In 2000, the Wisconsin Division of Public Health reorganized the public health contracting process by establishing contracts based on performance rather than on audited costs and allocating funds based on population health statistics and demographics rather than competitive bid proposals. This process created a quasi-market in which the State acts as buyer and the local public health department (LPHD) as seller of public health services. Instead of paying for what agencies spend (cost-based reimbursement), the State buys public health outcomes. Price, risk, and product are negotiated in a setting where the State attempts to maximize product, minimize cost, and write a risk policy to make the State whole if the product is not delivered. The local agencies attempt to bargain to attain their local priorities, maximize revenue, and minimize risk. This contracting innovation in Wisconsin is an attempt to restore the link between price and product. Politically, it is a partial response to the perceived lack of value-added in public health spending. With quasi-market incentives being applied to the public sector via performance-based contracts, its technical purpose is to bring greater accountability in terms of the allocation of public funds. The fundamental principle in this theory is to make the State a buyer of public health outcomes. In its first year of operation, the program has more effectively defined public health to its funders and constituencies, increased its fiscal accountability, and more substantively documented performance.
Learning Objectives: At the conclusion of the session, the participants will be able to: 1. Identify the positive aspects of a performance-based contracting system. 2. Recognize the value of buying public health services that are outcome-based and discuss the strategies related to implementing such a system. 3. Assess the feasibility of implementing a performance-based contracting system in their agency.
Keywords: Contracting, Performance Measurement
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: N/A
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.