Evidence shows that outcome-based contracting doesn’t produce good outcomes in real life. @tobyjlowe shares 7 things you should know about outcomes-based contracting.
Share article“The overall conclusion from international experience of implementing an outcomes approach is that the journey is long and the results are disappointing.” Learn more in this @CPI_foundation article.
Share article"Commissioning and contracting - which focuses on experimentation, learning, and adaptation - enables public service to create real outcomes more efficiently." @tobyjlowe on outcomes-based contracting.
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It is now widely agreed that the purpose of public service is to help people create good outcomes in their lives. This is a fantastic thing. It is brilliant that this perspective is so commonplace.
It is natural for people to move from this perspective to the idea that we should commission, contract, and performance manage public services based on the outcomes that they ‘deliver’. It sounds so sensible. How could it be wrong?
Outcome-based contracting (sometimes called outcome-based performance management or payment by results) doesn’t produce good outcomes in real life.
Sadly, the evidence shows that outcome-based contracting (sometimes called outcome-based performance management or payment by results) doesn’t produce good outcomes in real life. Here are seven things you should know about outcomes-based contracting based on the extensive research evidence about these practices.
It results in gaming - the deliberate manipulation of data to produce better-looking results.
It creates perverse incentives and undermines effective practice. It focuses public service attention on what is easily measurable about outcomes rather than what matters to people.
It produces good-looking data about outcomes, but these aren’t what people on the ground want, and other (non-contracted) outcomes either stagnate or get worse.
It makes delivery organisations employ more people to manipulate performance data (rather than supporting people) and encourages public-facing staff to discipline and punish those they are supposed to help.
It fails to understand how outcomes are made in the real world. If you’re a commissioner, you can’t ‘purchase’ an outcome. If you’re a provider, you can’t ‘deliver’ one. In reality, outcomes are made by hundreds of different factors working interdependently - most of which are beyond the control or influence of contracted services.
The UK’s National Audit Office reviewed outcomes-based contracting (in the form of ‘Payment by Results’). They concluded that it should only be used when it is possible to directly attribute an outcome to a particular service - i.e. almost never, in the complex reality of the world.
“The overall conclusion from international experience of implementing an outcomes approach is that the journey is long and the results are disappointing.” (Wimbush 2011)
Commissioning and contracting - which focuses on experimentation, learning, and adaptation - enables public service to create real outcomes more efficiently.
The good news is that if we truly care about outcomes, we know quite a lot about how to commission to create real outcomes (rather than good-looking performance data about outcomes). Commissioning and contracting - which focuses on experimentation, learning, and adaptation - enables public service to create real outcomes more efficiently.
Find out more:
See examples in practice:
Read The Plymouth Alliance case study
Read the Liverpool City Region case study
