About 15% of people my age have a long term condition. A little over two years ago I developed COPD: Cautiously Optimistic about Payment on Delivery, and have been unable to rid myself of the affliction. Thus having published Better Outcomes, a report exploring the what, where and why of payment-by-outcome, I and several colleagues have spent the last six months dedicating our minds to understanding how to make it work well. Despite intense criticism and even dismissal from eminent thinkers like Aaron Wildavsky and Allen Schick, paying service providers based on what they actually achieve rather than on the effort they put in has persisted as an idea with merit and is one of the flagship policies of the current UK government. I hardly need to list the advantages here as they are so obvious. But the criticism, coming from such reputed quarters, needs to be taken seriously.
Through case studies on welfare to work, offender management and long-term condition management and drawing on examples including pharmaceutical pricing, foster care, foreign aid and streetscene management, my colleagues and I have tried to extract lessons from past experience using payment-by-outcome. These lessons form the backbone of the toolkit we have produced.
We have spent countless hours grappling with the complex problems associated with measuring outcomes, designing incentives that encourage providers to do what commissioners really want them to do and not something else, and dividing a population of diverse service users so they all receive a high quality service tailored to their needs, among other things. After all this we have a host of lessons to offer the debate, and I feel cautiously optimistic that others will be able to use our report to develop concrete solutions to make payment-by-outcome a driver of better public service outcomes in their particular sectors.
Payment by Outcome: A Commissioner’s Toolkit is a document for implementors, those who have to roll up their sleeves and deliver on policy promises. But it is also for politicians and policymakers who want to understand where payment-by-outcome can apply, what the pitfalls are and how they can ensure they are part of the solution rather than adding to the problem. This is a policy with enormous potential to improve public services, but only if it is implemented well. Let’s make sure we do just that.