Brookings Institute Webinar: Impact Bonds in Health

https://www.brookings.edu/wp-content/uploads/2017/11/impact-bonds-for-health_slides_20171212.pdf Webinar: Impact Bonds in Health December 12, 2017 #impactbonds Welcome and Introduction Emily Gustafsson-Wright Fellow, The Brookings Institution egustafssonwright@brookings.edu @EGWBrookings • Achieving the SDG health targets would require new investments increasing over time from US$ 134 billion annually to $371 billion by 2030 • By 2020, chronic disease will make up 57% of the global health burden • In the United States: $10,348 per person in 2016 • Absenteeism costs employers in US $226 billion per year THE BURDEN OF HEALTH COSTS Photo credit: DFAT • Wide variety of innovative financing mechanisms for health: sin taxes, solidarity levy on airline tickets, IFFIm • Payment by Results in health: e.g. Health Results Innovation Trust Fund at the World Bank • Social and development impact bonds (SIBs and DIBs): focusing on paying for results in the health sector INNOVATIVE FINANCING FOR HEALTH IMPACT BOND PRIMER IMPACT BOND PRIMER 1. The investor provides upfront capital to the service provider to deliver services to a population in need. 2. An independent evaluator verifies whether the service provider has achieved pre-agreed impact metrics 3. The outcome funder repays the investor if the metrics are achieved. 101 IMPACT BONDS CONTRACTED GLOBALLY SECTORS: IMPACT BONDS CONTRACTED GLOBALLY HEALTH SOCIAL WELFARE EMPLOYMENT EDUCATION CRIMINAL JUSTICE ENVIRONMENT & AGRICULTURE WHY IMPACT BONDS FOR HEALTH? • Impact bonds in the health field have three potential goals: • Preventing illness –reducing direct and indirect costs • Reducing indirect cost (social/economic) of illness • Finding a cure for disease • Most contracted impact bonds to date fall into the first category • 13 contracted impact bonds globally • Focus areas: • Preventive: hypertension, diabetes, maternal and newborn health • Reducing indirect costs of illness: reducing sick leave, work reintegration for cancer patients, physical rehabilitation, mental health • 11 in High-Income, 2 in Low- or Middle-Income countries • Average contract length of 54 months • Sum of upfront capital: $24 million • A further 9 impact bonds for health in design in LMICs WHAT DO WE KNOW ABOUT IMPACT BONDS FOR HEALTH? IMPACT BONDS FOR HEALTH: EXAMPLES Example: Israel Type II Diabetes SIB Yaron Neudorfer CEO Social Finance Israel Contact: omer@socialfinance.org.il Impact Bond for Health – Potential, Applications & Tackling Type 2 Diabetes Case Study Social Finance Israel © Disclaimer: The information in this presentation is not a recommendation or an offer of any securities and is provided solely for your information purposes. While the structure of the Social Impact Bond will be as described below, the specific numbers stated below are solely as examples. Any references to securities listed in this document are not intended to constitute a current or past recommendation, investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. This presentation and the information in it is the sole property of SFI and it is prohibited to make any use of it, including copying, replicating, sending to a third party, without an upfront written consent from SFI. Social Finance Israel © 14 Why don’t healthcare systems focus on prevention? • Prevention programs usually contain challenging behavioral change components – creating risk for healthcare providers. • From the provider point of view, there is a high probability that resources invested in prevention would not yield the desired outcomes • Eliminating this financial risk can improve financial results for healthcare systems • By their nature, healthcare systems are designed to deal with the most urgent problems • Prevention programs have impacts that can be observed on the long term, and their cost effectiveness must be proven in the short term Prioritizing: Important vs Urgent Prevention programs are usually risky Traditional healthcare providers are not “experts” in prevention • Healthcare providers concentrate on treatment and have developed expertise in treatment. • Prevention is a different kind of expertise, which requires different personnel and different thinking. • Therefore, although healthcare providers can deliver prevention programs, chances are that an “expert” organization will do a better job Social Finance Israel © 15 Advantages of SIBs in supporting preventive medicine • Healthcare providers benefit from the pooling of resources in cases where economic value is distributed among several players in the system • Investors bear the financial risks • Investors bear efficacy risks • Healthcare providers can continue providing treatment without shifting resources and management attention • By definition, SIBs must incorporate rigorous measurement and a predefined target population • Healthcare providers can prioritize specific populations and issues • The SIB’s predefined timeframe creates funding security for long term preventive programs, reducing the risk of cancellation due to policy change Certainty and defined target population Reduced risk for