| Notes |
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! |