14
ational Council for Voluntary Organisations Sustainable Funding Project AM 6 Assessing risks and payment by results Chair: Fiona Sheil, Public Services Officer, NCVO
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National Council for Voluntary Organisations
Sustainable Funding Project
AM 6
Assessing risks and payment by results Chair: Fiona Sheil, Public Services Officer, NCVO
National Council for Voluntary Organisations
Sustainable Funding Project
Fraser Battye Principle at GHK Consultancy
Payment by results: risky business or a land of opportunity?
NCVO Sustainable Funding Conference 2012
Fraser Battye
28th November July 2012
icfi.com | ghkint.com
This presentation is a whistle-stop tour of a complex topic. It’s in two parts
1) What is PbR? 2) Issues raised for the VCS
icfi.com | ghkint.com
PbR is a form of outcomes-based commissioning
2) Issues raised1) What is PbR?
‘Old’ (!) commissioning
State sees a need
State commissions the service
Monitoring of inputs and outputs
(Largely) past model of provision
State sees a need
State works out what to do
State provides service
‘New’ commissioning
State sees a need
State commissions
‘Outcome’ based payment
Fundamental point: PbR is not perfect, how does it compare
relative to alternatives?
icfi.com | ghkint.com
So the intention is to focus on the difference that services make - not on what is done
1) What is PbR?
Outputs
Services provided
People supported
Inputs
Resources needed / consumed
Outcomes
Results: changes in condition / outlook /
knowledge etc
An attractive proposition: only paying insofar as services are effective
2) Issues raised
icfi.com | ghkint.com
At heart, the thinking behind PbR is simple: incentives matter
PbR policyChange in
commissioning / contracts
Change in provider
incentives
Change in service delivery
Improved outcomes for
usersBetter VFM
1) What is PbR? 2) Issues raised
icfi.com | ghkint.com
PbR is being used as a mechanism for public service reform
“...it is not enough to pay someone to provide a service with the only
recourse being that if they fail they will not be re-awarded the contract. In these cases it makes sense to build in an element of payment by results to provide a constant and
tough financial incentive for providers to deliver good services
throughout the term of the contract.”
15 references to ‘payment by
results’
1) What is PbR? 2) Issues raised
icfi.com | ghkint.com
PbR is being tested in a range of policy / service areas
Work Programme
Peterborough Prison (SIB)
Smoking Cessation
Children’s Centres Pilots Drug
Rehabilitation
Physical Activity Programmes
Troubled Families
London Reducing
Reoffending Programme
ESF
1) What is PbR? 2) Issues raised
icfi.com | ghkint.com
‘PbR’ describes a range of different models (which can be blended)
Results for... Payments on... Accounts for...
...populations
...individuals
...outcome
...output
...a % increment
...the whole contract
Incentives for...
...systems
...individual staff
1) What is PbR? 2) Issues raised
icfi.com | ghkint.com
The debate on PbR is theory-rich and evidence-poor...it can be rather polarised
1) What is PbR?
"Payment by results should be implemented across the public sector without exception – where it exists already, it should be made more forceful and sophisticated, where it does not exist, it should be introduced with very limited transitional periods."
KPMG ‘Payment for Success’
"The NAYJ does not however accept that a case has been made for the benefits of PBR and is concerned the introduction of
the profit motive and market mechanisms may have potentially deleterious effects
on the experience of, and outcomes for, children who come to the attention of the
youth justice system.“
National Association for Youth Justice position paper
"Our review of UK and international research evidence found few rigorous evaluations of PbR and no complete, systematic analysis of its effectiveness.”
Audit Commission
2) Issues raised
icfi.com | ghkint.com
PbR raises a series of important considerations for the VCS
For any given service, what do we mean by ‘result’? How is this to be measured?
Are your commissioners properly equipped for PbR?
Are you? PbR needs good outcome data
What about cash flow (post-outcome payment) and rates of success (no outcome, no payment)? Can risk be properly priced in?
Is the VCS destined to life at the end of a supply chain, or is there the willingness / capacity to lead?
1) What is PbR? 2) Issues raised
icfi.com | ghkint.com
ICF GHK has undertaken substantial work on PbR (advisory and evaluative); please get in touch if you would like to know more:
[email protected] / 0121 2338900
National Council for Voluntary Organisations
Sustainable Funding Project
Marcus RobertsDirector of Policy, DrugScope
