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Social impact bonds don’t lead to better outcomes, study finds

A UK study has found social impact bonds are “no panacea for public service reform”

An evaluation of Social Impact Bonds (SIBs) has revealed that there is no clear evidence that they lead to better outcomes or are more cost-effective.

The first of its kind UK government-funded study found that, despite SIBs being a payment performance contract that puts strong emphasis on demonstrating results,   they are no “panacea for public service reform”.

Lead researcher, Professor Nicholas Mays, said: “The main demonstrable success of SIB projects in health and social care has been in helping marginalised groups who had, previously, been neglected by public services.

“It is much less clear that SIB-related services for other groups, such as people with chronic health conditions, have led to marked improvements in health.”

The research highlights that policymakers should be focusing on SIB components that prove effective in developing outcome-based contracting, such as greater flexibility and personalised support for clients, rather than SIB as a whole.

“The researchers conclude that SIBs, as currently conceived, may have a role in specific circumstances, especially where outcomes are uncontroversial, easily attribute to the actions of the provider and easily measured but are unlikely to be widely applicable in public services,” the London School of Hygiene & Tropical Medicine, who conducted the research,  wrote.

The study evaluated nine projects from across England to analyse plans and contracts and determine effectiveness. The SIBs funded a wide range of different interventions, including older people who are socially isolated, multiple chronic health conditions, rough sleepers, adolescents in care and people with disabilities.

During the study, the researchers found three models of SIBs: Direct Provider of SIB, SIB with Special Purpose Vehicle and the Social Investment Partnership.

“Each allocated financial risks differently, with providers bearing more of the financial risk in the Direct Provider model than in the others. Frontline staff were more aware of the financial incentives associated with meeting client outcomes in the Direct Provider model than in the Special Purpose Vehicle model,” the London school wrote.

Despite the projects being outcome-focused, the up-front financing of providers by investors tended to be provided in instalments related to hitting volume or targets rather than improvements in client outcomes.

The bulk of subsequent payments to the investors of the projects for achieving targets came from central government rather than from local commissioners.

“Our research provides important information for governments looking for new financing mechanisms for health and care,” Mays said.

“So far at least, cashable savings from SIBs, despite early hopes and rhetoric, remain unproven. Policymakers should learn from different models but SIBs are no panacea for better commissioning of health and care services.”

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