Outcome based commissioning: 10 lessons from practice and theory

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Robin Miller, Senior Fellow, Health Services Management Centre

As part of the move towards greater integration there has been much interest in the potential of ‘outcome-based commissioning’.  Outcomes, and the need to focus on these rather than inputs and activities is of course nothing new although often still elusive to achieve in practice. However the term has been adopted of late to mean a commissioning arrangement in which groups of providers led by an ‘integrator’ organisation are funded to achieve designated outcomes for a defined population. The integrator can also be provider or only act in a contractor function, and they are required to co-ordinate a supply chain that will deliver the required benefits.

The hope is that the greater flexibility will enable providers to introduce innovation, and for their individual contributions to be better co-ordinated through shared responsibility to deliver contract requirements. The integrator will undertake tasks previously done by the commissioner such as managing the performance of the other suppliers and therefore brings in additional capacity to the purchasing process. From a provider perspective, such arrangements are seen as giving the consortia greater freedom to deliver what they think works. Their central role and delegated commissioning function the arrangement awards the integrator more strategic influence than the traditional contractual arrangements. For the voluntary and community sector outcome based commissioning is seen as an opportunity to demonstrate greater capacity and resilience and so win larger public sector contracts. The model is being tested in a range of health and / or social care services including musculoskeletal, end of life, mental health, prevention and carer services.

So what are the risks? Procurement theory would tell us that handing over responsibility to a supplier is fraught with danger due to the influence that such a dominant provider will hold. This influence is based on the access to information that they (and not the commissioner) will be privy to, the likelihood that they will dominate the local market place, and the reliance that the commissioner will have upon them (#too important to fail’). Transactional costs may be reduced in principle through commissioners having one rather than many contracts, but these will be complex entities in their own right and integrators will need funding to develop their own capacity and competence. Patient experience could be improved through better integration, but choice may be reduced if provider diversity is reduced. From a practice perspective, commissioners are not that familiar with deploying such arrangements, and neither are most voluntary and community sector organisations. Developing the necessary consortium (in particular deciding who will not be part of it), and negotiating a contractual relationship with peers are particularly difficult and delicate tasks.

There is then a real potential for ‘outcome based commissioning’ to be a painful experience for all concerned, and to detract from the achievement of individual and community outcomes. That said, there is also the potential for new partnerships to be formed and for these contracts to unlock design and delivery capacity from provider organisations.  This has been the experience to date in Birmingham Carer Services, in which an innovative on-line ‘market place’ is connecting carers with a wider range of community based support.  From our research work we therefore suggest 10 key questions to be considered by commissioners and providers if the promise of better outcomes is to be achieved.

Questions for commissioners

  1. Are you being realistic about what can be achieved through a consortium?
  2. Have you considered the potential dangers as well as benefits of consortium delivery?
  3. Are you ready as individuals, as a commissioning team and as an organisation to undertake a consortium tender?
  4. Is the market place ready to undertake consortium tendering and delivery?
  5. Have you considered the practicalities as well as the vision of working with a consortium?

Questions for providers

  1. Are your board / trustees engaged with the possibility of consortia working?
  2. Have you undertaken a strategic review of the use of consortia within your future service areas?
  3. Have you approached other organisations that you may wish to develop consortia with?
  4. Do you have a set of key criteria regarding consortium membership?
  5. Do you have the competence and capacity within your management team to lead or join a consortium?