News and Comment

Commissioning for outcomes – challenges and opportunities

Thursday 1 December 2016



In the UK, around £15bn of outcomes contracts has been commissioned in 5 years. Outcome contracting or outcomes-based commissioning (OBC) is not new, but its use has attracted increasing attention as part of the Government’s wider public services reforms, set out in the Cabinet Office’s 2011 white paper. It is aimed at building more accountability into commissioning and to create a direct financial incentive to drive outcomes while incentivising providers to find better ways of delivering services. However, as the National Audit Office reported, OBC is not the ‘magic bullet’ and is not suited to all public services.

Appetite for OBC

In our experience of working with a wide range of local commissioners and those in commissioning networks; we are aware that OBC is still highly variable. Commissioners are conscious of the challenges of OBC. The process of developing and procuring outcome contracts is technically challenging. Interestingly, while much has been written about the technical challenges associated with defining outcome metrics, identifying target cohorts, establishing causality between intervention and outcomes, setting appropriate outcome payment, and procuring OBC; there has been less attention given to the cultural challenges of developing and procuring outcome contracts.

Our engagement with commissioners indicates that they do not under-estimate the technical challenges of OBC, but largely feel that they can have access to in-house capacity and skills for analysing outcome, activity and financial metrics; or are able to lever in such expertise. However, technical expertise per se is insufficient.

The structure and organisation of the statutory sector can pose challenges. For example, it is hierarchical and, despite good intentions, still operates in silos. Developing OBC often requires ‘going against the grain’ of established practice. Breaking down silos, networking and influencing effectively, and being able to understand and navigate complex relational dynamics within a commissioning organisation can sit uncomfortably within settings that are more commonly characterised by deeply entrenched sets of institutionalised behaviours and bureaucracy.

Commissioners often talk about risk in the context of OBC. They hint at the need for a different attitude towards risk within the statutory sector, and also different ways of ‘holding’ and managing the risks. Risk assessment and risk management have become de rigor in many statutory services and organisations and, in these contexts, risk is conceptualised and understood in negative terms. However, risk management strategies can often reflect public opinion and market forces, rather than stem from any objective analysis of risk. There are also deep contradictions in relation to whether risks are managed at the individual or collective levels. The issue of ‘who holds what risks’ is highly pertinent in this context.

Outcomes for whom?

As I have written previously elsewhere, ‘outcomes’ are still largely system-defined. This is more than an issue of ‘who pays’ and ‘who saves’, but also recognises the fact that ‘the system’ (e.g. healthcare, social care, children’s services, etc) already collects a significant amount of data routinely, using broadly consistent techniques. It is therefore perceived to be more ‘cost-effective’ to use such existing data, particularly when such data are also key targets or KPIs against which organisational performance are assessed.

There is a paucity of evidence around the link between individual-level and system-level outcomes. There can be over-simplistic assumptions around the link between, say, achieving better individual wellbeing and resultant decrease in service use. Despite the rhetoric around person-centred care and user involvement, genuine involvement of service beneficiaries in defining outcomes is still rare.

Interestingly, there may be potential to reframe the way we look at outcomes. For example, while the Sustainability and Transformation Plans (STP) agenda has been criticized by local authorities and by those championing public consultation, the high level principles and vision underpinning it can be used to open up a wider discussion around “outcomes for whom?”. In our own work with commissioners, we have encountered colleagues in Clinical Commissioning Groups who have used the STP agenda to embrace a wider perspective on outcomes – in particular to involve service users in co-defining ‘what success looks like’, over and above any system-level benefits, even if these may not result in ‘cashable’ savings.


Looking ahead, we need to pay more attention to the needs of commissioners in terms of the support they require to enact OBC, with clearer guidance for thinking through where OBC may or may not work. The support should cover not only the technical aspects of developing and procuring OBC, but should also extend to include support for navigating the relational aspects of OBC, both internally and externally. It is also crucial to better understand how commissioners access support. From our experience, effective commissioning support is never simply about ‘pushing’ information and resources ‘out’ to commissioners. There should be a strong formative thrust aimed at helping commissioners translate and unpack resources and learning, and making these work in their specific local contexts. In addition, we know that peer-to-peer support and exchange can be critical in sense-making and practice improvement. This is where commissioning networks can play a vital role in encouraging and sustaining such exchange.

Dr Chih Hoong Sin, Director for Innovation & Social Investment