There is a consistent concern with performance-based contracting in education, physical and mental health, and social services: Providers will want to sign up only those clients who seem to have the greatest chance of success, not those with deeper and more intractable problems. The process is called "creaming."

One way to get a handle on that, says James Moore, director of government programs at the Rensselaerville Institute, is to figure it into contracts. Take, for example, the tough world of addiction-recovery services. Agencies contracting for these services should set up varying performance targets according to degrees of difficulty. "What we point out to agencies is that you need to take a mixed approach to gauging results," says Moore. "You have young kids who have just gotten addicted. You have 20- to 30-year-olds who are pretty far down the path to heavy addiction. And you have your 55- to 60-year-old skid row addicts."

For the first group, says Moore, becoming addiction-free in a short period of time might be a reasonable goal. For the second group, kicking the habit will likely require more services and take longer. For the last group--hard-core, lifelong junkies--the goal might simply be to keep them out of jail or out of the emergency room. The key is to decide on realistic milestones based on such variations, says Moore, and then set up contracts that reimburse providers accordingly.

Some providers, however, don't think "creaming" is a big problem, because it's not very easy to do. "We naturally want to work with clients who we think will succeed," says Robin Thompson, executive director of The Major Group, which contracts with the Oklahoma Department of Rehabilitative Services to do job training and placement. "But there are lots of times when we work with someone who you'd never think would be a good employee, and they're the ones who end up being easy to place, and the ones you think are going to be really easy end up being really hard. Nobody is a piece of cake."