Understanding payment by results Supplementary material from the - - PowerPoint PPT Presentation

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Nov 21, 2022 368 likes •425 views

Understanding payment by results Supplementary material from the open ideas market sounding session 11 March 2015 Select a target group and establish a robust measurement framework Know what outcomes Consider the form of Measure the

SLIDE 1

Understanding payment by results

Supplementary material from the open ideas market sounding session 11 March 2015

SLIDE 2

Select a target group and establish a robust measurement framework

Comparison Treatment

Comparison Treatment Positive change Statistically reliable measure Treatment group needs to be large enough to be statistically reliable. Performance payments linked to measurements of comparison and treatment cohorts 12 month KPI measure 24 month KPI measure 50-75 months End of Term KPI measure Know what outcomes you are aiming for. Select a target cohort from the population. Consider the form of comparator you will use. Establish comparison and treatment groups. Measure the program’s performance by comparing

utcomes in the comparison and

treatment groups over time.

STEP 3 STEP 2 STEP 1

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Risk and reward: Payments are linked to program performance

GOOD SUPERIOR OUTSTANDING PROGRAM PERFORMANCE POOR BAD REALLY BAD Government’s exposure capped % of government savings Comparison and treatment group

utcomes equal

Provider’s exposure limited Returns accrue to both investors and providers RISK/REWARD PAYMENTS

I N D I C AT I V E O N LY

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Structure of government payments

STRUCTURE OF PAYMENT FIXED VARIABLE % direct service costs paid in

arrears. Payment frequency is

determined by contractual conditions. Independent assessment of performance against KPIs. Timing

f payments will depend on the

transaction structure.

SLIDE 5

Proponent’s cash flows

Cash flow

INDICATIVE ONLY. This model does not account for payments received from or made to private investors. The amount and timing of fixed and performance payments depend on the transaction model and contract conditions. Incomings and outgoings (and net position) may differ depending on the transaction model and program performance. How do I get financing to cover the deficit?

Bond
Bank loan
Bank overdraft
Equity parent

What are my costs?

Staffing – caseworkers, counsellors, etc.
Overheads and on-costs

How do I service this debt?

Fixed and variable government payments

Operating costs Fixed payments Performance payments Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 Q21 Q22 Q23 Q24 Q25