healthcare providers Drive innovative solutions and expertise • The pay-for-success mechanism incentivizes innovative solutions • Performance management ensures constant efficiency and learnings • SIBs provide the flexibility to improve upon intervention components, programs or service providers and shift resources to more successful strategies • The selected service provider has expertise in prevention programs Social Finance Israel © 16 Considerations for a prevention SIB • Is there a social need for intervention? • How large is the potential target population? • What would be the impact on Israeli society? Social Need Social Impact Potential SIB Compatibility • Is there any existing knowledge in Israel? • Are there any existing measurements of success? • Among how many players are the economic benefits distributed? (preferably >1) • Is the government/ healthcare system willing to pay for success? • Are there any potential service providers? • Are the economic benefits detectable and measurable? • Are the potential results measurable? • Is there a SIB operating abroad? • Does the intervention incorporate behavioral change? • Has the intervention been tested before (scaling-up)? • Is the intervention model innovative? Operability Compatibility with the SIB Model Former Knowledge & Behavioral Change Investors’ Risk Former Knowledge Low Mid High Social Finance Israel © 17 Tackling type 2 diabetes SIB Impact investors Pay for success Professional Intervention Based on reducing allowances Based on reducing costs Innovative solutions HMOs Treating 2,250 high risk pre-diabetics External evaluation 5.3$ Million upfront capital Raising awareness, nutrition adherence, physical activity and support groups Means and applications to monitor physical activities, E.g., mobile app, wearables, etc. Data, tests and ongoing monitoring Social Finance Israel © 18 Who are the investors? 15 Impact investors 50% Israelis 50% International Diverse background and motivations: Philanthropic funds Impact funds Commercial bank High net worth individuals Family offices Social Finance Israel © 19 Tackling type 2 diabetes SIB - Intervention A year of intensive intervention A year of moderate intervention 3-5 years of measurement High risk pre-diabetics 3 cohorts 400-1000 participants per cohort The program is built on existing international experience and best practices providing personalized and culturally sensitive fitness and nutrition plans coordinated by dedicated case managers Nutrition Physical activity Workshops Motivation Technology Measuring the results of the intervention group compared to the comparison group Reduction in transition to diabetes Social Finance Israel © 20 Tackling type 2 diabetes SIB - Innovation and Distinctions • 3 different outcome payers are collaborating in this SIB: • 2 HMOs – Paying for direct cost of treatment, medicine, and inpatient days • National Insurance Institute – Paying for reduced disability allowances payments • All the outcome payers agreed to the same measurement of outcomes • This Social Impact Bond pools resources in order to make the intervention feasible for all of the outcome payers Pooling of Resources • Type 2 diabetes is a global epidemic • Many healthcare systems are looking for sustainable solutions to deal with the growing numbers of diabetics • This SIB has the potential to prove that an intensive intervention can prevent the progression to diabetes and be more cost effective • SIBs are attractive to governments due to the lack of financial risk they see by virtue of the Pay for Success model Global scale potential Referral process • Participants are chosen according to an innovative scoring system • The scoring system was developed by the Clalit Research Institute. It predicts patient’s risk of developing diabetes within the following years based on big data • The referral process is based on collaboration between outcome payers and service providers Example: Rajasthan Maternal and Newborn Health DIB Priya Sharma Senior Policy and Innovative Financing Advisor Center for Accelerating Innovation and Impact at USAID @psharma1304 psharma@usaid.gov RAJASTHAN MATERNAL & NEWBORN HEALTH DIB ISSUE 1) Rajasthan has one of the highest maternal and neonatal mortality rates in India. 2) While the Government of Rajasthan has greatly increased the number of women delivering in facilities, this has not resulted in the expected improvement in maternal/newborn outcomes. 3)Researchers believe that this has resulted, in part, from a lack of quality facilities in the State. 