Can PBR drive improved practice? Fraser Battye Children England Annual Conference 15 th 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. Appeal2. Models3. Early results 4. Consider- ations

The principle of linking results and reward in the public sector commands widespread support Appeal2. Models3. Early results 4. 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. Appeal2. Models3. Early results 4. 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. Appeal2. Models3. Early results 4. 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. Appeal2. Models3. Early results 4. 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. Appeal2. Models3. Early results 4. 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: ‘Thinking about...payment by results’ ‘Thinking about...evaluation and payment by results’