The Role of Pay for Success in Building a Culture of Health

“Pay for Success” (PFS) is a public/private partnership approach to financing proven prevention programs that help the public sector save money or achieve greater value for an investment.

Also known as social impact bonds, the PFS finance model implements evidence-based interventions using capital from investors who only receive a return on their investment if agreed-upon, measurable outcomes are achieved. This project will increase understanding of the potential for and best practices by which PFS initiatives can address the social determinants of health and reduce public expenditures on health and social services, through the following research activities:

  1. Conducting a landscape analysis of all PFS project launched in the U.S. and abroad;
  2. Designing and launching a policy surveillance system that will track local, state and federal PFS-related policy discussions and decisions; and
  3. Producing materials for wide audiences on a number key topics related to the spread of PFS projects, including evaluation best practices and the most promising areas for local/state PFS interventions related to population health and health equity.

Experts from George Washington University and Third Sector Capital Partners will participate in all project research and dissemination activities.

Read "When Does Pay-for-Success Make Sense?" in the Stanford Social Innovation Review, authored by Paula Lantz and Samantha Iovan.

Evidence

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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.