What We’ve Learned from LA County’s Transition to Outcomes-Oriented Contracting (Part I of II)

This is the first part of a two part series.

Last month, Los Angeles County announced the launch of the County’s first Pay for Success (PFS) project: “Just-in-Reach.” The “Just-in-Reach” PFS project is an outcomes-oriented, health-based housing program that will reduce jail recidivism and help end homelessness among people experiencing repeat jail time. Over four years, the project will place 300 homeless individuals who are currently in custody within the LA County jail system and have a mental health and/or substance use disorders into permanent supportive housing. The project is a cross-departmental partnership between the LA County Department of Health Services Housing for Health initiative and the LA County Sheriff’s Department.

This project is the culmination of three years of very deliberate planning and execution by the County, its partners, and Third Sector Capital Partners. Third Sector has been a PFS advisor to the County, and in particular the LA County CEO’s Office, since 2012.

Our work, funded by the James C. Irvine Foundation’s California PFS Initiative, with LA County during these last 3+ years has given us a unique perspective into how a jurisdiction of over 10 million individuals can take a systematic and data-informed approach to linking multiple funding streams to the cause of measurably improving social outcomes.  While Los Angeles County followed a path specific to the County’s needs, Third Sector’s work with the County has yielded some universal takeaways that can be applied to other governments looking to replicate LA County’s transition towards PFS and outcomes-oriented contracting:

  1. Secure one or more senior government champions from day one;
  2. Take the time upfront to understand the operational realities required;
  3. Don’t re-invent the government funding wheel: leverage existing funding streams.

Secure one or more senior government champions from day one

Securing a committed government champion/end-payor is one of the pillars of a successful PFS initiative. For the largest county in the nation, securing the backing of the Board of Supervisors from the start of this initiative proved to be a game changing move that ultimately contributed to the successful launch of the “Just-in-Reach” PFS project.

LA County’s PFS journey began in August 2012 with a single PFS focused resolution authored by Supervisors Mark Ridley Thomas and Don Knabe. The directive: find a way to bring PFS to Los Angeles County. The concept of PFS provided the Supervisors with an opportunity to:

  1. Incentivize service providers to innovate and deliver improved social outcomes;
  2. Align multiple County departments and funding streams towards achieving the same outcomes;
  3. Shift a portion of the risk for outcomes achievement away from the County;
  4. Improve data sharing and cooperation between the County and service providers.

The Bottom Line: At a time when PFS was in its infancy, Supervisors Thomas and Knabe recognized the value of outcomes-oriented contracting to dramatically improve the lives of vulnerable Angelinos.

The Board’s first PFS resolution in 2012 and the resolutions that would follow over the next five years continued to publically reinforce the County’s commitment, both in spirit and in practice (funding), to making PFS a reality in LA County. The continued commitment of the Board drove:

  1. The mobilization of cross-departmental staff resources over a multi-year development project.
  2. The required structural changes to data systems, funding, and contracting needed for PFS.
  3. An end payor funding commitment for the “Just-in-Reach” PFS project.

Read Part 2 here.