As interest in SIBs grows and the number of SIBs increases, it can be interesting to explore what could potentially be contracted using a SIB structure.
Can SIBs only be applied to services? If a SIB was used to purchase goods, what would it add? Most payments for goods occur after goods are delivered and deemed to be of a satisfactory standard, which is usually only a short period of time after they have been requested. Grey areas like infrastructure or consulting project might be more interesting to consider. Government has experimented with several variations of performance-enhancing contracts for infrastructure projects including Public-Private Partnerships and bonus payments for on-time completion. However we have yet to see Government tender not for an output, such as a highway or rail line, but for an infrastructure outcome without e.g. the construction of a transport solution so that people in A can get to B at any time of day in less than 30 minutes. Perhaps due to the allocation of land for infrastructure projects, this is something we will never see. Consulting projects are sometimes contracted on the basis of the receipt of a good, such as a report. Will we ever see consultants paid for outcomes such as the improvement in a process if recommendations are accepted and implemented, or the increased confidence of the commissioner to make a decision, or the increase in public understanding on a topic after publication?
Can SIBs only be applied to services with a social impact in the country they are delivered? The name certainly suggests a focus on social impact. There has been discussion of ‘environmental impact bonds’ and there is a history performance-based contracts in environmental management. Social Finance has begun work on ‘development impact bonds’ for the distribution of overseas aid. The Greater London Authority homelessness SIB also makes payments for accommodating homeless people in the countries from which they came.
Can SIBs only be applied to prevention and early intervention? Certainly a shift of funding towards prevention and early intervention services was a key focus in early publications about SIBs, and has been used to justify all SIBs established so far. But does that mean that a SIB could not be used to deliver acute care? The line between prevention and acute care isn’t always so easy to draw. One area that could be suitable for a SIB is palliative care, where the delivery of medical services in the home might be more desirable for the patient and less expensive. It could be argued that these services ‘prevent’ a patient from requiring hospitalisation which is typically regarded as acute care, but palliative services delivered in the home may also be considered acute care. Prison is usually considered ‘acute care’, yet the manager of Her Majesty’s Prison Peterborough has suggested that all prison contracts be made on the basis of a single reoffending outcome, which could easily be structured as a SIB. It could be said that the SIB model will only work financially if the cohort receiving services are predicted to have high future costs to Government, but a SIB could also work if the cohort has high alternative costs to Government, should the SIB not be delivered.
Can SIBs only be applied in a service ‘gap’? There are several reasons it is easier to introduce a SIB into a service gap. It might make it easier to convince government officials to accept the programme, easier to measure a result, easier to deliver and easier to attribute a result to a particular service. But a SIB could be used to deliver an existing contract. The contract could be redesigned with payments based on outcomes that may or may not represent an improvement in the service, depending on how well current services are perceived to be delivered. Or one (or more) of a number of similar contracts could be delivered via a SIB, with payments based on equivalent or improved outcomes.
Do SIBs have to make savings? SIBs may be more attractive to Government or other commissioners if they produce savings. As seen above, however, a commissioner may recontract a service with a SIB in order to improve or account for the outcomes of the service, rather than to create savings.
Can SIBs only be applied to service areas where there is an evidence base? The evidence base of similar programs in a service area enables investors, commissioners and service providers to estimate the potential range social outcomes for their SIB and likelihood of achieving them. They will also use the evidence base to form eligibility requirements for the SIB, to design the most effective service possible, estimate the cost of services, choose partners and providers, and design the measurement system. But SIBs may provide an unprecedented opportunity for Government to try new services or new delivery organisations that don’t have the evidence base, as they only pay if they produce the desired outcomes.
Can SIBs only be applied to a large cohort? If the payments made by Government are based on the outcome difference between cohort and a comparison group, then the group needs to be large enough for this measurement to be statistically significant. That is, there is a high degree of confidence that the effect was due to the services delivered. This was a consideration in the development of the Peterborough measurement system. Subsequent SIBs have introduced smaller cohorts with payments made on individual outcomes as they happen, with payment size reflecting the historical likelihood of outcomes occurring without services.
Can SIBs only be applied to service areas where commissioners want to spend AND investors want to invest AND service providers want to deliver services? Absolutely, the only real constraint to a SIB is that all parties agree to it. This assumption is closely related to the definition of a SIB. There may be service areas that will never be attractive to one or more of these parties. As more SIBs develop, it will be interesting to discover which services these are and monitor any adverse effects on these services and the people who benefit from receiving them. In order to secure the participation of all three parties, they will need to be confident that the SIB will achieve its desired outcomes. It will be easier to agree a SIB if it includes:
• High likelihood that the cohort will want to engage with services
• Eligibility or referral criteria that are clear and objective
• An outcome that can be objectively measured
• A close relationship between the outcome and costs to Government
• Sufficient data to predict the outcomes for the cohort with and without effective services
• A small cost of intervention in relation to potential benefits to Government
3 thoughts on “Can I SIB this?”
No doubt you have next to no recollection of meeting out at CareFlight (seems like a while ago). Having just found this rather impressive spot (and marvelled at where the idea is flying), a quick question – seems like SIBs are ideal in certain service situations, and that some measure of outcomes is pretty vital.
Is it feasible to structure SIBs in a way that supports basic research (for example in areas where the pay off might be more than 10 years into the future and estimates of difference in costs etc produced by implementing research results might be a little challenging)?
Sort of thinking across the research spectrum, given there is lots of pressure on researchers to source income for their work (and, you might gather, I have a personal interest here).
Of course I remember my fantastic helicopter flight and how great it was to learn about what you do at CareFlight.!
Generally, SIB investment has depended on having a very stable future funding source. This has been government bodies that benefit directly from measurable improvement in outcomes. Service providers have so far agreed to outcomes that they are very confident of achieving. I don’t know how well the model applies to medical research – from the little I know, the results would be quite variable and the market for people to pay for them might not be so obvious 10 years out. I certainly think social investment and medical research should be great friends, but its possible that crowdfunding or equity models might be more suitable. Social Ventures Australia might have some good advice, but I’m not sure if they’ve invested directly in health so far. I certainly think there’s potential for a medical research social investment fund in Australia – where several high-risk, high-potential researchers are backed by a pool of social investors.
Please email me directly at firstname.lastname@example.org – we should keep in touch on this and find some other people to help us look for research funding solutions.
Hi Emma. Dopey me just found this in my wordpress bit up the top! Total blog guru here.
Anyway, amazing to see where you’ve ended up.
I’ll check out Social Ventures Australia. Planning to do the crowdfunding thing but need to build some kind of following before that’s worthwhile launching.
Anyway, I’ll get in touch properly over the next few days (grant application to lodge first unfortunately).
PS Should have mentioned directly that on one of my blog posts I pointed your blog out to people (doubt you would have seen a blip, I’m not massively read at this stage). I figured you were the cleverest person I knew on SIBs. Hope that’s OK.