Can PBR drive improved practice?

Fraser Battye

Children England Annual Conference

15th March 2012

This presentation is in four parts and makes one central point: PbR can work well, but care is needed in its use

1. The intuitive and policy appeal of PbR

2. Models being tested

3. Early results

4. Considerations in using PbR

1. Appeal 2. Models 3. Early results4. Consider-

ations

The principle of linking results and reward in the public sector commands widespread support...

1. Appeal 2. Models 3. Early results4. Consider-

ations

There is also a clear policy direction: PbR is a central 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.”

1. Appeal 2. Models 3. Early results4. Consider-

ations

PbR as an alternative to performance management / targets and terror

15 references to ‘payment by

results’

PbR is being trialled in a range of areas – including children and families services

Work Programme

Peterborough Prison (SIB)

Smoking Cessation (West

Mids)

Children’s Centres Pilots Drug

Rehabilitation

Physical Activity Programmes

Families with Multiple

Problems

London Reducing

Reoffending Programme

1. Appeal 2. Models 3. Early results4. Consider-

ations

In all cases: an attempt to make commissioning more

outcomes-focussed

Different models of PbR are being tested; they differ on a series of key variables

Results for... Payments on... PbR accounts for...

...populations

...individuals

...outcome

...output

...a % increment

...the whole contract

1. Appeal 2. Models 3. Early results4. Consider-

ations

Whatever the model, the theory is the same: incentives matter, they alter provider behaviour and so user outcomes

PbR led to improvements in smoking cessation services

Does PbR always create the right incentives?

1. Appeal 2. Models 3. Early results4. Consider-

ations

Several key considerations underpin the enterprise of maximising the benefits and minimising the risks of PbR

• Defining the ‘result’ (outcomes / outputs)

• Causal claims and attributing results

• Data / audit requirements (transaction costs will go up)

• The ‘payment’ (setting the level, staging the payment)

• Balancing risk and opportunity (commissioner / provider)

• Commissioner skills and provider capacity

In design - think through the way that incentives might work

In practice - evaluate, learn, refine

GHK specialises in policy analysis for government and the third sector.

We have undertaken several PbR-related assignments and produced two short papers:

For more information, please get in touch:

fraser.battye@ghkint.com 0121 2338900

www.ghkint.com

‘Thinking about...payment

by results’

‘Thinking about...evaluation and payment by

results’