A step toward funding health outcomes

The Economist writes:

When doctors reach for their prescription pad, most patients expect to receive a jar of pills or a bottle of ointment. Few think they will be referred to a gym or a volunteering scheme. But more and more doctors are dishing out these “social” prescriptions.... Tango classes, ukulele lessons: the rise of “social prescriptions”, 'The Economist', 15 February

Social-prescribing schemes, in which doctors refer patients to non-medical treatments, are becoming more numerous in the UK. I think it's an encouraging trend. Just as crime is not solely a matter for the police, nor education solely a matter for schools, so health is not solely a matter for the medical profession. I hope social prescribing presages a wider move from government funding of institutions to funding for outcomes. I've long argued that funding for outcomes is going to encourage more imaginative solutions to our complex social and environmental problems than the current focus on the structures and funding of government agencies. And more efficiency:

One review of studies on social prescribing showed that, on average, it was associated with a 28% fall in GP visits and a 24% drop in attendance at emergency wards.

For more on applying the Social Policy Bond principle to health, see here. For more on applying the principle to crime see here, and to education, see here. The Social Policy Bonds home page is here.

Social Impact Bonds today

Social Impact Bonds are the non-tradable version of the Social Policy Bond idea. Around 108 SIBs have been launched in 24 countries, with nine countries launching their first SIBs in 2017. The Social Finance Impact Bond Global Database provides information on all these projects, which have collectively mobilised $392m in capital and touched more than 738 000 lives.

David Bank writes that:

Social impact bonds have been bedeviled by complex structures and measurement difficulties, not to mention the thorny social problems themselves.

It's much as I have written here and here: because the bonds aren't tradable, bondholders will focus on approaches that will reach their end-point some time in the near future. In order to benefit from the success of their bond-achieving projects, they will have to own the bonds from flotation to redemption. This greatly diminishes the scope of the projects, and also means that inherently long-term goals cannot be targeted. When we have such small objectives, the costs of monitoring progress toward or away from their achievement is going to be a higher proportion of the total administrative costs than they would under a regime that could target broader goals. It's almost as easy (or not much more difficult) to monitor national crime indicators, say, as to look at the behaviour of group of a few hundred specific ex-prisoners in one part of the country over several years. These are the problems of SIBs to which Mr Bank alludes. 

In the same piece, Mr Bank quotes Tracy Palandjian, CEO of Social Finance US, a leading social impact bond developer:

What has surpassed my expectations, and why the work is so hard and the impact so enduring, is we are changing mindsets. We are changing how government officials think about problems.

Contracting out the solution of social problems and payment for results are two essential elements of the Social Policy Bond idea as I envisaged it, and SIBs incorporate these. Where SIBs fall short, though, is that without tradability, not only is the range of solvable problems limited, but the market's efficiencies in resource allocation cannot be realised. Another possibility is that they can be more readily gamed and manipulated - especially likely, I believe, once their novelty has worn off and they disappear from public scrutiny. I'm therefore ambivalent about SIBs. They might be an essential stepping stone on the way to a pure Social Policy Bond regime. But their limitations and flaws might discredit the Social Policy Bond concept. For the record, I haven't been involved in any SIB projects.