1 RAJASTHAN INDIA 282 1782 High MMR Low MMR 322 of every 1,000 newborns will die 2552 of every 100,000 mothers will die due to childbirth 78%3 of women receive labor and delivery care in facilities 79%4 Sources: 1.Randive, B. India’s Conditional Cash Transfer Programme (the JSY) to Promote Institutional Birth (2013) 2.Sample Response Survey 2010-2012; 2013 3. Palladium Research 4. Rapid Survey on Children 2013-2014. Graphic: Social Finance UK Rajasthan OVERVIEW OF THE OPPORTUNITY TRANSFORM QUALITY OF CARE IN FACILITIES OVERVIEW OF THE OPPORTUNITY A standardized way to assure quality will allow the Government of Rajasthan to channel government funds to private facilities offering quality care – a costeffective approach to saving lives. The Government of India recognizes quality of maternity care as an essential area of investment to increase maternal and early newborn survival. While public facilities are subject to government quality standards to be considered for reimbursement programs that drive volume, private facilities are not required to meet quality standards to access reimbursement programs. Private Public The partnership seeks to achieve impact at scale with a relatively small and catalytic investment. The intervention focused on improving and standardizing the quality of maternal care in private healthcare facilities in Rajasthan. To focus on impact, they mission will utilize a pay for performance structure, with deployment of capital directly connected to the achievement of outcomes. The project will take place over three years with a total investment of up to $9M. Through a government approved certification process, NABH-FOGSI, private facilities will be accredited based on the ability to meet specific quality standards for maternal care. The MCH implementing partners will guide facilities through quality improvements to meet this standard as well as the application process. IDEA What? How? IMPACT Why? Over the course of three years, the intervention is projected to: This intervention will be rolled out across Rajasthan, covering a geographic market of over 75 million people and… Impact the lives of up to 600,000 pregnant women, allowing us to… Save the lives of up to 10,000 women and children in Rajasthan over the next 5 years1 OVERVIEW OF THE OPPORTUNITY 1 Determined through modeling using the Lives Saved (LiST) tool The Rajasthan Maternal and Newborn Health Development Impact Bond 1. UBS Optimus Foundation provides PSI and HLFPPT with working capital 2. PSI and HLFPPT, under the direction of Palladium, begin working with private facilities to improve quality of maternal and neonatal care 3. Outcomes are achieved, i.e. facilities are accreditation ready 4. Mathematica verifies the achievement of outcomes 5. Verification of outcomes triggers the outcome payments from USAID and Merck for Mothers who have made up to $8M available for outcomes funding, over three years Co-funded performancebased contract to service providers & an investor up to $8M over three years 4 3 1 2 5 SUSTAINABILITY: LOOKING BEYOND YEAR THREE… Should the pilot project prove successful: Designed to be catalytic 1 The Government of Rajasthan has committed to finance the program with additional investments A project MOU has already been signed between the project’s performance manager and the State Ministry of Health. Private insurance schemes will be attracted to accredited facilities, creating financial incentives for facilities to invest in continued self-improvement and ensure accreditation is renewed 2 Impact This sustainability will lead to long-term health impacts for women and children after the MCH DIB implementation is complete. Without analysis of program expansion, through 2021 it is projected that the project will achieve the following: Up to 10,00 women and newborns saved Up to 600,000 Pregnant women impacted Example: Nurse-Family Partnership South Carolina Dr. Tara Jethwani National Strategic Initiatives Manager Nurse Family Partnership tara.jethwani@nursefamilypartnership.org NFP South Carolina Pay for Success Project Nurse-Family Partnership  Evidence-based, community health program that helps transform the lives of vulnerable mothers pregnant with their first child.  Four decades of research re: Nurse-Family Partnership’s (NFP) favorable impact on:  Pregnancy Outcomes  Child Health and Development  Economic Self-Sufficiency of the Family Nurse-Family Partnership EXPERT: Specially-trained nurses PROVEN: Extensive and compelling evidence INTENSIVE: Pregnancy through age 2 TIMELY: First 1000 days Nurse-Family Partnership Families served since replication began in 1996: 269,311 Families currently enrolled: 33,467 Number of Nurse Home Visitors: 1,867 Number of Counties: 586 Number of States: 42 + U.S Virgin Islands and 6 Tribal communities September 2017 NFP South Carolina PFS Project  South Carolina and NFP launched nation’s first Pay for Success (PFS) project to improve maternal and child health outcomes for low-income families • Pilot: January 2016; Launch: April 2016 • Extends NFP services statewide to an additional 3,200 Medicaideligible first-time moms and their children over a 6-year period • Spans 29 of South Carolina’s 46 counties • Includes 9 implementing agencies delivering NFP services  Project Leverages Private and Public Funding • Philanthropic investment + Medicaid reimbursement via 1915(b) waiver awarded to the South Carolina Department of Health and Human Services (SCDHHS) by the federal Centers for Medicare and Medicaid Services (CMS). NFP South Carolina PFS Project PROJECT PARTNERS Service Provider Nurse-Family Partnership National Service Office (9 NFP Implementing Agencies in SC) Philanthropic Investors BlueCross BlueShield of South Carolina Foundation; The Duke