This interactive tool has been designed to assist commissioners, social impact investors and providers to assess the appropriateness of payment by results for a particular service.
If you invest a few minutes in using this tool, you will get immediate feedback about whether your service is likely to be a good fit for PbR and the critical success – and failure – factors you need to consider.
There are many definitions of payment by results. In this tool, PbR refers to any funding mechanism where payments are directly linked to the outcomes achieved.
The tool is based on a comprehensive literature review (completed January 2016) and consultation with commissioners, providers, service users and researchers. PbR schemes are so varied and tend to be commissioned for such different reasons that it is not yet possible to pass judgement on whether the PbR model works. There are a number of examples of both successful and failing PbR schemes in this and other countries. However, there are enough good quality reviews and evaluations to identify key learning points which provide the basis for this tool.
How to use the tool
The tool is split into two parts:
Question 1 asks: “Why use PbR?” and is most useful before deciding on a PbR approach.
The evidence suggests that commissioners should have a clear purpose for using PbR and that the reasons for adopting PbR have an impact on contract design. Schemes which try to achieve too many different objectives tend to fail.
Select a maximum of three rationales for using PbR and you will be taken to short summaries of the evidence for the pros and cons of using PbR for each of these reasons and the implications for contract design. [Question 1 may, inevitably, be of more use to commissioners/investors while Questions 2-9 provide key learning for all parties involved in PbR schemes.]
Questions 2-9 ask: “How to use PbR?” and are most useful when constructing a model/negotiating a contract.
In this section, you are asked a series of 8 questions. Each answer will generate a different key learning point.
If you wish, you can think through the issues relating to each question before answering by clicking:
Click here for help in considering your answer
If you want to pause at any time, just click the save button and resume at a later date.
Click the reset button if you want to go back to the beginning.
When you have finished, you can download your answers as a PDF; this document will also provide you with additional, free PbR resources.
This tool uses a simple traffic light system to help you identify high risk issues for the PbR service you are considering commissioning, investing in or providing. In general terms, any answer that is highlighted in red is highly likely to significantly limit the effectiveness of any PbR contract and should be addressed before starting any procurement process.
Before you start
There are four key overarching points to bear in mind if you are a commissioner designing a PbR contract or a provider considering bidding for one:
- Unintended consequences are commonplace in PbR contracts, build in the ability to review & modify contracts regularly in the interests of commissioners, providers and, most importantly, service users.
- PbR contracting is often a high risk approach, requiring substantial changes to established ways of working. Therefore, commissioners are recommended to consider a “blended” approach where the element of the contract subject to PbR starts at a low percentage and grows over time. Providers should be wary about taking on a 100%-PbR funded contract.
- PbR is not the only commissioning approach which can incentivise specific outcomes, where the research evidence underpinning this tool suggests that PbR does not fit the service you are commissioning, consider other approaches.
- Because we do not yet understand how PbR often plays out in practice, the literature strongly recommends piloting new initiatives.
It is also important to bear in mind that not all services are a good fit with a PbR approach. PbR works best when a service has clear overall objectives capable of being translated into measurable outcomes which can be clearly attributed to provider interventions.
This tool is based on a comprehensive literature review which can be downloaded here for free. Definitions of PbR jargon are here. You can also find out more about how the tool was developed here.
Click here for more information