Mark Friedman, Results Based Accountability In September, Common Good Vermont was thrilled to welcome world renown Results Based AccountabilityTM founder Mark Friedman to Vermont for three days of training and policy discussions with over 300 agencies, legislators, and funders. Mark expertly guided everyone through his methodology for answering the three questions: 1) How much did we do; 2) How well did we do it; and 3) Is anyone better off?

1. Draft 2 June 2011
Next Generation Contracting 2.0
An Approach to Flexible Funding and
Integrated, Outcome-Based Contracting
Based on Next Generation Contracting
and Virtual Funding Pool Principles developed by FPSI
Fiscal Policy Studies Institute

2. Next Generation Contracting
Quantity Quality
1. Traditional purchasing
Effort
methods work fine in the
upper quadrants.
BUT
Effect
2. They break down in
the Is anyone better off?
quadrants (because of case mix
differences and perverse incentives).
WHICH MEANS
3. What we purchase in the lower quadrants are not deliverables,
but rather a RELATIONSHIP where funder and grantees work
together to maximize customer results.

3. Next Generation Contracting
Contract Provisions
Provision 1. Specify the 3 to 5 most important performance
measures (from the How well did we do it? and Is anyone
better off? categories).
Provision 2. Specify that the contractor will use a continuous
improvement process (the RBA 7 Questions).
Provision 3. Specify how the funder and contractor will work
in partnership to maximize customer results (quarterly
meetings using the 7 questions as the agenda).
Provision 4. Specify that the funder will work with the funding
community to simplify and standardize contracting and
performance reporting.

4. Next Generation Contracting
Contract Provisions
Provision 5: : Clear articulation of role in population/community
well-being. Language of contribution not
attribution.
Provision 6: 10% for quality management and administration.
Provision 7: Multi-year funding using 3 year rolling contracts
Provision 8: Use of targets that are fair and useful.
Provision 9: Fund flexibility and virtual funding pool: transfer
of up to 10% across line items and program lines.

5. Draft 2 June 2011
Next Generation Contracting 2.0
An Approach based on Next Generation Contracting
and Virtual Funding Pool Principles developed by FPSI
KEY FEATURES:
1. Allows fine tuning of the balance between control and fund flexibility.
2. Provides the benefits of "traditional" fund pools for mainstream
funding, without the loss of fund identity, and with less accounting and
administrative complexity.
3. Promotes partnership/alliance working on both population quality of
life and service system performance improvement. Defines
funder/contractor partnership for maximizing customer outcomes.
4. Makes use of simplified reporting on contract performance using RBA
formats and the three RBA measurement categories: How much did we
do? How well did we do it? and Is anyone better off?
5. Establishes 3 year rolling contracting (with safeguards) that prevents
annual destabilization of service providers.
6. Institutionalizes contractor continuous improvement processes.
7. Provides funding for contractor management infrastructure.
Fiscal Policy Studies Institute

6. Service Line Specifications
1. What is the role of the service in population quality of life?
2. Definition of the service
3. Service quality requirements
4. Key partners, alliance relationships
5. How many people will be served? (and relevant targets)
6. How much of what activities will be provided? (and relevant targets)
7. How well did we do it? and Is anyone better off? measures (3-5)
Fiscal Policy Studies Institute

7. General Contract Provisions
1. The contractor will use a continuous improvement process.
2. The contractor will report on progress quarterly using a
simplified format: Numbers, Accomplishments & Stories.
3. Targets, where used, will be set in relation to a baseline and
will be negotiated so as to be fair and useful.
4. The funder and contractor will work as partners to maximize
customer outcomes.
5. The funder will work with the funding community to simplify
and standardize contracting and reporting requirements.
6. General provisions concerning management, due diligence,
dispute resolution, termination, and other matters required by
law.
Fiscal Policy Studies Institute

8. Financial Contract Provisions
1. Standard provisions for accounting, financial reporting, audit
and general fiduciary responsibility.
2. Specify budget by service line.
3. Provide 10% for management and infrastructure, adjusted for
economies of scale.
4. Provide for rolling 3 year contract with new 3rd year
amendment to be negotiated by the end of each contract year.
5. Allow contractor to move funds of less than 10% of budget
between service lines in the interest of more effective services.
6. Allow contractor to retain (across contract years) savings in
medium/high intensive services to expand prevention services.
Fiscal Policy Studies Institute

9. Virtual Funding Pool
Managing "as if" funds were pooled: Accountability and flexibility without loss of fund line identity
Programs Low cost Med -High cost
Prevention
(using health examples) Intervention Intervention
Transfer between service lines or to new service
1a. Health promotion $ 1,000,000
1b. Immunizations 3,000,000
1c. GP well visits 4,000,000 1,000,000
2a. GP sick visits 10,000,000
2b. Diagnostic testing 2,000,000 4,000,000 10,000,000
2d. Emergency room 5,000,000 25,000,000
3a. Hospital care 50,000,000
3b. Long term care 60,000,000
3c. Hospice care 5,000,000
4. Mgmt Infrastructure 1,000,000 2,000,000 10,000,000
11,000,000 22,000,000 160,000,000
Fiscal Policy Studies Institute Transfer savings from deep end to prevention