Phase 1 - Define

1.4 Cultivate potential payers for your outcomes

Looking for an outcomes payer

When you’re clear which outcomes your programme delivers, think creatively about who might be prepared to pay for all some of them. While many SIBs feature central or local government bodies as outcomes payers, and the term “commissioner” is commonly used as shorthand for “outcomes payer” (as in this guide), Chih Hoong Sin, Director of OPM, points out that there is potential for more flexibility and creativity in the role of an outcomes payer. Some of your programme outcomes may be of interest to other kinds of organisations with the budget to pay for them, beyond the statutory commissioning bodies – foundations, for example, or schools.

If the outcomes that matter most to you are not in line with the current political climate, you may need to look beyond the statutory system for an outcomes payer: traditional commissioners will tend to only pay for outcomes aligned with current policy intent, and often (particularly in the case of local authorities) only when other big contracts are ending or where pots of funding already exist.

Since it may be a slow process, start reaching out to these potential outcomes payers now.

Negotiating outcomes

This can be the stage at which outcomes are transformed from vague organisational objectives...

  • for example, “the participant is in full-time employment payable outcomes

  • for example, “the participant has been in employment of more than 16 hours per week for at least 13 of the 26 months following their sixteenth birthday”.

In designing a set of ‘win-win’ outcomes, each party needs to balance what can seem like opposing factors:

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1. Outcomes need to be meaningful, uniting all stakeholders

A provider needs to ensure that:

An outcomes payer needs to ensure that:

  • The outcomes closely align with their mission and expertise, and make a difference to the people they serve, rather than being manufactured to respond to a potential funding opportunity

  • The outcomes are a good proxy for genuine and sustainable impact within priority policy areas, and often (in the case of statutory outcomes payers) lead to economic savings or cost avoidance

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2. Outcomes need to be attributable but achievable

A provider needs to ensure that:

An outcomes payer needs to ensure that:

  • Enough outcomes can be achieved – i.e. the bar is not too high

  • The outcomes can be identified in a timely manner

  • The outcomes are reasonably attributable to the activities

  • They are not paying for something that could have happened anyway

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3. Outcomes need to be measurable and provable

A provider needs to ensure that:

An outcomes payer needs to ensure that:

  • Successful cases can be proven easily enough

  • The outcomes are simple and objective enough, and/or are validated by a willing and neutral validating authority

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4. Outcomes need to be helpful

A provider needs to ensure that:

An outcomes payer needs to ensure that:

  • No unintended consequences are built in. For example, in achieving an outcome, something else may worsen or decline for beneficiaries

  • No ‘perverse incentives’ are built in. For example, all parties need to be careful that providers are not incentivised to ‘push’ their beneficiaries through routes or activities that are not in their best interests

See section 1.7 for what to consider when modelling for volumes and rates.

Cohort-level vs individual outcomes

Cohort-level outcomes: An outcome payment may be specified per cohort, where payment is triggered if a specified minimum percentage of the cohort achieves the outcomes agreed.  For example, if the commissioner agreed to pay £75,000 if a minimum of 50% of the cohort got jobs, no payment would be triggered if 49% of the cohort got jobs.

Outcomes-payers may even advocate for a ‘control group’ system, benchmarking the beneficiary group’s outcomes against a (usually random, anonymous) control group of their peers.

  • Be aware that these methods can rely on agreeing reliable data sources for group-level statistics, and will involve conversations around statistical significance
  • This system can be best for establishing attribution, enabling you to say that you really are responsible for the outcomes you are claiming
  • Another advantage is that it reduces the burden of individual-level admin. If you are claiming for a reduction in the ‘rate’ of this or the ‘prevalence’ of that, you don’t have to worry about certifying positive outcomes for individual beneficiaries

Individual vs. Population-level outcomes:

“To make it simple and measurable, we couldn’t be operating at population level. We needed to be proving outcomes on an individual basis. That’s where you can create the right incentives to do right by people.”

– Foundation leading the development of a SIB

Individual outcomes: or you can be paid each time an individual achieves, improves or does not do something.

  • Individual outcomes may require further evaluation to establish attribution (whether your programme caused this change), on the downside
  • But they are usually simpler to prove, and often involve real-time tracking, which enables course-correction of the programme along the way
  • Also, a system of individual outcomes does work at smaller numbers, where a cohort-level system may not

You are likely to have several different discussions with commissioners before precise contractual outcomes definitions can be negotiated.

What about soft outcomes?

Historically, commissioners have tended to prefer hard, objective outcomes that can be verified independently, such as gaining of qualifications, or job sustainment. But SIBs can include payments linked to softer, more subjective outcomes, where commissioners accept that these can indicate progress toward the hard outcomes that will come in time. For example:

  • improved wellbeing (Ways to Wellness SIB) 

  • reduced loneliness (Reconnections SIB)

  • resilience (DfE Innovation Fund for care leavers)

Service providers use evidence such as letters from teachers and interviews with beneficiaries to demonstrate that soft outcomes have been achieved.

Be aware that these kinds of outcomes will raise questions around robustness and value for money. If they are based on self-assessment questionnaires: to what extend does it depend on the participant’s frame of mind at the time of answering? Did they feel beholden to delivery staff when they answered it?

To persuade a commissioner to agree to soft outcomes, be prepared to show evidence that the soft outcomes are conducive to the ultimate hard outcomes/policy objectives and be prepared to incorporate a blend of different types of outcome.

Next: 1.5 Calculate costs