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“Social Impact Bonds”: opportunities and limits of a new model of care financing in Europe

By Deborah Liebart. Previously appeared on DisputatioMagistrorum. DOI: 10.5281/zenodo.3457741

For several months, a massive strike action is in progress1. While the situation crystallizes, it appears necessary to rethink the governance of our health systems, in order to bring them in line with the new contemporary societal challenges but also with existing economic conditions: growing public debt, budget restrictions, etc…

  Caregivers point out the lack of financial and human resources, and underline that budget cuts are turning the hospital into a merchant service in tension. For several decades, the superiority of private management has been invoked in the discourse and in the new public management policies, with the underlying idea of mapping the modes of operation and management of public services to that of private companies: efficiency, yield, payment to result, productivity are now at the top of the hospital’s problems. Public policie priority is now to save money by concentrating the care within mega-poles, to the detriment of the small structure of proximity.

   Previously mentioned in our study on finance and care2, I will not develop the issue, except to draw attention that care mega-structures distort the relationship patient / caregiver increasing the distances between the patient and the care structure, especially, in a preexisting context reducing public transport, and the development of new social ills in post-industrial territories in crisis3. Today, I would like to talk to you about governance and contemporary funding models of healthcare structures.

  Traditionally, in Europe, whether models inspired by Beveridge or Bismarck, the care services are financed, for all or part, through the tax levy and / or the contribution to organizations private insurance. Well-known by specialists, perhaps less well known to the general public, the new ways of financing care structures have reached a certain maturity allowing to measure their effectiveness. Recent case studies allow us to draw first results, first feedback, at different scales. Social Impact Bonds, (SIB), are one of the examples of these new experimental and experienced financing methods, facilitated by the development of new technologies, encouraged by the European Investment Bank through the Social Impact Accelerator.

   SIB is an alliance between a social operator, private financiers and a structure of general interest, developing projects of common goods, most often at the territorial scale. In other words, these are financial obligations issued by the public sector, the payment of which is conditional on the success of the action undertaken. In practice, project management is assigned by the authorities to a delegate setting the objectives to be achieved, finding the investors and setting the terms for evaluating the contract. Investors fund service providers that work with and for target audiences. If the objectives are met, the State considers that it has achieved savings and the delegate allocates to the investor some of the savings made calculated and fixed by the contractual terms. This type of financing is used in many projects in Europe and more generally in the West, whether it is the prison system and the recidivism with the Peterborough or Rikers prison projects or the care system, particularly in Great Britain, but also in various social initiatives. The success of the change of scale corresponds to a clear strategy of common development and the measurement of the results and the collective impact of the alliance to ensure its effectiveness, sufficient human and financial resources, as well as and a supporting ecosystem able to be replicated eslwhere in the territory. These alliances, in a context of deconcentration of central governance in favor of the territorial scale, reinforce the competitiveness between the various regions and impact local economic development, by developing the attractiveness of some economic poles.

   For its supporters, the SIB system has the primary merit of financing social initiatives that without this system simply would not exist, because of budget reduction policies, especially the austerity policies in Europe since the crisis of 2008. However, the effectiveness of SIB, compared to a conventional financing system on the issue of care seems again tempered by the recent study by Dayson, Fraser and Lowe4, which points out the inefficiency of the use of data, collected for the purpose of managing performance, and not for the purpose of learning, (use in a conventional model), which is in line with our previous conclusions for the Open Care project, which calls for the global redefinition of a social contract and of the ethics of care5. The conclusions of Dayson, Fraser and Lowe’s documented study are based on a case study comparing two models from northern Great Britain, in disaster-stricken, post-industrial areas, subject to a growing development of new chronic diseases, demographic aging and the reappearance of the health and social ills of poverty6, with precarious populations exposed to risks of all kinds7 as a « core target », in a pre-existing context of fragmentation and territorialization of the National Health Service.

   Why does not it work? In order to cope with the profound changes our societies are facing, it is necessary to take advantage of all the experiences and understand their weaknesses in order to correct them. Some authors argue that SIB have difficulty in adapting to long-term financing8, to the temporality corresponding to the initiatives needed for any project on the question of care, as well as the investment in venture capital. One hypothesis would be that healthcare, in all its multi-factorial dimensions, can not be thought of as an investment with potential profitability, because care is not a market transaction like the others.

  Care is not limited to a measuring beam and feedback tending to strengthen its economic efficiency or its profitability, it is only measured in an ecosystem. The concept of linear measurement of achievable gain is a artificial rhetoric for the caregiver, whose definition of health is not operational and not transformable into general decontextualized measures, into general metrics separated from the landscape where each individual functions.

 Care is a project of society, a socio-political construction, (« from cradle to grave » to paraphrase Beveridge), not exactly responding to synthetic economic evaluations.

  Increasingly, the projects include a broad reflection on the environment and urban planning stressing the need for space configuration in an integrated approach to care in the broad sense9, just as the EIS projects are working to influence local decisions and integrate health issues into political projects, at local and regional scales as shown by the example of the Canton of Geneva, initiatives in Rennes in France or in Quebec10.

  Assessing well-being, developing a coherent social benefit that meets the needs of patients in a defined area, and the opportunities for caregivers to best fulfill their mission are not just efficiency, but more to the conservation of trust-based relational accountability mechanisms at the strategic level between the different partners involved : hospital, patients, caregivers, peripheral associations supporting patients discharged from outpatient care, municipalities, inter-municipal authorities, external service providers … all of whom to a well-defined place in the overall care project. « Trustless » systems, if they can be applied to a certain extent to well-defined areas, such as the Internet of Things, for example, seem hardly applicable to the field of care for which trust between key players remains essential to achieve the main objective : well-being and care of the patient especially when, as in these post-industrial areas, the intervention must necessarily be multidisciplinary and transverse, a system where each of us can and should act at his own level to create and recreate meaningful social bonds and restoring human dignity.

2Liébart, Manca, La finance et le soin : gouvernance, systèmes mutualistes et répartition du risque , 2017.http://opencare.cc/resources/

5Liebart, Deborah; Manca, Mara; Wong, Susana; Abdallah, Ali; Manca, Marco, Community driven care. A draft social contract, 2017. http://opencare.cc/resources/

10https://journals.sagepub.com/doi/full/10.1177/1757975914522667

Laurine Tollec, Anne Roué le Gall, Alain Jourdren, Frédéric Auffray, Françoise Jabot, Anne Vidy, Pascal Thébault, Pauline Mordelet, Jean-Luc Potelon et Jean Simos, « L’Évaluation d’Impacts sur la Santé (EIS) : une démarche d’intégration des champs santé-environnement dans la voie du développement durable
Application à un projet d’aménagement urbain : la halte ferroviaire de Pontchaillou à Rennes », Développement durable et territoires [En ligne], Vol. 4, n°2 | Juillet 2013, mis en ligne le 10 juillet 2013.

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