2. mt chp lessons from other sectors-v6
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This document summarizes lessons learned from using outcome-based contracting models in other sectors that could be applied to the NHS. It discusses programs in employment and justice that aimed to help the long-term unemployed find jobs and reduce criminal reoffending. Key lessons include: piloting programs first to avoid unintended consequences of large-scale implementation; ensuring incentives do not result in "cream skimming" harder to help groups; keeping metrics and measures as simple as possible to avoid perverse incentives and gaming; and distinguishing cost savings from quality outcomes, as prioritizing savings alone could conflict with care objectives. Overall, the document advocates testing and piloting approaches on a smaller scale before widespread adoption to help programs succeed.
2. mt chp lessons from other sectors-v6
- 1. Outcomes Based Commissioning in other sectors Lessons the NHS can learn PCC Conference Leeds Hilton 30th June 2015 Mike Thorogood
- 2. Plan to cover • Experiences in other parts of the Public Sector: • Employment – Benefits to Work • MoJ – Reducing Re-offending • Lessons for the NHS
- 3. Employment – The Work Programme - Background Objective • Aims to help people who have been out of work for long periods to find and keep jobs • It targets 10% of those claiming benefit – assumed that 90% of claimants will find work within 1 year, the rest are referred to the Work Programme • Target cohort divided into payment groups – easier-to-help groups such as Jobseeker’s Allowance claimants and harder-to-help groups such as people who claim Employment and Support Allowance. • • introduced in June 2011 referrals will cease in March 2016 • 40 contracts with 18 prime contractors, who operate in18 geographic areas
- 4. Employment – The Work Programme - Background Objective • It replaces previous welfare-to-work programmes such as the New Deals, Employment Zones and Flexible New Deal, which were developed and delivered over the past decade. • These programmes suffered from several problems: they were: • fragmented; • interventions were over-specified; and incentives were poor, • allowing providers to stay in business without delivering strong results. • Outcome based payments now make up 80% of the total. For previous schemes such as Flexible New Deal they made up 60%
- 5. Employment – The Work Programme – Contract incentives Start Fee • Providers paid a small fee for each participant • Reduced and eliminated after 3 years. • In past schemes most of the revenue was earned here Job Outcome Payment • Payment made once participant in work for 3 to 6 mths (depending on payment group Sustainment Payments • Payment made every 4 wks a participant stays in employment beyond the outcome payment
- 6. Employment – The Work Programme – NAO & PAC Early Performance • Did not allow sufficient ramp up time o Bad publicity in first year – only 2.3% found work for > 6 mths o NAO in 2014 found success rate of 27% with more recent performance around 32% Base lining & Value added • DWP did compare performance with earlier programmes e.g New Deal (which performed at 26%. Didn’t assess against people who would have found jobs any way). Cream skimming • DWP paid contractors more for harder-to- help payment groups • To avoid “parking” contractors were asked to set minimum service standards. They developed 214 measures which DWP could not monitor • Contractors spend half as much on the hard to help groups as they said they would when bidding
- 7. Employment – The Work Programme – NAO & PAC Missed opportunity to learn • PAC found no attempt to relate spending on different payment groups and relate this to support given and outcomes, or compare performance across providers Flaw in contact • A key metric resulted in fewer clients making performance look better. As a result a contractor who was sacked from the scheme was contractually entitled to incentive payments because of this distortion
- 8. Justice – Tackling re-offending The Problem • Breaking the Cycle Green Paper (2011) • 75% of all offences committed are re-offences • 31.2% of offenders had 15 or more previous convictions / cautions • 26.7% reoffend within one year Proposal • Introduction of a case management approach to offender management • A single point of contact for offenders and the design of tailored support packages based on identified need. Pilot – HMP Doncaster •Pilot outcome based contract signed in April 2011
- 9. Justice – Tackling re-offending What’s changed? • Offenders did not have dedicated case managers. • Offenders were responsible for accessing services, requested through an “ATM” machine. Services provided in a fragmented way: • Community Re-integration Team – focuses on resettlement at end of sentence • South Yorkshire Probation Service • Offender Management Unit – carried out some risk assessment • “Through the Gate” support post release and ad hoc • No triaging / despite risk assessment – offenders served on a first come first served basis
