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Journal features Youth Villages’ take on ‘Pay for Success’

December 3, 2013

term-23An article featuring the work of Youth Villages is among more than 20 articles on the “pay for success” concept included in “Community Development Investment Review” recently published by the Federal Reserve Bank of San Francisco.

Written by Youth Villages CEO Patrick Lawler and Jessica Foster, director of strategy, the article focuses on how to make “pay for success” contracting work, using experience gained from more than seven years of contracts with the Tennessee Department of Children’s Services. “Pay for Success” contracting has been touted to improve outcomes for children while increasing accountability for taxpayers and is one aspect of the movement toward performance-based contracting.

Despite some challenges in implementation, performance-based contracting in Tennessee’s child welfare system has led to better outcomes for children and families, Lawler and Foster said.

“In the first three years, care day utilization went down by 8 percent, and permanent exits went up 6 percent – without any increase in reentries to care,” they said. “These percentages may sound like fairly small improvements, but they are pointing in the right direction and mean that hundreds of children each year are achieving permanency.” A permanent exit from the child welfare system happens when a child is successfully reunited with his or her birth parents or becomes a part of a family through adoption.

The article says the best performance-based contracts give providers flexibility and include transparent and consistent data collection. The best contracts ensure that all providers are compared against common benchmarks, take each provider’s population mix into account and over time, shift “market share” to providers that produce the best outcomes, the nonprofit executives concluded.

“Absent that redistribution, states will fall short of delivering the best possible outcomes for troubled youth,” Lawler said. Despite the challenges, Youth Villages is an advocate for the pay for performance concept, he said.

“The current system of pay-for-outputs government contracting is not focused enough on real outcomes that we – providers, government, everyone who cares about kids and families – seek,” the authors concluded. “We believe that performance-based contracting has potential to achieve better results on limited budgets.”

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