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5 Pay-for-Success Financing and Population Health
Pages 35-44

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From page 35...
... Megan Golden, a fellow at New York University Wagner School's Innovation Labs and the Institute for Child Success, provided an overview of the role that pay-forsuccess financing can play in population health. Robert Dugger, founder and managing partner of Hanover Provident Capital, LLC, and Rick Brush, founder and chief executive officer of Collective Health, then gave their perspectives on this new approach to financing population health and discussed examples of how it has been used so far.
From page 36...
... The first example of pay-for-success financing in the United States was launched in 2012 to fund a New York City program aimed at reducing recidivism among 16- to 18-year-olds leaving city jails. For this project, social impact bonds were used to fund implementation of a proven cognitive behavioral intervention for the 3,000 or so young people passing through the city's jail each year.
From page 37...
... In the home visiting feasibility study, the metric Golden and colleagues chose to use was the reduction in preterm birth rates -- a selection that was based an examination of the available state Medicaid data on adverse birth outcomes and other health outcomes for the first 2 years of life. Based on the research, Golden and colleagues plan to phase in the program over 3 years, with a focus on one to two health outcomes chosen by the state, which will only pay if there are improvements in the participant group, in comparison to others.
From page 38...
... "The reason I'm excited about it," she said, "is that it gets multiple sectors together to focus on and be accountable for outcomes, and it's a mechanism to operationalize that shift of funding from remediation to a place farther upstream." SOCIAL IMPACT INVESTMENT AND POPULATION HEALTH What is the most important product of our society? "A ready-for-life 18-year-old," said Robert Dugger in stating the central tenet underlying pay-for-success financing for early childhood health and development projects.
From page 39...
... The United Way of Salt Lake City provided the regional vision; Voices for Utah Children conducted the feasibility study; and Goldman Sachs, the United Way, and a group of philanthropists, including Dugger and the Pritzker Family Foundation, provided $20 million in financing. Financial engineering was done by Voices for Utah Children, Goldman Sachs, Imperium Capital, and the Pritzker Children's Initiative, while the United Way of Salt Lake City, acting as the intermediary, managed the funds.
From page 40...
... In bringing all of these different sources of investment together, it will be important to use a progressive reinvestment strategy that can take short-term cost savings out of the health care system and dedicate a portion to paying back investors through shared agreements among all of the payers that are benefitting from these savings. "So as we reduce Medicaid costs or we reduce costs for a self-insured employer," Brush said, "they keep some of the savings, pay back a portion of savings to investors that provided the upfront capital, and, ideally, reinvest a portion of savings in expanded or longer-term health improvement programs." As an example of a potential application of health impact financing, Brush described an effort to reduce costs associated with childhood asthma in Fresno, California, that is being supported by the California Endowment.
From page 41...
... The project has engaged Clinica Sierra Vista, a network of federally qualified health clinics, as its clinical partner and the Central California Asthma Collaborative as its community partner. The program pays for a range of services, including home visits by community health workers, repairs to fix leaky roofs and to remove and prevent mold at an average of cost of $850 per home, HEPA (high-efficiency particulate air)
From page 42...
... "I think there's a wave coming," she said. "The first several deals will focus on programs that have a rock solid evidence base." She cautioned, though, that the field will have to expand its focus from those programs with a substantial supportive evidence base to the kind of work that Brush is doing with demonstration projects or to projects that examine multiple outcomes.
From page 43...
... Marthe Gold of the City College of New York asked about the necessity of randomized clinical trials to convince businesses and investment firms to enter pay-for-success contracts. Both Dugger and Golden said that not all businesses or existing pay-for-success programs require trials before deciding to invest.


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