By Alec Fraser, Stefanie Tan & Nicholas Mays
SIBs bring promises of extra cash and reduced fragmentation but also concerns about private sector interests, practicality and governance.
What does research tell us about Social Impact Bonds (SIBs) and their applicability to health and social care? That’s our big question as we review the issues raised by our experts in their thoughtful commentaries over the past few weeks.
It’s clear how the mood music around SIBs has appeal, notably concerning two issues that bedevil health and social care – funding shortfalls and fragmentation. Ring-fencing funds and staff to achieve specific outcomes is a key SIB feature, particularly highlighted in the contribution from Ben Jupp of Social Finance. Those in health and social care who feel frustrated by juggling cash for competing tasks – having to “rob Peter to pay Paul” – would like to get on with their jobs, unencumbered by unexpected resource cuts.
Likewise, part of SIBs’ appeal is the feeling that they address chronic fragmentation of service delivery, particularly between health and social care. In principle, SIBs incentivise everyone to work in harmony on behalf of the patient/user.
Three questions
Some of our commentators have cast doubt over these possible benefits. Ring-fencing of spending and staffing can, for example, be achieved by other means, such as minimum nurse staffing ratios. Our contributors also highlight that SIBs can’t cure the structural problem of health and social care fragmentation, though they can be helpful on a case by case basis.
We would like to draw attention to three further issues raised by our commentators: the public’s general discomfort with the idea of private interests in NHS provision; the practicality of outcome-based, debt-funding in health and social care compared with traditional forms of payment; and the governance challenges created by SIBs as they reintegrate the purchasing and providing roles that have been separated in the English NHS since the 1990s.
On the other hand, we suggest that SIBs can contribute to mitigating some longstanding issues facing health and social care. These include the need for a better focus on prevention and outcome delivery; personalising services around the user/patient; and better partnership in health and social care planning and delivery between purchasers and providers.
1. Discomfort with private financing of healthcare
The early UK SIB-funded programmes have typically dealt with issues outside the mainstream of health and social care provision, such as youth unemployment and probation services. SIBs in health and social care have mainly focused on preventive interventions to improve health (e.g. social prescribing). We’ve yet to see proposed applications that address core NHS treatment activities such as funding hospitals and primary care. Such proposals might be highly controversial to the public.
The NHS retains a unique status for voters, unlike, for example, tertiary education, where private fees are widely considered to be acceptable, or social care, which is means-tested. The NHS is a universal service. There is a general belief that it should be paid for publicly. There is also less pressure to find alternative sources than there is, for example, in the case of some local authority social services because the NHS has been better protected from financial austerity than other public services.
2. Important practical and effectiveness questions
Our second theme concerns practical questions about the effectiveness of SIBs. Alex Nicholls and Mildred Warner have drawn attention to the weakness of the evidence in this area. There is a lack of evidence to demonstrate that SIBs provide better services that are more cost-effective or more likely to save money than those delivered using conventional funding methods. A further issue is how to make cashable any notional savings generated by improving user outcomes: for example, being able to close wards and sack nurses as a result of a successful SIB would not be a popular approach in such a highly politicised public service. Unlike many social services, such as problematic families, the public generally regards spending more on the NHS as a positive thing, so there may be less political support to pursue “savings” in health.
Healthcare commissioners in the UK are well versed in scrutinising cost-effectiveness evidence but healthcare lacks the interoperability of information systems that aids oversight of the outcomes and costs arising from interventions. So, for example, it’s currently easier at the Department for Work and Pensions to assess a SIB’s impact on employment rates among NEETs (Not in Employment, Education or Training) than for the NHS to track whether a preventive health SIB has reduced use of primary and hospital care.
Healthcare commissioners may also be concerned that SIBs typically have high set-up/transaction costs and quite opaque management costs. They may be reluctant to pay for outcomes when the sources of money needed to pay intermediaries and other actors lack transparency. This caution about SIBs is well founded given the continuing costs of previous PFI projects, which created new facilities quickly but left the NHS with debt and concern among some that providers may have secured poor value for money.
3. SIBs and governance issues in healthcare
Thirdly, there is a governance challenge that may accompany the adoption of SIB-funding for health and social care services. SIBs are attractive because they are designed to bring stakeholders into partnership in pursuit of a set of goals around a particular client group. This may imply, for healthcare, a degree of reintegration of purchasing and providing. This may be problematic as it appears that a genuine market in intermediaries is currently lacking.
We also do not yet have a recognised governance framework setting out how intermediaries and the other parties should operate at particular stages of the SIB development process. This is of crucial importance for policymakers as SIBs currently develop in a space that lacks agreed rules and processes. It will be important to resolve these governance issues and create an explicit framework for managing potential conflicts of interest.
Digging a little deeper, the SIBs debate should remind us of the need to maintain a healthy scepticism about all providers, even if they are from the Third/not-for-profit sector. They should be subject to due scrutiny, like any other providers of contracted-out services.
Conclusion
There are important questions and doubts about the wisdom of widespread application of SIBs to health and social care. Nevertheless, we should be careful and avoid prematurely rejecting a still largely untested innovation that could have niche applications for entrenched social issues. It is also worth remembering that traditional health and social care procurement models are far from perfect.
SIBs are rightly taken seriously because they help to question services that have, through bureaucracy, size and provider-domination, sometimes failed to meet the needs of patients or the requirement for cost-effectiveness. But there are important questions to be asked about the transparency, costs and accountability of SIBs. Our commentators have shown that SIBs are not a panacea and that they bring unanswered questions with them. More robust and more plentiful evidence would be needed to justify widespread roll-out of SIBs in UK health and social care.
Stefanie Tan and Alec Fraser are Research Fellows at the London School of Hygiene & Tropical Medicine and part of the Policy Innovation Research Unit (PIRU) at LSHTM.
Nicholas Mays is Professor of Health Policy at LSHTM and Director of PIRU.
Acknowledgement and disclaimer:
This is an independent commentary commissioned and funded by the Policy Research Programme in the Department of Health. The views expressed are not necessarily those of the Department.