What are the implications of "outcomes' based funding?

The Shergold review of social services has put outcomes based funding back on the table. Below, Simon Smith from Wesley Mission Victoria unpacks what lies behind interest in 'outcomes based funding' and what it might mean for program delivery.  

Wanting to deliver outcomes for the people we support seems like something all agencies would agree on.  Surely the ultimate outcome from our work is to improve client’s lives?  However, defining, measuring and achieving outcomes isn't necessarily straightforward.  With the Victorian Government’s focus on outcomes as the way to improve delivery of community services, the implications of this approach need to be carefully considered.[i]

Current situation

In Victoria, improving outcomes has become a major focus for the delivery of community services.  In the Out of Home Care and Homelessness sectors, trials have been announced (or started), where program providers are funded on the basis of the outcomes they achieve for clients.  The Community Sector Reform Council, Co-Chaired by State Government and the sector, is also going to work on "embedding a stronger focus on articulating and measuring outcomes" as one of its major priorities during 2014.  Consultation with the sector is expected to commence in mid-June.

Just what is an outcome?

There isn’t a clear consensus on what is meant by outcomes.  One definition is that outcomes are "the long term change that results from an activity".  Another way of defining outcomes is the difference that a program is trying to make in clients’ lives.

But even using these definitions, there are many different outcomes that programs are trying to achieve.  A homeless agency, a youth mentor program and a drug and alcohol program are all arguably trying to achieve different outcomes - even if they share a similar focus on improving clients’ lives.

So who will determine what the different intended outcomes are for different policies and services?  The Victorian Government has already done this in an ad hoc way, setting out outcomes for different areas in some of its policy documents, but not all of them.  For example, the recent Five Year Plan for Out of Home Care has a clear outcomes framework.  In contrast, the 2011 Victorian Homeless Action Plan provides funding for innovation projects, where funding is provided on the basis of the outcomes that are achieved.  However at this point there is no single outcomes focus that will be applied to all existing homeless services.

How do we know if we are achieving the intended outcomes?

If outcomes are truly about achieving long-term change for clients, how much time do we need to allow for, to see if the envisaged outcome has been achieved?  Intuitively, it seems like there will need to be a reasonable period of time to see whether outcomes, especially changes in clients’ lives, are realised.  Some agencies that have been developing an outcomes framework have taken up to seven years to collect enough data to truly understand the outcome of their work.

Given the long time frames likely to be involved, are there meaningful outcomes that could be achieved for people along the way towards what is considered the ‘ultimate’ outcome?  A worker in Wesley's Homelessness service says that stopping a client from using drugs for a week can be a very significant outcome.  These might then help them towards achieving other outcomes.

How do we determine the impact of factors outside of an agency’s control that can influence whether or not they achieved the desired outcomes?  Changes in underlying economic conditions or changes in Government policy (such as income support payments) can have a strong bearing on the outcomes that services achieve.

How do we know if the outcomes that a particular agency achieves are 'good' or 'bad' outcomes?  In Australia there aren’t a lot of studies that look at the 'counterfactual' argument i.e. what would have happened if the person in need hadn’t accessed the service.  Sometimes the outcomes from a particular service might seem small, but if this was compared to what would have happened without the program, the outcomes that are achieved seem much more impressive.

Who will measure whether outcomes have been achieved? 

What method will be used to measure outcomes?  There are a number of different concepts that have been developed for outcomes measurement.  Some are focussed on the ‘return on investment using cost-benefit type methodology.  These are likely to be of interest to Government as the principal funder of many programs.  However it’s just as important to capture the client’s perspective about the actual difference that being part of a program has made to their lives.  Many examples exist, such as the evaluation of Reclink which interviewed over 200 individual clients[ii].

At a practical level, will agencies have to measure outcomes themselves?  Will they be supported to do this where they don't have the capacity to design survey instruments and IT systems to collect this information?  How will workers be supported to collect data to measure outcomes when this is another thing they have to do in their day-to-day work?

What are the potential links between an outcomes focus and program funding and design?

What happens if individual outcomes either aren’t achieved, or only partly achieved?  Will agencies only be funded for some of the work that they have done, or not receive any funding at all?

How do we control for pernicious affects?  Agencies might decide to only take those clients with whom it is easiest to get an outcome for, if they were in a situation where better outcomes might lead to further funding.  Arguably, this is what has happened since the introduction of Job Network, where agencies receive ‘outcome’ payments for different types of clients.


Ultimately, it’s worth asking the question: What is the outcome we are trying to achieve by bringing an 'outcomes' focus to program delivery?  If the aim is to ensure that services are making the greatest difference possible for clients, we welcomes this, but there are lots of questions to be worked through to make this happen.

[i]As an aside, at a Federal level, the move to person-centred service delivery has a strong link with outcomes focus.  Here, planning is based on a person's goals, and most outcomes are related to goals of the client.  The implications of these reforms will be looked at in another article.

[ii] See The Impact of Reclink Australia Programs on Participants: National Report, Centre for Sport and Social Impact, 2013.

Simon Smith is the Social Policy Officer at Wesley Mission Victoria, where his role is to support advocacy and lobbying across the sectors' that Wesley is involved in.  Simon's earlier career in the community sector included working for 2 national peaks, Homelessness Australia and Catholic Social Services Australia.  He represented members in major policy debates including the development of the first national homelessness white paper, and earlier welfare reform proposals.

Posted by Gemma Carey