Achieving impact and innovation

Commissioners and providers are familiar with the refrain "to do more with less". The twin pressures of austerity - increasing need and decreasing budgets - have led organisations to seek new ways of working and new partners. At the same time, budget holders are focusing more on "customer" outcomes; seeking to make a positive impact on the lives of children, young people and families while justifying spend by demonstrating its benefits.

The Children's Services Development Group has concluded that in these circumstances innovation is both "necessary and extremely challenging" - necessary because the sector cannot continue to function in the same way in the current economic climate, yet challenging in that innovation and outcome-based commissioning do not always go together.

Tighter budgets can lead to prioritising interventions and providers already known to be effective. This can reduce market capacity, particularly among smaller providers whose work can offer the necessary innovation to make a real difference to service users, but which may not be able to compete with larger organisations with the resources to manage outcome-based contracts.

The most common form of "outcome-based" commissioning is payment by results (PbR). This approach is often used in health provision and adult social care for contracts where a percentage of the total value is reserved as an incentive-based payment dependent on the provider achieving particular results.

Research by the NHS Confederation shows PbR can be helpful for groups with entrenched poor outcomes, on whom a lot of money is spent or who have complex pathways, as contracts reward performance which has a positive impact on those outcomes.

In Central Bedfordshire, we have recently implemented this approach within our community health services contract, which includes the 0-19 children's health service. Embedding PbR within preventative services has the potential to address wider health inequalities for vulnerable families and reduce the need for resource-intensive statutory services in the longer term.

However, the performance frameworks for PbR can be onerous and rely on commissioners and providers understanding the outcomes to be achieved, their baseline position and their forecast need. Success relies on a transparent, trusting relationship between all parties in the arrangement.

Commissioners also need to consider whether outcomes will offset the investment in analytical and financial capacity needed to deliver value on PbR contracts. GOLab, the outcomes-based contracting research organisation, recommends total contract values in excess of £1m over three to five years; however, the turnover needed by the contractor to be awarded a contract of this value may price many smaller providers out of competing.

One solution may be for commissioners to facilitate a partnership through a social impact bond (SIB), a subset of PbR which relies on external investment capital to provide the upfront cost of developing a new service. Increasingly used in government contracts, SIBs reward investors if certain social outcomes are met, such as improvements in education and employment and reductions in reoffending.

As services funded by SIBs are likely to be delivered by voluntary providers, they can help to build market capacity. They are also more likely to be innovative, says GOLab, with "some significant uncertainty" around the outcomes. SIBs are, however, not without their challenges - funding applications and service development can take some time to come into effect. Furthermore, a number of examples identified as good practice - Multi-Systemic Therapy in Essex and Multidimensional Treatment Foster Care in Manchester - are grounded in evidence-based interventions with proven outcomes. Many interventions, such as the Mockingbird fostering model, were initially piloted with DfE funding under the Children's Social Care Innovation Programme. While the commissioning method may be innovative, as time goes by, SIB-funded services may be less so.

• Toni Badnall-Neill is strategic commissioning officer for children's services at Central Bedfordshire Council
  
  

BALANCING OUTCOMES AND INNOVATION

• When commissioning a service, it is paramount to understand what is needed from the process - improvement of outcomes within the current system, new methods of commissioning that prioritise outcomes, or more experimental service design with potentially bigger impact but where performance is not guaranteed. The greater innovation desired, the greater risk and system change is needed to enable this.
• Both innovation and good outcomes can be achieved by involving the market in the design process. Providers are often the first to become aware of emerging needs but may be deterred from meeting them by narrowly-defined service delivery requirements. Involving these organisations in co-developing outcomes frameworks while leaving specifications more open-ended embeds this expertise and allows providers to respond dynamically to design their service model around the outcomes.
• Young people should also be involved at the design stage. Young commissioners, children in care councils and young healthwatch groups have both direct expertise in this kind of co-production and the potential for identifying new ways of achieving service objectives.
  
  

FURTHER READING

Balancing the Three-legged Stool: Effective Outcomes-based Commissioning, Child Outcomes Research Consortium, October 2018

A Guide to Determining Whether an Outcome Based Commissioning Project is Viable, GOLab, May 2017

Commissioning for Outcomes Across Children's Services and Health and Social Care, Social Finance, January 2017

Collaborating for Better Outcomes: Final Report from the Children's Services Taskforce, Children's Services Development Group & Local Government Information Unit, November 2014