomes they want and that these are few in number and clearly defined.
One of the less discussed aspects of payment by results is that unless a very small number of outcomes are very tightly defined, the costs of measuring and validating these outcomes can amount to a substantial proportion of the overall cost – and a disproportionate amount of commissioner, and more importantly, provider time.
For this reason, I have come to the conclusion that payment by results schemes just don’t work with multiple outcomes which is why the drug recovery PbR pilots are unlikely to be successful in their current form.
More details on that in the next post which examines the Third Commandment of PbR:
Browse my comprehensive resource pack on Payment by Results.
Check out my Marmite Infographic for simple explanation of key PbR jargon.