Supplementary written evidence from Professor
Martin Chalkley following the evidence session on Tuesday 8 March
2011 (PB 72)
PAYMENT BY
RESULTS
There are two issues that I did not articulate in
oral evidence which I would like to comment on:
1. On contracting for "process"
versus "result of process"
The particular conception of Payment by Results that
is set out in the Consultation Paper is a contract in which the
remuneration is varied according to the outcome of supervisory
intervention, specifically re-offending. As I suggested in reviewing
the use of Payment by Results in health care, other notions of
"result" are possible. In health care the "result"
is a completed hospital treatment. I would contend that the most
important change is a movement away from contracting on process—whether
it is completed interventions (the health care example), or successful
interventions (the proposed probation example) is more an issue
of detail. I contend this because research strongly supports the
idea that by delegating process to providers there will be efficiency
gains. To use the jargon of the literature, contracts specified
in terms of result make the provider a residual claimant over
any process savings they can achieve. The lure of contracting
over "successful" outcomes is that it is success that
we really want—but there is another literature that warns
against attempting to be too specific in terms of reward structure.
2. On the evidence base for conditioning payment
on success rates
The other witnesses were more enthusiastic regarding
the robustness of the evidence that links re-offending rates to
"risk factors" (age, gender, socio-economic status etc)
than I am. We were described as "drowning in data" concerning
the correlates of re-offending; the implication being that it
would be a straightforward task to determine whether a provider
has improved on the average and therefore warrants a bonus. In
healthcare I would contend there is an ocean of data, compared
with the swimming pool that we are drowning in with regard to
reoffending. And yet there are many unresolved issues in health
care in agreeing risk factors. The problem is that many factors
are interdependent, so that untangling the competing influences
is very hard. I think that this means that the practical problems
of contracting upon successful outcomes (ie reduced reoffending)
are being understated.
March 2011
| 
