In March 2016, the government announced that it was pairing up with the Blavatnik School of Government at the University of Oxford to create the Government Outcomes Lab (GOL). The aim of this partnership was to create a centre for excellence in commissioning research and practice – to find new and innovative ways for the public sector to commission projects, provide on the ground support to local commissioning teams and become a world class research centre on effective models of commissioning.
Payment by service vs payment by results
Traditionally, governments contract third-party service providers on a ‘fee for service’ basis – so commissioners prescribe and pay for a particular service that they believe will lead to a desired outcome. More recently however, commissioning teams have started to introduce elements of ‘payment by results’ or ‘pay for success’ when commissioning services – so providers only get paid in full if they deliver the desired outcomes.
Social impact bonds
Social impact bonds (SIBs) are a tool to help outcomes-driven providers deliver on their projects, by giving them access to financing and management support from “socially-minded investors”. The idea being that this will broaden the pool of skilled providers, encourage smaller more locally based providers to tender for projects (who may have been reluctant to previously because of cost and lack of support) and, potentially, increase the chances of the service being successful.
One of the primary aims of the Government Outcomes Lab is to consolidate and promote as far as possible the use of social impact bonds to align social value based commissioning with commissioning for measurable outcomes – to promote a social value as well as an economic value in the way providers deliver on contracts. There are now 32 Social Impact Bonds across the UK, supporting beneficiaries in areas like youth unemployment, mental health and homelessness.
Benefits and challenges to outcome based commissioning
While to many people it may seem almost impossible to question the principle of outcomes based commissioning (to move from a system focused on process measures and targets to a system that is focused on improving the outcomes that matters to citizens and patients) the reality for commissioning teams, providers and service users is, in some cases, very far removed from this ideal.
In April 2012, the Audit Commission published its guidance on Payment by Results (PbR). This generated fairly positive messages around PbR but also advised commissioners to be aware of the risks:
“At its best, PbR can deliver savings and bring in new resources at a time when budgets are under great pressure. It also defers costs to commissioners to allow time to realise the benefits of change and preventative work….. However, PbR carries extra risks to securing value for money and requires higher level commissioning skills than more traditional approaches”- Audit Commission (2012)
Much of the literature on outcomes based commissioning models emphasises the importance of:
- agreed objectives;
- agreed measurable outcomes;
- communication and clear definitions of accountability between commissioners;
- any social investors or third sector bodies with input;
- and any secondary providers who may be awarded subsequent sub contracts
A more comprehensive list of pros and cons to outcomes based commissioning can be found here.
One high-profile intitiative which has faced more challenges than it has produced benefits is the “troubled families” programme. which aimed to support families with long-standing problems. The programme was heavily criticised for its payment by number (number of clients processed) rather than payment by specific outcome. The issue here appeared to be the lack of definition of outcomes and what was going to be expected of the provider in terms of service before they could be paid.
In this instance the organisations delivering the “troubled families” programme in some areas were being paid for the number of people who went through the service, rather than the number of people who completed the programme successfully, or saw notable improvement as a direct result of the input of the programme, and without taking note of the professional view of the quality of the service being provided (which was considered in some areas to be poor). This resulted in providers being paid for a service which, while many people used, did not actually achieve the expected outcomes. This is something which future commissioning bodies must take note of and act upon to ensure that any future agreements do not contain such massive loopholes with regards to payment.
Outcomes based commissioning in health and social care
A number of different policy areas have begun to use outcomes based commissioning models with varied success (although as we have seen this can be as much to do with the quality of the provider and the transparency of the contract as it is about the implementation of an outcomes based model). Rather than focusing on inputs (e.g. number of doctors) or outputs (e.g. number of operations conducted, or amount of drugs administered), these commissioning models are based on achieving specific, predefined and measurable ‘outcomes’ (e.g. improved health).
In a specific health and social care context, outcomes based commissioning can, if done well, form a key part of a wider prevention agenda, as well as helping to improve personalisation of services. In Wiltshire for example, the council has employed outcomes based commissioning techniques in relation to its domiciliary social care teams. This example shows that when the right providers are selected and clear outcome measures are defined, the impact for service users can be significant, in a positive way: there is a strong focus on getting the best possible result for the customer in the way that suits them; with every visit having a clear purpose and a focus on achieving greater independence for the older person wherever that is possible (which is the overall wider outcome the commissioning teams were hoping to achieve – greater independence of service users and less reliance on the social care teams in the long term).
Some specific challenges in a health and social care context include coordinating payment for outcomes with direct (or personal) payment schemes and agreeing on realistic and well defined outcomes and time frames with service users (which if done well can have a very positive impact on the personalisation agenda of services) Attributing outcomes specifically to one set of interventions in health and social care can also be difficult, particularly if a service user is in receipt of a number of different strands of care, for example, primary care and domiciliary social care as well as having access to some remote telehealth facilities.
Commissioning for long term outcomes
If the issue of defining or attributing outcomes is a challenge for outcomes based commissioners, then the issue of planning for long term outcomes is even more difficult. This approach requires commissioners to have a long term view of the strategic aims of a programme, as well as requiring them to consider any factors which may influence or change these aims, and additionally to consider the scope of need in the future if other preventative measures are successful.
Advice for councils
The LGiU and academics at Oxford Brookes University, as well as many others, have published guidance for local authority commissioning teams, giving them some direction in relation to best practice in outcomes based commissioning. Some of the key “pointers” for councillors include:
- Take time to get the right set of providers in place to deliver the new model and collaborate with them to get the best possible system in place – be thorough in research and consideration of tenders.
- Be very clear what the likely outcomes are that any specific service is being asked to deliver.
- Make the payment mechanism as simple as possible. Consider whether any rewards will be paid for good performance in delivering outcomes. Consider if payments should be made on each individual outcome achieved or for outcomes for sub-sets of the population e.g. hospital discharges.
- Make use of the public, their opinions and data collected about them to assess the needs of the population and reflect this in the agreed outcomes.
- Try to implement outcomes based commissioning as part of wider transformation within the organisation – in order to improve quality, reduce costs and improve efficiency (particularly in health and social care) other infrastructure and practices (such as IT systems and skills development in staff) need to be addressed in addition to commissioning models in order to bring about change.
Further reading about health and social care on our blog
Co-production in social care … a need for systems change
Why a holistic approach to public health and social care needs a wider evidence base … and how Social Policy and Practice can help
What’s happening to make big data use a reality in health and social care?