SIBs Being Tested to Reduce ER Visits, Costs

Source: nhs.uk

The Takeaway

1. Social Impact Bonds, also called "pay for success bonds," are an innovative funding method for community-wide health improvement and cost reduction.

2. The California Endowment is investing 1.5 million dollars on a pilot project in Fresno, CA to test whether in-home interventions can reduce ER visits and hospitalizations due to childhood asthma.

3. Applied to health care, the new funding method is being dubbed an HIB (Health Innovative Bond).

4. If they prove to have measurable impact and scalability, HIBs will offer a new way to pay for preventive care.

The One-Minute Summary

Social Impact Bonds (SIBs) are currently being used in Australia the United Kingdom, and New York City to fund broad-based social improvement projects that, in this age of narrow funding streams, might otherwise be difficult to finance. The idea is that local governments partner with private investors to issue bonds for a local project. The bondholders then contract with non-governmental service agencies to carry out the project. Investors get paid only when certain benchmarks are achieved. This gives the investors an incentive to monitor progress, and presumably, keep things on track. The local government pays the bond and taxpayers benefit by only paying for projects that have shown positive results. New York's Mayor Michael Bloomberg recently signed off on a pilot project to use an SIB to reduce recidivism rates at the Rikers Island men's facility (a jail).  Now, this "pay for success" model is being applied to healthcare reform.

Rebecca Fairfax Clay described the first use of an HIB (Health Impact Bond) in an article for Environmental Health Perspectives. The California Endowment is putting up the initial money and Collective Health, a social enterprise organization is overseeing the project. The aim is to save money by reducing ER visits and hospital admissions for asthma sufferers in Fresno, CA. Asthma rates are particularly severe in this area; twenty percent of children in the county have been diagnosed with the disease. In the pilot phase of the study 200 children will receive preventive care in the form of home visits from community health workers. The program not only allows health workers to monitor medication compliance, it also pays for interventions such as removing carpets and cleaning up dust and mold.  Backers expect to see a 33 percent reduction in ER visits and a 50 percent reduction in hospitalizations.  The resultant savings are expected to be more than enough to offset the costs. Based on initial estimates, insurers will save 5,000 dollars for every child in the program.

Read the Article: Health Impact Bonds: Will Investors Pay for Intervention?

by Rebecca Fairfax Clay