Effective Contracting of Employment and Health Services

Robust, quantitative evidence to determine the costs and benefits of contracting out employment services and health assessments and comparing these models to no provision or to traditional, in-house delivery by Public Employment Services (PES), is relatively scarce. In addition, existing studies do not allow us to fully understand why contracted services performed well (or not so well), if and how this differs according to context and contract design. As a result of this, evidence is also limited on how the process of contracting out could be improved to achieve better outcomes for individual clients, while keeping the costs of service reasonable for the public purse. This study, commissioned by the Department for Work and Pensions (DWP) and conducted by RAND Europe, synthesises findings from the existing literature and qualitative interviews with commissioners, providers and other experts, to address the question: What are the advantages and disadvantages of contracting out public employment services and health assessments and what is the optimum model for doing so? This main question agreed with DWP captures a number of specific issues explored in this report around contracting employment services and health assessments. These two types of services represent different contracting models in the UK: (i) payment by results (PbR) contracts feature prominently in employment services (these were temporarily replaced with Cost Plus contracts introduced in response to the COVID-19 pandemic); (ii) payment for service contracts are commonplace in health assessments. The reviewed evidence focuses primarily on contracts utilising PbR mechanisms, which are common in the commissioning of employment services in the UK and internationally. There were no international examples of commissioning health assessments in the reviewed literature. This is reflected in the research findings but where possible and relevant, other contract models are discussed.