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Payment by results: risky
business or a land of opportunity?

NCVO Sustainable Funding Conference 2012


              Fra...
This presentation is a whistle-stop tour of a
complex topic. It’s in two parts




                  1) What is PbR?   2) ...
PbR is a form of outcomes-based commissioning


   (Largely) past                         ‘Old’ (!)                    ‘Ne...
So the intention is to focus on the difference that
services make - not on what is done


            Inputs          Outp...
At heart, the thinking behind PbR is simple:
incentives matter



                                       Change in        ...
PbR is being used as a mechanism for public
service reform


                                   “...it is not enough to pa...
PbR is being tested in a range of policy / service
areas

                                                                ...
‘PbR’ describes a range of different models
(which can be blended)
Results for...           Payments on...   Accounts for....
The debate on PbR is theory-rich and evidence-
poor...it can be rather polarised
"Payment by results should be            ...
PbR raises a series of important considerations
for the VCS


           For any given service, what do we mean by ‘resul...
ICF GHK has undertaken substantial work on PbR (advisory and
                          evaluative); please get in touch if...
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Fraser Battye, Principle at GHK Consultancy
Assessing risks and Payment by Results

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Fraser Battye - Assessing risks and Payment by Results

  1. 1. Payment by results: risky business or a land of opportunity? NCVO Sustainable Funding Conference 2012 Fraser Battye 28th November 2012
  2. 2. 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
  3. 3. PbR is a form of outcomes-based commissioning (Largely) past ‘Old’ (!) ‘New’ model of commissioning commissioning provision State sees a need State sees a need State sees a need State commissions State commissions State works out the service what to do ‘Outcome’ based Monitoring of inputs payment State provides and outputs service Fundamental point: PbR is not perfect, how does it compare 1) What is 2) Issues icfi.com | ghkint.com alternatives? relative to PbR? raised
  4. 4. So the intention is to focus on the difference that services make - not on what is done Inputs Outputs Outcomes Resources needed Services provided Results: changes in / consumed condition / outlook / People supported knowledge etc An attractive proposition: only paying insofar as services are effective 1) What is 2) Issues icfi.com | ghkint.com PbR? raised
  5. 5. At heart, the thinking behind PbR is simple: incentives matter Change in Change in PbR policy commissioning provider / contracts incentives Improved Change in Better VFM outcomes for service users delivery 1) What is 2) Issues icfi.com | ghkint.com PbR? raised
  6. 6. 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 15 references tough financial incentive for to ‘payment by providers to deliver good services results’ throughout the term of the contract.” 1) What is 2) Issues icfi.com | ghkint.com PbR? raised
  7. 7. PbR is being tested in a range of policy / service areas London Smoking Reducing Cessation Peterborough Reoffending Prison (SIB) Programme Children’s Centres Pilots Work Drug Programme Rehabilitation Troubled Families ESF Physical Activity Programmes 1) What is 2) Issues icfi.com | ghkint.com PbR? raised
  8. 8. ‘PbR’ describes a range of different models (which can be blended) Results for... Payments on... Accounts for... Incentives for... ...a % ...populations ...outcome ...systems increment ...individuals ...output ...the whole ...individual contract staff 1) What is 2) Issues icfi.com | ghkint.com PbR? raised
  9. 9. The debate on PbR is theory-rich and evidence- poor...it can be rather polarised "Payment by results should be "The NAYJ does not however accept that implemented across the public sector a case has been made for the benefits of without exception – where it exists PBR and is concerned the introduction of already, it should be made more the profit motive and market mechanisms forceful and sophisticated, where it may have potentially deleterious effects does not exist, it should be on the experience of, and outcomes for, introduced with very limited children who come to the attention of the transitional periods." youth justice system.“ KPMG ‘Payment for Success’ 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 1) What is 2) Issues icfi.com | ghkint.com PbR? raised
  10. 10. 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 2) Issues icfi.com | ghkint.com PbR? raised
  11. 11. ICF GHK has undertaken substantial work on PbR (advisory and evaluative); please get in touch if you would like to know more: icfi.com | ghkint.com fraser.battye@ghkint.com / 0121 2338900
  • NCVO

    Dec. 10, 2012

Fraser Battye, Principle at GHK Consultancy Assessing risks and Payment by Results

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