A Rapid Evidence Review of the Use of Payment by Results in Social Care

O'Leary, CP (2017) A Rapid Evidence Review of the Use of Payment by Results in Social Care. In: 3rd International Conference on Public Policy (ICPP), 28 June 2017 - 30 June 2017, Singapore.

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Abstract

Over recent years, there has been increasing interest in ‘Payment by Results’ (PbR) (Pay for Success in the US) as a model for outcome-based commissioning services in the public sector. Such PbR contracts link payment to the outcomes achieved, rather than the inputs, outputs or processes of a service (Cabinet Office 2011). By making some or all of payment to a service contingent on delivering agreed outcomes, PbR supposedly reduces ‘micro-management’ on the part of the commissioner, encourages innovation and transfers risk away from the branch of government commissioning the service towards the service provider because government will only pay if outcomes are achieved. From government’s perspective payments for service are deferred. Given the need to reduce public sector spending, both the transference of risk and deferring payment for services are attractive propositions for government. To date, over £15 billion of services in the UK are subject to PbR contracts (National Audit Office 2015), in areas such as criminal justice, healthcare, and social care. Payment by Results and Social Impact Bonds can be considered as the logical conclusion of outcome-based performance management (OBPM) (Lowe and Wilson, 2015), as they are intended to ensure that financial rewards directly flow from the achievement of specified outcomes. OBPM is a general term used for using outcomes as a means of assessing performance (Lowe, 2013), and different forms of OBPM have emerged since the 1990s. OBPM is associated with New Public Management (NOM) (Hood 1991). This paper seeks to examine the use of Payment by Results in social care in the UK. Although formal evaluations of both PbR and are still limited some evaluation findings are starting to be published and some tentative conclusions on the potential for innovation are drawn from the REA. It draws on a Rapid Evidence Review of the literature on PbR is social care.