Over the last eight years, the use of social impact bonds (SIB) for funding human services has grown. Thirty-two SIBs launched worldwide in 2017, bringing the global total to 108, with an estimated $300 million total investments (see Paying For Social Outcomes: A Review Of The Global Impact Bond Market In 2017).
If you’re unfamiliar with the SIB concept, the model is based on leveraging private funding for human services. A provider organization uses loans from private investors to fund the management of a specific service, with while government agencies agree to pay for the program only if performance targets are met (see What is Pay for Success?; Social Impact Bonds – Moving From Experimental To Scale; and Social Impact Bonds: Small Model, Big Implications For Value-Based Reimbursement).
The question that has hovered over all coverage of SIBs is simple: Are they working? It’s still too early to give a global “thumbs up” to SIBs, but some of the early results are showing positive outcomes.
In Colorado, the first year of the City of Denver’s supportive housing SIB initiative, the outcomes met benchmarks to trigger the first success payment of $188,349 to project investors. In 2016, Denver and eight private investors invested $8.6 million to fund the program to house 250 people over five years. The city anticipates that it will save $3 million to $15 million over the five-year project (see Denver Supportive Housing Social Impact Bond Initiative Earns The First ‘Success Payment’ For Project Investors).
Last year, the very first SIB ever enacted in the United Kingdom reported that investors in the Peterborough SIB at Peterborough Prison were repaid in full with a return of 3% (see Peterborough Social Impact Bond Investors Repaid In Full). As part of that SIB, seven service provider organizations delivered substance abuse and mental health services for ex-prisoners—reporting that rates of re-offense were cut by 9% (see More Governments Are Turning To Impact Bonds-But Do They Deliver?).
On the other hand, in the U.S., the first social impact bond at Rikers Island did not meet its target, but still had positive outcomes—87% of the target population attended at least one intervention session, and 44% reached a program milestone found in other studies to be associated with positive outcomes. (To learn more about social impact bonds in progress in 2018, be sure to check out Social Impact Bonds: Over $166 Million In Funding & 20 Programs.)
While the evaluation of social impact bonds is still thin, there is enthusiasm for the model and expectations that they will continue. Last year Senator Todd Young (R-IN) introduced the Social Impact Partnerships to Pay for Results Act (SIPPRA), which would provide a $92 million fund through the Department of Treasury, and would allow the Treasury to enter into agreements with state and local governments for SIB partnership projects (see S.963 – Social Impact Partnerships to Pay for Results Act). SIPPRA was passed in February as part of the Bipartisan Budget Act of 2018.
Included in the legislation was plans to release requests for proposals (RFPs) from state and local governments for projects related to reducing utilization of emergency room services for consumers with chronic conditions; reducing the number of children in foster care living in group homes and institutions; reducing homelessness among vulnerable populations; improving the health and well being of consumers with mental health issues; and more. The programs will require applicants to meet the following criteria:
- Outcome goals for the proposed program should be met within a time period of up to 10 years
- No more than 15% of awarded funds for the proposed program can be used to evaluate the implementation and outcomes of the project
- Applications must include a plan to develop and deploy projects that produce measurable outcomes that result in social benefit, as well as federal, state, or local savings.
- Applications need to provide outcome goals, intervention, evaluation, target population, expected social benefits, projected costs, and projected savings.
The Office of Management and Budget will implement the legislation over the next year, and the RFPs are expected to be released in February of 2019. (Premium and Elite OPEN MINDS Circle members will find the RFPs when they are released in the OPEN MINDS Government RFP & Contract Database.) Though it appears that the federal RFPs will be intended for state and local governments, these institutions will need experienced partners with demonstrated results to be part of their proposal for funds. The legislation notes that funding applications must include description of the expertise of each service provider organization that will administer the intervention, including their past experience with similar programs. This means the field is still wide open for provider organizations with innovative programs and demonstrated outcomes.
Will this become the next face of value-based care? Payers and stakeholders want to know that quality care is being provided and that dollars are being put to the best use—what the final face of outcomes-based funding looks like is still clearly up for grabs.
For more, join my colleague, OPEN MINDS Advisory Board Member Richard Louis, III on September 17 for his 2018 OPEN MINDS Executive Leadership Retreat Executive Seminar, “How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating, & Contracting With Health Plans.”