Breaking the risk barrier
How Payment by Results can be embedded in public sector programmes
Governments around the world are seeking ways to maximise the impact of their taxpayers’ money. In the UK, policymakers and commissioners have started to focus on Payment by Results (PbR) to help reinforce the relationship between payment for public services and value received by the taxpayer.
In this paper, we explore the lessons commissioners and suppliers can learn from PbR’s use in the public sector to date. Crucially, we consider the extent to which risk can be transferred to suppliers – and the challenges of successfully applying PbR in contract design.
"Such a good idea I want to put rocket boosters under it"
David Cameron on Payment by Results
Ultimately four key challenges must be overcome to successfully transfer risk at scale. Only by articulating a clear vision, applying the right metrics, sharing meaningful data and creating an appetite for risk, can commissioners truly embed PbR in public sector programmes.
Payment by Results is a complex and diverse topic. Deloitte has substantial experience of designing payment mechanisms for commissioners, of advising providers bidding PbR programmes, and of driving successful operational delivery in a PbR context.