Endowment; The Boeing Company; Laura and John Arnold Foundation; Consortium of private funders Outcome Payor SC Department of Health and Human Services Intermediary Social Finance Technical Assistance Harvard Kennedy School Government Performance Lab (GPL) Evaluator Abdul Latif Jameel Poverty Action Lab (J-PAL) North America NFP South Carolina PFS Project  Methodology • Randomized Controlled Trial (RCT)  Outcome Metrics • Reduction in preterm births • Reduction in child injuries • Increase in healthy birth spacing between 1 st and 2 nd child • Increase in number of first-time moms served in low-income zip codes  Evaluation • Independent Evaluators measure level of outcomes achieved to inform outcome payments NFP South Carolina PFS Project Innovations  Increase Caseloads  Implement Telehealth  Employ Robust Marketing and Outreach Campaigns  Reduce Program Cost, Scale Up and Maintain NFP Model Fidelity NFP South Carolina PFS Project Successes:  Closing enrollment gap  Nurse education Challenges:  Locating young moms and moms in low-income zip codes  Nurse recruitment and retention  Conversion of Medicaid referrals to enrollment AUDIENCE Q&A Funding the cure for a disease - Mission:Cure Megan Golden Co-founder Mission: Cure Contact: mgolden@mission-cure.org @mgoldennyc A NEW MODEL FOR CURING DISEASE DRIVEN BY FINANCING BASED ON PATIENT OUTCOMES AND IMPACT INVESTMENT © Mission: Cure Why Don’t We Have Treatments for Debilitating, Expensive Diseases? The Valley of Death: insufficient resources for promising treatments Incentives based on profit not patient outcomes Stakeholders competing rather than collaborating to achieve results Traditional scientific process does not match patients’ timeframes Mission: Cure mission-cure.org Our Approach Our First Target: Pancreatitis Patients are Desperate …I run a support group for chronic pancreatitis, we have almost 2000 members and they have asked me to write to you in an effort to find out about human trials and when they might begin. We are having a tough time getting pain control these days and many have attempted suicide because they just can't take the pain any longer. Most Dr's are pretty clueless on this disease, especially in E.R.'s around the country, treating many as drug seekers and humiliating them only to turn them away with no help. We NEED help with this disease…. Many of us are willing to volunteer as test subjects, if not to help us to help future patients and the kids who get this horrible disease…. Chronic Pancreatitis is Costly Sources: Uc et al, Direct Costs of Acute Recurrent and Chronic Pancreatitis in Children in the INSPPIRE Registry, JPGN, March 2016; January ACP Internist, copyright © 2014 by the American College of Physicians; Cost Burden of Chronic Pain Patients in a Large Integrated Delivery System in the United States, Pain Practice, Nov. 2016, p. 1001. 122,000 outpatient visits & 56,000 hospitalizations/year in the US •> 90% of US CP patients hospitalized for pain Analysis of children shows $40,589 in medical costs/year; for 150,000 chronic pancreatitis sufferers = $6.09 billion/year Chronic pain care in US costs $32,000 per person/year; for 150,000 chronic pancreatitis sufferers = $4.8 billion/year How the Financing Will Work Outcome Payors Agree to pay for specific patient outcomes over 10 years Impact Investors Finance Mission: Cure for returns based on patient outcomes and market Mission: Cure Invests in & manages coordinated therapy development efforts In 10 Years... Patients improve through new therapies; impact investors receive return Possible Patient Outcomes to Determine Payment Emergency room visits/days in hospital Time absent from work or school Pain (validated measure) Survival In 8-10 years 4 8 Strategies to Develop Effective Treatments Advanced genetic testing & precision medicine Test promising already-approved drugs using efficient, innovative trial designs Incentives to move new molecules through the development process efficiently Convene experts and innovators to problem-solve 4 9 Using Impact Investing To Cure Disease: An Idea Catching On Venture Philanthropy & DiseaseSpecific Investing Examples Results • live longer, healthier, less painful, more productive lives Patients and those at risk for chronic pancreatitis • help cure a disease and also received a financial return Impact investors • have funding and support for their efforts to help patients and cure disease Scientists and clinicians • invest in new technologies that reduce their long-term costs, while demonstrating commitment to clients’ wellbeing Healthcare and life insurance payors • engage in risk-free outcome-based philanthropy: they do not pay unless they have cured a disease Venture philanthropists who pay for patient outcomes Partners Innovative Financing for Health: Expert Response Ambassador (ret.) John Simon Vice-Chair of the Board The Global Fund to Fight AIDS, Tuberculosis and Malaria & Founder and Managing Partner of Total Impact Capital AUDIENCE Q&A For more information on Brookings impact bonds research: www.brookings.edu/series/impactbonds/ Contact: egustafssonwright@brookings.edu @EGWBrookings Credit: RFUK Thank you!