Performance-based contracting in Wisconsin public health: transforming state-local relations

In 2000, the Wisconsin Division of Public Health reorganized its allocation of federal and state funds by basing contracts on performance rather than audited costs. This created a quasi market in which the state acted as the buyer and the local health departments as the sellers of public health services. In its first year of operation, the program more effectively defined public health objectives to its funders and constituencies, linked its fiscal accountability more closely to attainment, and documented performance more carefully. In the next two years, the program will focus on improving the quality of objectives and training all parties in negotiation skills. The 2003-6 contract cycle will concentrate on multiyear and multiprogram objectives and a Web-based contract management system. This new contract system will not, however, be established permanently until its long-range impact on funding levels and population health status is known.