1. Designing and implementing PbR 18 June 2012 Ian Hickman Director of Policy, Audit Commission

2. Our report on payment by results, published in April

3. Incentives for providers and commissioners Well designed local PbR schemes have the following incentives for providers and commissioners: For commissioners: Savings Deferred costs New resources Improved outcomes Transferred risks Clearer accountability For providers: Range of outcomes New ideas Greater freedom Improved efficiency and effectiveness New entrants

4. Engaging providers Engaging providers in the design of a scheme: Measurement Matching rewards to contribution Joint commissioners Engaging them in the implementation: Rewards need to be attractive Mix of core and reward payments

5. Mitigating risks PbR schemes have the following risks: For commissioners: Costs may increase Costs may be deferred Disagreement about outcomes Schemes may fail For providers: Extra costs Attribution issues Schemes may fail

6. Key principles 1.A clear purpose 2.A full understanding of the risks 3.A well-designed payment and reward structure 4.Sound financing for the whole scheme 5.Effective and robust measurement and evaluation Five key principles for any PbR scheme:

7. Feedback we would like on our work What were your initial views on the usefulness of our publication? Are there any aspects that you think could have been clearer/made better? We left out a piece of work on Social Impact Bonds - would it be useful to do some follow up work around these/other newer funding models? Do you know of any case studies that we should try and find out more about/attempt to write up? Are you aware of other organisations doing this sort of work that we could collaborate with to maximise limited resources? i-hickman@audit-commission.gov.uk