Today’s article focuses on health and how PFS can enable a better society – all music to the ears of SIB advocates!
Have a great weekend, it has been quite a week for SIB stories and developments with lots more excitement to come in the next few months I am sure!
Using Pay For Success To Enable Healthy Housing Choices
Dan Rinzler, Mary Cunningham & Phil Tegeler – CA Economy
Why Pay for Success Financing Makes Sense for Housing Mobility
Even as housing mobility is gaining popularity among policy experts as a promising tool to promote population health, there are several barriers to funding these programs. First, mobility is a classic example of misaligned incentives via the “wrong pocket problem,” where an investment in one sector (housing) generates cost savings for another (health care). In addition, public housing authorities that administer rental assistance programs—upon which mobility services are typically layered—are highly regulated and face continual funding cuts. As such, they do not have the resources to support mobility programs. Mobility is also an “upstream” intervention that does not generate immediate, short-term health improvements traditionally favored by health care payers—even if holistic, longer-term strategies are critical to improving population health.
However, incentives in the health care delivery system are beginning to align around supporting such upstream investments in the social determinants of health. The current challenge, then, is to demonstrate to health agencies and other stakeholders that mobility is a worthy investment. Pay for success financing is a promising vehicle that could serve the dual purpose of supporting new or expanded mobility programs in the short term, while building the case for future support by validating and expanding upon the existing evidence base—in essence, serving as catalytic capital to trigger additional investment from public agencies and investors focused on health and social equity.
Under a pay for success arrangement for housing mobility, private investors would support the up-front costs of providing mobility services to low-income families in a given housing authority’s voucher program, and a health care agency (and possibly other payers) would agree to repay investors, plus a reasonable return, only if certain health outcomes—such as reductions in diabetes prevalence—are achieved over an agreed-upon time period.
Pay for success could address each of the challenges to implementation that we named above, and offer additional benefits—establishing working relationships among sectors that rarely collaborate, building the case for further investment of health dollars into upstream and place-conscious community development interventions, and addressing a pressing social challenge at a regional scale, which is critical to any health-and-opportunity agenda but typically very hard to do.