Top trends in outcome commissioning

To start with a health warning.  This is very much a personal piece of speculation from the author.  It makes no claim to academic rigour and is an attempt to draw together some threads on the trends and possible futures of outcome commissioning and SIBs in particular.  It hopes to provoke debate and we look forward to your thoughts and comments in response. 

Collective impact bonds came from the US where there is a long tradition of philanthropy and a greater reliance on non-state funding around public services.  In the UK we have one example – West London Zone (WLZ), where funding comes from multiple sources, including charitable grants and social investment.  The service is delivered through a single “backbone organisation” that knits together services by overlaying existing services with additional link worker resources, measured through a single outcomes framework.

WLZ is led by a social enterprise and has the entrepreneurial characteristics of an enterprise rather than a mainstream service.  It plans to continue to live dangerously with 80% of the cost coming from public sources initially and 20% from donor sources, with an expectation that the funding mix will change over time.  The principle of WLZ and collective impact bonds more generally, is that no single party, including government, can make a sufficient impact on complex problems and a wider set of resources need to be deployed.  It differs from traditional charitable funding in bringing these different sources of funding together into a single service and outcome framework.  

Collective impact bonds are more complex and precarious than most other types of SIBs, but they have the potential to capture the imagination and support of people in the community and to take on risks that commissioners may not be able to countenance alone.  The bond structure creates a coherence to the service and transparency on performance that is not typical in charitable funding. 

I think we should expect to see the emergence of more projects that draw in multiple funding sources and share accountability for achieving outcomes across public sector commissioners, donors and potentially the community itself.  It changes both the balance of risk on public sources of funding and on the responsibility of public commissioners for being the sole actor in initiating and sponsoring changes in services.

In May this year the new Mayor of Manchester – Andy Burnham announced a campaign to eliminate rough sleeping in Manchester by 2020, backed by a local fund managed by the charity Crisis that takes donations from local people and businesses.  At the beginning of September 2017, the donation website shows that £37,000 of a target £100,000 has been raised so far mainly from local people donating small amounts.  A community foundation made up of homeless people, community leaders and charitable organisations oversees the allocation of funds to projects.

Being a Mayor provides an ideal and unique platform to launch a high profile call to action around tackling a local problem.  Andy Burnham’s campaign is laudable, but when compared to the DCLG Fair Chances Fund which allocated £15 million on achieving better outcomes for 16,000 homeless young people, its ambition is fairly modest. But, it has captured the imagination and created a sense of impact and political leadership that is usually absent from SIB projects. 

 So, perhaps it is time to put a bit more campaigning into our contracting?  SIBs are tackling the issues we care most about – children growing up in families, people living longer and better, reducing loneliness.  SIBs deliver tangible results that perhaps deserve a little more of the political limelight and perhaps there is some value in closer alignment between politicians with a vision for change, and SIB’s as part of the toolbox? 

One of the most often cited criticisms of SIBs is the scale at which they operate.  All that effort for what is often a small number of people and a modest spend in the context of overall departmental spending.  There has been much soul searching about how to scale projects up to make the cost and effort more worthwhile.  But, SIBs are small for a reason.  The most important quality in a successful SIB project is match between the specific needs of a cohort and the effectiveness of the intervention in tackling those needs.  Trying to shoehorn service users into a project whose needs are not closely aligned to an intervention, leads to problems around paying for “deadweight” or reluctance from the provider/investor to take the risk on being paid for outcomes.

 But scale is still an important aspiration where it mitigates the cost of developing and managing projects, and enables commissioners to assign strong senior level resources to manage projects.  (One of the biggest causes of SIBs not reaching fruition is turnover of key staff). 

A small number of Cities and London Boroughs are looking to achieve scale by creating locally managed funds that include a portfolio of individual SIB projects.  These commissioners are seeking devolved funding to utilise the development grant and co-investment support provided by central government, but are making their own policy choices on spending.  Projects are at an early stage, but show some promise in surmounting issues around cost and scale, around building local capability and ensuring alignment with local policy priorities.  We hope to see more of them.

The appetite for achieving change through structural reform or large-scale systems investment has declined in recent years and we are seeing change being achieved more often through connection and collaboration from Accountable Care Organisations through to the Troubled Families programme.

