23 February 2010 – Publication of DWP research report 638: The influence of outcome based contracting on Provider-Led Pathways to Work

This new report published today by the Department for Work and Pensions presents the findings from qualitative research exploring the influence of outcome based contracting on the management and delivery of Provider-Led Pathways to Work.

Evidence from this research reinforces concern that the job outcome framework of contracts does not incorporate adequate incentives for Prime Providers to work with harder to help customer groups.

Some of the key findings include:

Underperformance of providers

There has been an underperformance of providers on job outcome targets and both prime and subcontractors are experiencing financial strain. This relates to unrealistic customer profiles in the provider bids and therefore the contracts and providers felt that this had been exacerbated by the recession.

Facilitators of improved performance

Provider Performance Reviews, Improvement Plans and Engagement Meetings as well as regular informal communication have been useful in driving up performance and to help strengthen stakeholder relationships.

Influence on delivery

• Customer classification systems are used to prioritise the time and effort of provider advisers and there were signs of management pressure towards focusing on customers considered easier to help.
• Advisers often expressed concern about these practices, but saw this approach as appropriate in an outcome based contracting target structure and where there was a clear management steer, for disengaged clients or those who are seriously ill or awaiting treatment.
• Provider innovation has generally been limited to efficiency savings.

Impact on the Provider-Led Pathways supply chain

All stakeholders felt that outcome based contracting shapes delivery of Provider-Led Pathways, which has led to a division of labour between Prime Providers (who focus on job ready clients) and subcontractors (who focus on harder to help).

Notes to Editors:

• The DWP research report: The influence of outcome based contracting on Provider-Led Pathways to Work is published today on the DWP website.
• The report authors are Maria Hudson, Joan Phillips, Kathryn Ray, Sandra Vegeris and Rosemary Davidson of the Policy Studies Institute.
• The report is based on in-depth qualitative interviews with a total of 56 key stakeholders involved in the delivery and management of Provider-Led Pathways from across four districts. The respondents included DWP Contract Managers, Jobcentre Plus Third Party Provision Managers, managers and advisers from prime provider organisations and representatives from subcontractor and partner organisations.
• Website: http://research.dwp.gov.uk/asd/asd5/rrs-index.asp

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