Can social impact bonds cut health and social care costs?
- Published on Friday, 13 July 2012 15:31
- Posted by Vicki Mitchem
A lack of integration and splintered funding streams threaten care savings but social impact bonds offer councils hope
Positive conversations about the opportunities presented by the public health reforms have quickly turned to discussions of funding shortfalls and the dangers of under-investment.
If the graph of doom – a chart presenting the bleak funding picture for local authorities without any radical changes to the social care system – is to be avoided, local authorities need to find new ways of working with commissioners to make upfront investments in lifestyle change.
Our Healthy Places report, found that budget pooling is seen as the most effective tool to ensure the effectiveness of health and wellbeing boards (HWBs). However, territorial issues over budgets is more prevalent than ever given the cuts; 94% of surveyed HWB members felt central government had provided insufficient incentives for better integration.
Islington is already investing money to reduce admissions to accident and emergency departments, with the hope that the NHS would reinvest those savings in the longer term. When asked how it is planning to get back the invested resources, the council said it was relying on trust.
Of course, trust and solid relationships between the organisations will be necessary to reduce the use of acute services. However, that will not be sufficient given the scale of the challenge. Innovative ways of investing in prevention will be needed.
The two most commonly cited barriers to making savings in health and social care are the difficulty of reallocating limited resources upstream and splintered funding streams. Social impact bonds (SIBs) – a financial instrument channelling external finance into preventative initiatives – provides a model which could help HWBs overcome these barriers, and do so at scale.
The use of a SIBs in health and social care would involve a contract between a financial institution and HWB members, who commit to pay for improved outcomes delivered over a fixed period. These contracts could redirect resources from expensive hospital care to day-to-day chronic care for people with long-term conditions.
Diabetes, for example, is predicted to bankrupt the NHS by 2035. A number of local authorities are already exploring the use of SIBs for conditions such as these. Worcestershire council has conducted a feasibility study to construct an SIB to reduce emergency hospital admissions for the elderly.
The use of these bonds by health and wellbeing boards is not without its challenges. Putting the model in place will require rigorous analysis to identify target groups and desired outcomes as well as long-term financial planning from the local authority and the NHS.
Nevertheless, SIBs offer a potential glimmer of hope for a sector dominated by gloomy conversations about unsustainable funding and rises in demand.
Source: The Guardian