In early 2017, the University of Michigan P4A research hub published an article in Health Affairs regarding one of their projects focused on social impact bonds, also known as “Pay for Success” (PFS) programs. These programs use private capital to finance prevention programs that help a government reduce public expenditures or achieve greater value.
The interdisciplinary team, led by Paula Lantz and including Sara Rosenbaum, Leighton Ku, and Samantha Iovan, conducted a landscape analysis of the first 11 PFS programs to launch in the U.S., all of which are focused on key social determinants of health. The research team sought to examine the potential of and challenges for PFS as a public-private partnership strategy to improve population health and health equity.
In September 2018, the research hub published an article in the American Journal of Public Health, building on their previous analysis to include data on all launched projects across the globe through 2017. Researchers Samantha Iovan, Paula Lantz, and Shoshana Shapiro analyzed each of the interventions delivered by the 82 launched PFS projects to demonstrate their impact on the social determinants of health.
The research team identified four key challenges to using the Pay for Success model to improve health:
- A strong evidence base for effectiveness is lacking for a number of PFS interventions.
- Many preventative interventions aimed at upstream social determinants of health do not save money, or the savings don’t materialize for many years.
- In some cases, the governmental entity supporting the intervention sees little or no economic benefit (also known as the “wrong pockets” problem).
- Medicaid law restricts the ways in which federal matching funds can be made available to states to make payouts to PFS investors.
To tackle these challenges and reduce barriers to using the PFS model to target the social determinants of health, the research team proposes a series of recommendations, outlined in detail in the Health Affairs paper.
The team’s most recent findings show that, globally, all 82 PFS projects have implemented interventions that address the structural and intermediary determinants of health, as outlined by the World Health Organization Commission on Social Determinants of Health conceptual framework. Most interventions delivered via PFS address intermediary determinants, such as housing, behavioral risk factors, psychosocial factors, and health care. The remaining interventions address structural factors, such as employment, education, and income.
Implications for Policy and Practice
The PFS model may prove to be a valuable tool for increasing critical investments in effective health and wellness interventions. The public-private nature of the approach can encourage important ties between the business community, investment groups, philanthropy, and public agencies and service systems; and stimulate innovative changes in the financing and delivery of sustainable, community-driven solutions.
However, for PFS programs to be successful in promoting population health and health equity, policymakers will need to resolve ongoing challenges related to the evidence base for experimentation, payouts to investors, the “wrong pocket” problem, and legal constraints to using federal Medicaid funds as an investor payout source.
Ultimately, while PFS continues to demonstrate an ability to address population health issues, we won’t know the true impact of PFS on health outcomes for many years. Still, the resources and attention PFS directs toward upstream prevention interventions that target social determinants of health is promising. Making projects more transparent will allow policymakers and practitioners to better observe the true impact of PFS on population health.
Paula Lantz and Samantha Iovan of the University of Michigan Research Hub used their innovative pay-for-success (PFS) surveillance system to identify strengths and challenges of several supportive housing interventions using PFS, and to assess whether PFS housing projects generally meet established criteria for improving social welfare.
Steven H. Goldberg, Paula M. Lantz, and Samantha Iovan from the University of Michigan P4A Research Hub examine the use of federal Medicaid dollars as a payout source for non-medical services aimed at addressing social determinants of health under the 2016 Medicaid Managed Care Final Rule.
The Pay for Success model may prove to be a valuable tool for increasing critical investments in effective health and wellness interventions. The public-private nature of the approach can encourage important ties between the business community, investment groups, philanthropy, and public agencies and service systems; and stimulate innovative changes in the financing and delivery of sustainable, community-driven solutions.
What kind of cost savings could be achieved if a "Pay for Success" (PFS) financing model were applied to a home-based, multi-component asthma intervention among low-income children on Medicaid in Detroit? The University of Michigan Research Hub team found that the economics of a PFS intervention are most viable if it targets children who have already experienced an expensive episode of asthma-related care.