Healthcare is centre stage today in SIB News with emerging markets at the forefront. However, given the fears of US unions over the likely failure of Obamacare and the recent scandals or widespread death in the UK NHS, it strikes me there is a massive opportunity to improve through SIB methods healthcare in much of the developed world too.
Open Development And Social Impact Bonds: Rethinking Healthcare Delivery
The Guardian
Social enterprises can help improve healthcare delivery – for example, they can offer delivering drugs from pharmacies to patients in remote areas.
Delivering effective services with limited resources to underserved parts of Africa have always presented development organisations with a challenge. Organisations have to work hard to gain local knowledge and insight regarding the needs in an area. Currently there are few incentives in place for citizens to start up enterprises that can support NGOs with service delivery – in other words, social enterprise. In addition there is not enough openly available data on the solutions relevant to any given community on any given problem. But by combining the concepts of open development and development impact bonds – a financing model based on payments-on-results – change becomes possible and can come from the grassroots.
Advances in information communication technology have led to the rise of open development, which encourages citizens and organisations to work together and share knowledge, figures, designs or code to deliver services and build things that are better. This approach enables organisations to address challenges such as ‘how to get high quality health services to people in underserved areas?’ But as Nigerian social justice activist, Sokari Ekine, wrote in ‘SMS Uprising’: “For social change to take place technology needs to be appropriate and rooted in local knowledge.”
So now the question is how to deliver innovative and appropriate solutions to social problems and ensure a high standard? How is this done when the end user is struggling to get by? How do we spark engagement from social entrepreneurs who understand the local context but are also driven by the need to earn a living and deliver the best service? How can services offered to the poorest consumers be monetised? Enter development impact bonds (DIBs).
Social Impact Bonds For Healthcare
Healthcare Finance News
The current mantra of health reform is: cut costs, improve quality. Unfortunately, reducing costs often requires an upfront investment in things like research and prevention.
One potential solution is social impact bonds (SIBs). The idea behind these bonds is to use the private sector to pay for smaller-scale, exploratory social interventions. If specific program goals are met, then the investors receive a payout. The programs are proved and can be looked at for use on a larger scale with public-sector funding.
“It’s a creative way to borrow and puts off the day the government pays until it happens and is successful,” said Mark Pauly, a professor of healthcare management, economics and public policy at the University of Pennsylvania’s The Wharton School. “People say, ‘Just give us money for God’s work and we’ll do God’s work and that should be enough for you,’ but it’s not good enough anymore. People are only going to invest money in good outcomes.”
Social impact bonds are not as common in the United States as they are in the United Kingdom. The handful of projects backed by SIBs in the U.S. are unrelated to healthcare – mostly they are for recidivism-reduction programs. For one such program – at Rikers Island in New York – Goldman Sachs has invested more than $9 million.