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Payment by results in criminal justice

Source: Public Sector Executive Nov/Dec 2012

Yasmin Batliwala, chair of the Westminster Drug Project (WDP), discusses the introduction of Payment by Results into the criminal justice system.

In December 2010, the Government launched its drug strategy, ‘Reducing Demand, Restricting Supply, Building Recovery: Supporting people to live a drug free life’. As stated in the introduction by Home Secretary Theresa May, “a fundamental difference between this strategy and those that have gone before is that…our approach will be to go much further and offer every support for people to choose recovery as an achievable way out of dependency.”

The strategy outlines the Government’s commitment to an evidence-based approach, and to build a recovery focused treatment system. As part of this approach, and to ensure that “money will follow success”, it introduced eight Payment by Results (PbR) pilots running for two years each. The aims include understanding value for money in treatment services, reducing bureaucracy, integrating service user assessment, delivering those interventions that are evidenced to be supporting recovery and collating lessons learned for future PbR commissioning.

Westminster Drug Project (WDP), a leading provider of drug and alcohol addiction services, was chosen as a delivery partner for one of the pilots. Twelve months into this process, we now have a robust idea of what does and does not work in this type of commissioning structure.

Critical success factors

It is important to recognise that each pilot, indeed each commissioned service, has its own unique set of circumstances. Within that context, our opinions on PbR are not solely a reflection of our experience, but our considered view on outcome-based commissioning in the drug and alcohol treatment sector.

We have identified four critical success factors that require serious consideration in order for any PbR service to be delivered successfully. We believe that it is too early to say whether PbR can be successful in achieving its aims, but we believe that success is unlikely in the current form of the programme. There is little evidence that cutting costs through PbR commissioning improves value for money, and WDP believes that there are material risks in such an approach, that could undo much of the good work of recent years, and ultimately impact negatively on service users.

Meaningful partnership and staged rollout

The co-design phase of any PbR service requires that all parties work together to design the service model, the desired outcomes, the payment mechanism and the measurement framework. Like any relationship, more will be achieved when the partners are on an equal footing and negotiation is meaningful and not pre-determined. To achieve this, WDP believes that a staged approach to rollout allows for the parties to not only develop a meaningful working relationship, but also to baseline the outcome data so that the success metrics are realistic. The alternative to this path may present many challenges, including establishing good partner relationships, identifying appropriate targets and getting ready to deliver an appropriate service to deliver the outcomes.

A staged rollout also allows for the providers and their statutory counterparts to understand the dynamics of their relationship. Decisions taken by one partner may have negative downstream effects on another partner, and so may impact on service user outcomes in an unforeseen way. Base-lining through a staged implementation allows for these linkages to be made and for feedback loops to be established before any major harm is done.

Appropriate outcomes and measurement

The success and viability of any PbR service is dependent on selecting appropriate outcomes. The outcome domains, many of which relate to reoffending, place a requirement on treatment providers to find solutions that the police, probation services and courts have yet to fi nd for these service users. And these statutory bodies have far more extensive resources and enforcement powers than non-statutory providers. The appropriateness of this risk transfer from the public to the third sector must be questioned in this context. There is also a huge administrative burden, risk of inaccuracy and hidden cost in monitoring all service users across a large number of outcomes. The LASARS (Local Area Single Assessment and Referral Service), whose job it is to monitor these outcomes, must be committed to the outcomes, fl exible, unbiased in their assessment and not unduly infl uenced by the commissioning body. The amount of administration that is required to evidence the outcomes, results in a level of bureaucracy that is far in excess of a non-PbR service. This goes against the stated Government policy of providing services effi ciently and without duplication.

Appropriate risk sharing

The real threat to PbR is, similar to the Work Programme, that it may push service providers out of business, due to the punitive fi nancial structure of the contracts.

In the substance misuse field, many voluntary sector providers do not normally build any signifi cant profi t margin into their costing, and hence in the event of falling short of achieving the agreed outcomes, a provider will be unable to cover its cost of delivery. In addition to PbR, the drug and alcohol sector is also subject to general budget cuts, the removal of budget ring fencing and the uncertainty that goes with the government’s localisation agenda.

Voluntary organisations don’t charge a profi t margin, and a reduction in revenue on this scale is not only a threat to their existence, but also something that could jeopardise the health and wellbeing of those who so badly need its service.

The commissioning authorities must understand that payment must refl ect both the risk and the cost to the provider. WDP sees a hybrid approach as the only one that can work in a PbR context. Contract payments should be split between block payments and incentive payments. The former cover all the operating costs; the latter are the incentives for delivering high quality services and outcomes. This will encourage more third sector organisations to bid for the contracts, and when they win them, it will empower them to provide the most suitable interventions for each service user, rather than a pre-defi ned process of interventions. It will also safeguard the fi nancial future of voluntary sector service providers, who are crucial in the provision of treatment services.

Designing PbR around service user needs

The most important element of any commissioned treatment service is that it is designed, delivered and reviewed around the needs of service users. WDPs experience is that a system that is designed without service user input risks being unable to achieve service user needs and missing outcome targets. WDP considers service user feedback as best practice and would encourage commissioners and service providers to include service users in all aspects of service planning and delivery. The reality of people with substance misuse issues, as recognized by Theresa May in her introduction to the Drug Strategy 2010, is that “individuals do not take drugs in isolation from what is happening in the rest of their lives”.

In this context, a good service treatment system should have the fl exibility to offer a bespoke plan that meets the needs of each service user. However, PbR threatens to force service users down a single track, which is not service user led and may force service providers to prioritise the interventions that are linked to the payment mechanism, and not to need. It also fails to take into account the external factors that contribute to failed outcomes, particularly as they relate to employment and substance misuse.


WDP calls for a more mature and complete debate on PbR. It is too early in the pilot period to say whether these contracts can work effi ciently and effectively. There is little evidence that cutting costs through PbR contracts leads to better outcomes. Indeed, by focusing so heavily on cost, service providers are unable to hire the most qualifi ed and experienced staff, which is central to delivering the outcomes sought.

The current pilots are intended to provide evidence to inform stakeholders, and we fi rmly believe in the importance of communicating the lessons learnt, as well as offering alternative approaches that will support the Government’s objectives. The feedback from these pilots will undoubtedly drive government policy in drug and alcohol treatment for many years to come. The feedback from these pilots must be impartial and refl ect the benefi ts and the challenges of PbR in an open and transparent way.

Yasmin Batliwala is a magistrate with nearly 20 years’ experience chairing public sector organisations and a founding trustee of WDP. She has been a non-executive director of the Hertfordshire Partnership (NHS) Foundation Trust, chair of the Hertfordshire Police Authority, chair of the Watford Community Safety Partnership and co-director of the Police National Assessment Centre. She managed the Substance Misuse Unit at the NHS’s North East Thames Regional Health Authority and has undertaken work for the United Nations Offi ce of Drugs & Crime. She started her career undertaking ‘action’ research for the Department of Health into drug use within SW5 and Soho. She is CEO of the charity Advocates for International Development (A4ID).

WDP is a charity committed to helping all those affected by drug and alcohol use including families and communities.

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