- 10. Justice – Tackling re-offending What has stayed the same? • The process by which offenders access services to support their resettlement has changed • The interventions available to offenders remain unchanged as has the budget / resources which have been reallocated to fit the new model
- 11. Justice – Tackling re-offending What Doncaster the pilot is testing • The impact of • case management • replacing a multitude of process / output targets with a single outcome based target with a strong financial incentive • Existing outcome / performance measures are still collected but are not part of the contract. These include: • Numbers receiving mandatory drug treatment • Training & education measures • Tornado training sessions
- 12. Justice – Tackling re-offending Contract incentives • Target - % of offenders reconvicted across the cohort within one year of discharge • A threshold has been set which will trigger payment, base year 2009 – • if the reconviction rate is not at least 5% lower than the baseline, MOJ will reclaim 10% of the core contract value • above 5% the provider is entitled to the core contract plus a performance payment up to a maximum of 10% reduction
- 13. Assessment by MoJ Pilot assessment • Interim assessment focuses on qualitative evidence • Generally very positive • Good feedback from services users, staff and in particular the offender management service providers • Provider already showing an ability to innovate Cream skimming & Gaming • Concern that this may be present • Case management largely dependent on willingness of offenders to engage • Opportunity to use offender transfer system covered by the main contract to game - exclude harder to help
- 14. Performance management • Quantitative assessment has been severely hampered by failings in the IT system (MegaNexus Case Management system) Risk & Reward • Case management provider “Catch 22” are a supply chain partner of the main contractor Serco who run services at the prison • Serco has not passed contract risk down to Catch 22, which has been commended • However, there is criticism from some that Catch 22 that the risk / reward link is broken Assessment by MoJ
- 15. Lessons For the NHS – Appropriateness of Outcome Contract Overall • Clear need for innovation e.g. statistics on re-offending shocking, and deteriorating • Absence of good practice solution to use as a remedy Specific payment mechanism • In Employment • Too much coverage? • Measures not well developed • In Justice • Mix of outcome measure with input measures • Pilot status allows the approach to evolve
- 16. Lessons For the NHS – Perverse Incentives x Carrot Stick
- 17. Lessons For the NHS – Keep it simple Simplicity • Impacts very hard to predict – • Keep the number of measures as low as possible • Keep the measures as simple as possible “Everything should be made as simple as possible. But not simpler.” Albert Einstein • DWP’s contractors developed 214 measures which DWP could not monitor • Flaws in measures resulted in bonus payments to poor performers
- 18. Lessons For the NHS – Perverse Incentives Cream skimming • Need to introduce differential funding and incentives to reward and incentivise providers to focus on hard to help groups • Employment used “payment groups” to stratify the target cohort. But didn’t monitor or enforce through the contract • Justice have 4 “pathways” which reflect differential risk and resource
- 19. Lessons For the NHS – Avoid over specifying If the purpose is to innovate, then you want to allow room for a nice surprise! ” The secret is to achieve a clear separation between those service requirements that are unavoidable with those that give freedom to innovate •In Justice there are activities such as tornado training, that must be delivered. These are not covered by outcome payments • The offender support services, however, are more discretionary, these are matched to outcome measures • Justice has allowed the contractor a lot of freedom. • Contractor is introducing innovative community based teams
- 20. Outcome based contracts can be complex to design and difficult to implement. Piloting may require patience and some upfront investment in evaluation but will help avoid significant costs from getting it wrong at scale. Justice is piloting a range of local pilots including a re-offending initiative which is based at the probation service rather tan offender support in prison as in HMP Doncaster Lessons For the NHS – Value of testing and piloting
- 21. Delivering savings is an outcome in its own right and need to be thought through carefully i.e. What is their priority more, equal, less important than quality outcomes Do they conflict with the other objectives? Should they sit with the core element of the contract rather than the outcome based element? etc Lessons For the NHS – Savings
- 22. Some common factors for success • Ask – is outcome contracting appropriate? • Don’t underestimate how difficult it is to get incentives right? • Be realistic about how long it takes to see results • Keep it simple / don’t over specify • Invest in pilots – it is likely to save you money in the long run • Distinguish clearly between savings and other objectives