Impact through the power of connections is also a feature of some of the most ground-breaking SIB projects and is happening through a new type of practitioner – the Link Worker.  In Ways to Wellness the Social Prescribing SIB in Newcastle, the Link Worker acts as the bridge between GPs who refer patients onto the programme, design individual treatment plans and case manage the delivery of services to individuals.  In West London Zone, the Link Worker works with local “anchor” organisations – schools, children’s centres and employment agencies to identify and then work with children to access additional services through local charities and providers.  In the Troubled Families programme, key workers linked up services around families, improving access and engagement, and reducing duplication of services.

The trend towards this type of role interests me for three main reasons.   

One, the fact that investors and providers are willing to accept the risk of being paid for outcomes where the ambit of the services within the direct control of the SIB is an enabler of access to services that themselves create the outcomes.  There is a high degree of dependency on resources outside the immediate scope of the contract, but sufficient confidence in the role of the Link Worker to accept the risk of outcomes being achieved. 

Two, the Link Workers, whilst being a very significant agent of impact, do not belong to a particular profession and have no defined pathway of development or progression.  The Chair of the Ways to Wellness SIB, Prof Chris Drinkwater, noted this point at the GO Lab Symposium on Better Commissioning for Healthy Lives and the risk that this poses on the ability to develop and scale services of this type. But, conversely, there is no legacy of practice to change. The evaluation of the Ways to Wellness project is examining the specific impact of the Link Worker in contributing to the performance of the contract.

Three, the role and impact of the Link Worker demonstrates the relative importance of investing in relationships to create impact, both in engaging service users and in aligning the services that deliver support.  Whilst in both Ways to Wellness and West London Zone there is some formality to the partnerships with GPs, schools and other organisations, these are not contractually defined obligations and there is a high degree of dependency on the relational skills of the Worker.

Social investors frequently play a very active role in setting up and managing SIBs that goes beyond the traditional remit of investors in most other spheres of investment.  That partly reflects the lack of maturity of the sector; investors are one of the few parties that have seen multiple projects end to end and have the expertise in making them happen.  It also reflects the diversity of projects and the need for investors to get closely involved to acquire sufficient understanding of the risks and costs of different projects. 

In some of the latest funds we are seeing the emergence of funds and teams focused on specific types of services.  Social Finance, for example, have the £12 million Care and Wellbeing Fund targeted specifically at interventions like cancer care and tackling loneliness. Bridges Fund Management manage funds that make investments in four sectors: youth employment, children’s services, homelessness and health/social care where they have an existing portfolio.   

Social Finance and Bridges are creating ready-made project vehicles that specialise in specific interventions, for example, Mental Health and Employment.  These vehicles seek to reduce the work necessary by commissioners to design the detailed service and commercial structures and provide expertise in managing the contract thereafter.  

It seems likely, as commissioners seek to replicate and scale services that have been delivered through outcome commissioning or SIBs, that specialised funding will become more prevalent.  It does depend, however, on achieving a sufficient volume of projects to build a viable fund and currently the market remains quite diverse in policy and service focus. 

We have yet to test the potential reach of SIBs in terms of different areas of policy and forms of intervention, but there is a working hypothesis that SIBs follow the “goldilocks” principle of needing to be focused, but not too small; complex, but not too risky and so forth; in short SIBs occupy a middle ground.  

There is much debate about how to extend the reach of SIBs and also how to cycle the learning from projects so services can be adopted by other commissioners and accepted into mainstream funding.  

One of the ways this is could be achieved is by investing in developing and licensing evidence based programmes.  In the US, there is a market in creating licensed models, such as Multi-Systemic Therapy and the Treatment Foster Care Oregon programme, and these make up a significant proportion of current SIBs in the UK and US.  

What evidence-backed programmes bring to SIBs is a source of confidence around the evidence base that reduces some of the risk associated with designing the intervention.  This level of prescription and the support provided by organisations that regulate the delivery of the licensed programme e.g. the National Implementation Service, gives commissioners and investors confidence to adopt innovation and to stretch the use of SIBs into new areas of service. 

Should we invest in putting new interventions through a cycle of hypothesis, service prototype, emerging evidence base to full evidence based model as a way of scaling services that create impact and giving a return on the investment into innovation? We would like to hear about your views on future trends and what you think might happen or perhaps should be part of the future.  

Email your views on golab@bsg.ox.ac.uk or tweet us on @ukgolab #SIBtrends

Jo Blundell is the former Deputy Director of the GO Lab. She has worked in and around public services in the UK and overseas for over 30 years, and is the founder and Director of Future Public.