From equitable resource allocation to outcomes-based commissioning: a basic roadmap (guest blog 3/4)
Dr. Eliana Jimenez Soto, experienced Health Economist
The Beacon Strategies team would like to welcome Dr Eliana Jimenez Soto as a guest blogger for the coming months. Eliana is a health economist with over 15 years of expertise in health financing, data analytics and M&E. From a PHN perspective, Eliana has held roles as a Senior Technical Advisor to a number of PHNs, providing technical advice on outcomes-based commissioning financing and the overall use of evidence to improve program performance and outcomes. Eliana has also been a consultant on health economics on equity-based financing to WHO and UNICEF. Her international assignments include the development of complex financing costing and epidemiological models to improve service delivery and evaluate outcomes for disadvantaged populations.
Resource-based allocation exercises, such as the one we discussed in our previous blogs can be powerful catalysts for moving towards outcomes-based commissioning as it puts a transparent funding formula supported by best available evidence on the co-design table.
To cut through some of the complexity in this journey, we propose a basic two-year step-by-step roadmap for advancing towards outcomes-based commissioning and incentivising performance, which can be adapted to any existing co-design process.
Stage 1 - Funding for new contracts
After the resource allocation exercise of benchmarking current vs. equity funding (i.e. allocation based on need), a decision needs to be made as to the proportion of total financing to be tied to equity rules.
It is perfectly OK to decide that only some but not all funding will be allocated on the basis of equity. This might be advisable if there are concerns of sudden and large changes in funding having unintended market consequences.
Stage 2 - Co-designing new contracts within a CQI framework
Although for some services, robust evidence from previous years can provide guidance on the level of outcomes that should be achieved for a certain level of funding, this is not always the case.
Working within a Continuous Quality Improvement (CQI) framework, commissioners and providers can start harnessing the power of monitoring and evaluation (M&E) to identify what works and what doesn’t to progressively implement the required program changes.
The new contract should include a M&E framework that exploits data currently collected by providers and includes the basic information required to unpack performance for CQI. Keep it basic, but definitely step it up from just the number of clients and services and a couple of interviews.
Common mistakes to avoid is a focus on high-level indicators related to outcomes not easily attributed to the program in the short and medium-term, ignoring important information on models of care or going ahead with wishy-washy program logics.
It might be premature to start linking contract targets to performance incentives at this stage. However, you can start building this culture by setting a contract target (and a performance incentive) for at least the completeness of data reporting.
Stage 3 - The first six-month CQI meeting: Setting the foundations
A robust analysis of service data with insightful infographics including data completeness and validation should be discussed with the provider.
The results of good data auditing will help providers improve their data and show that the organisation is serious about using data for improving services and commissioning outcomes.
Start unpacking the many insights that good data analytics can provide, from frequent users and key cost-drivers to any potential incentives for targeting low-cost clients. Use them along with other service information to identify how best to help providers improve services within current funding parameters.
Stage 4 - Year one CQI meeting: Agree on a basic outcomes-based commissioning framework and test it
After one year, you can bring service data into the resource allocation model to align funding not only with population need but also with provider capacity to benefit the population based on data analytics.
After drawing on quantitative and qualitative information to unpack levels and drivers of provider performance, agree on KPIs and targets (for outcomes and other service domains), be mindful of any in-built incentives (i.e. for avoiding complex clients) and specify how they will be monitored and evaluated.
Take the opportunity to identify elements of success that can be replicated across providers and identify systemic issues affecting performance that can be tackled as a collective.
Stage 5 - Year two: Reissue contracts based on a tested outcomes-based commissioning framework
Working under a CQI framework in the previous two years should provide you with a good understanding of what drives differences in provider performance and costings. Are they due to differences in models of care, client mix, location? Were the replications successful? What are the systemic issues affecting performance and what can be done about them? What levels and types of outcomes can be expected in the short and medium-term? This is indeed the type of evidence needed for effectively commissioning outcomes and rewarding performance.
Grounding this process on CQI might not sound as exciting as the latest ‘game changer’ in the market, but the truth is that even with the best gear in the world, nobody can prepare in three days to climb Annapurna and survive the journey.
Strap on your tool belt because in her last blog, Eliana will be dishing out other useful health economics tools!