LA County’s First Pay for Success Contract: A Blueprint for Systems Change?

On October 3, Los Angeles County announced the launch of the County’s first Pay for Success (PFS) project: “The Just-in-Reach Supportive Housing Program.” Unlocking a new type of outcomes-contracting in the largest county in the nation was no small feat, and was made possible only through committed leadership and coordination at the LA County Board of Supervisors, CEO’s Office, multiple County agencies and service providers, and California-focused philanthropic partners.

As PFS advisor to the LA County’s CEO’s office since 2012, Third Sector has supported the development of the County’s first PFS demonstration project while laying the groundwork for future outcomes-oriented initiatives. Funded through the James C. Irvine Foundation’s California PFS Initiative, Third Sector’s work included:

  1. Educating key County stakeholders on the merits and operational mechanics of outcomes-oriented contracts;
  2. Designing a County specific “Pay for Success Blueprint” in partnership with the CEO’s office for developing & executing outcomes projects;
  3. Leading a cross-departmental RFP competition with the CEO’s office for outcomes-oriented intervention concepts;
  4. Selecting the “Just-in-Reach” intervention for PFS contract development; and
  5. Building the “Just-in-Reach” program’s financial model to support implementing stakeholders.

LA County’s deliberate approach to outcomes work resulted in both its first PFS project as well as a process blueprint that can be scaled to other county agencies interested in implementing their own contracts. While the 2014 LA County “Pay for Success Blueprint” could be updated to include a broader outcomes-oriented contracting framework, we are encouraged that additional departments are using it to guide their own initiatives to improve wellness for vulnerable Angelenos. Given that the LA County Board of Supervisors is laser-focused on results, we believe that this is only the beginning of outcomes-oriented work in the County.

Los Angeles County now joins twenty other communities who have entered into Pay for Success contracts, along with dozens of others exploring outcomes-based approaches. With this critical mass, it is safe to say there is a quiet revolution taking hold to align government resources with results. Yet the success of this revolution is far from certain and will require deliberate action to ensure that demonstration projects lead to systemic changes towards outcomes funding in government.

At Third Sector, the LA experience has taught us two important lessons as we seek to shift Pay for Success programs from demonstration projects to scale:

  1. Plan for systems-wide change while implementing individual pilots: LA County approached Pay for Success as part of a broader commitment from the Board of Supervisors and CEO’s Office to shift government funding to outcomes. The County took a deliberate, cross-agency approach to understanding the system-wide requirements for outcomes-oriented service delivery and contracting. The result: the development of the county-wide "PFS Blueprint" providing a road map for agencies across the County seeking the development of both demonstration pilots as well as a broader systems re-orientation towards outcomes.
  2. Leverage success stories and incentivize future outcomes-oriented work at broader scale: LA County’s first PFS project ignited an outcomes-focused approach to organizing service delivery within DHS. DHS case managers now look daily at data showing their progress on increasing housing stability for the homeless and have developed improved systems for communication and referrals with the County jail and court system. The next step is for LA County to share learnings from this experience across other agencies, incentivizing additional leaders within the County to take up outcomes-oriented approaches for whole funding streams alongside individual demonstration projects.

Outcomes-oriented contracting directly impacts individuals in need and ensures that taxpayer dollars are spent on services that deliver opportunity for the most vulnerable. For this revolution to drive systemic change, PFS demonstration projects, like “Just-in-Reach,” need to be developed alongside replicable blueprints, processes and incentives for other agencies to follow suit. That is how we will get from demonstration projects to improving lives at scale.

Interested in learning more? Please see here for more information on Third Sector’s homelessness work, as well as how we partner with governments to develop outcomes-oriented contracts.