Outcomes for social benefit bonds: A Kimberley perspective on opportunities

Tuesday, March 1, 2016

In 2012, I predicted that support for social benefit bonds (SBBs) in health would be readily forthcoming from cash-strapped governments looking for new ways to obtain results with probity, foresight and the wellbeing of patients at heart. As shared with participants at AHHA’s recent roundtable on social impact bonds, I hold this conviction even more deeply now that my scope of policy and practice experience in remote Australia exposes me daily to the unintended inefficiencies, moral hazards, short-termism and — as acknowledged in the Commonwealth’s 2015 Implementation Plan for Aboriginal and Torres Strait Islander Health — racism of what has gone before.

Key features of bonds structured to reward only outcomes

The premise for the first SBB to go live in the United Kingdom was that a 20% reduction in the reoffending rate of 60% for shortsentence male prisoners would permit four prisons to be closed within five years due to reduced demand. Bankable savings from closing prisons no longer required created the designated envelope from which to pay the agreed return on investment (ROI). This is why the reportable outcome of interest in this SBB is not the number of client contacts or services or any other “busy-ness” but only the rate of reoffending.

By setting the outcome of interest upon which the ROI is calculated beyond election cycles, the drivers for achieving results are unwavering. Perennial interference by funders who unilaterally adjust expectations, ground rules or annual budgets is bypassed. Government departments are relieved of the dual role of funder and manager and, instead, become commissioners with no transactional oversight. Say goodbye to all those government requirements for three-monthly reports on activities, staff hires and consumables, or mind-numbing red-tape requiring central approval of expenditure varying by 10% of original budget line items or, worse still, piece-meal funding extensions. Service providers are enabled to manage resources as they see fit to deliver the SBB outcome.

Another feature will be welcome to those committed to evidence-based healthcare: a market for evidence itself! To bid for SBBs, service providers will be hungry to know the extant evidence for service models and the effectiveness of scale-up. Moreover, performance and management will be resolutely data-driven while, best of all, persistent conundrums impeding the achievement of outcomes during the course of the SBB will be resolved scientifically through commissioned research. This market for evidence will transform the dynamic for knowledge generation, systematic reviews and evidence transfer between policymakers, health service managers and researchers.

Best buy

For my money (as a taxpayer, it is my money), I’d pin my hopes on the rate of potentially preventable hospitalisations (PPHs) as the pathfinder outcome with which to innovate, design and implement SBBs in health. Why? The population-based, age-standardised rate of PPHs is an agreed proxy indicator for systems capacity: the rate goes up when primary healthcare is weak and it goes down when primary healthcare is effective. It’s an outcome of interest worth watching. In December 2015, the National Health Performance Authority produced national PPH snapshots including regional rates and peer group comparisons. Importantly, the term “achievable benchmark” for PPH rates now has been coined in the United States.

SBBs structured to reduce populationbased age-standardised rates of PPH can be geographically defined with sufficient precision to mobilise system transformation in the long haul. Imagine a five- or ten-year SBB to reduce the PPH rate for a disadvantaged population. Accountability to deliver ROI is unimpeded and the guarantee of financial payout at the end based on uncontestable criteria. Improvements over time in PPH rates indicate serious significant and sustainable health systems reform through primary healthcare investments. Name a better way to achieve health equity from within the health system.

SBBs in remote Australia

In addition to showing the great divide between Aboriginal and non-Aboriginal people, the data shows the gap between the Kimberley as a remote region and WA as a whole. In constructing a SBB in response, let our colleagues in central agencies announce loudly without hesitation that the long haul age-standardised population-based PPH rate must decrease. Make this the outcome of interest. We all know what to do but need a singular financial reward powerful enough to transcend all other distractions to make us do it — and to make us do it with effort proportionate to local needs. Savings sufficient to fund this long haul reward will come from fewer aeromedical evacuations, fewer admissions and fewer travel subsidies.

Again, the answer is clear: build sustainable, effective primary healthcare. Comprehensive approaches work better than vertical, diseasespecific programs that may integrate poorly on the ground. Remember these become issues for local resolution however, not central diktat. What matters to commissioners is only the fixed requirement to reduce the PPH rate from beginning to end of the SBB.

Aboriginal perspectives from the Kimberley

“Spare a thought for Aboriginal and Torres Strait Islanders, who live in what can only be described as a three-speed economy, stuck in the lowest gear on the steepest hill, fanned by ministers and bureaucrats waving money.”

With these words, Dodson and Gill advocated SBBs for economic outcomes, advocating dialogue in their conceptualisation and calling upon government to reward investors only if the agreed social impact was achieved. They added this is “one way to offer more control to indigenous people over investments in their future.” Discussions in the Kimberley are keen. Local health governance is in place. Reform of our Federation may deliver structures such as Regional Purchasing Agencies with capacity for SBBs.

Beware elephants

I welcome this new wave of interest in SBBs yet remember that, like every other health or social policy dominated by non-Indigenous power-play and executed at distance from the strength of local community, any fresh-faced, well-meaning but external enthusiasm can be inherently disempowering for Aboriginal people. Sean Gordon recently reflected: “We all toil largely in vain because we are mice doing business with elephants… We can all point to ministers and bureaucrats who came to the table with goodwill and intent to find the solution. But they don’t realise they are the elephant… Like an elephant that wants to hug a mouse but ends up stepping on the mouse in its exuberance, we see government people squashing our rights to come up with our own solutions.”  

In the Kimberley, strong Aboriginal culture and strong Aboriginal leaders who patiently facilitate reconciliation, recognition and reconstruction help people like me be less like this elephant. In the Kimberley, we have an exceptional foundation for ongoing dialogue about health SBBs for something that matters — to everyone.

This article was written by WA Country Health Services Public Health Medicine Consultant Jeanette Ward for the February 2016 edition of The Health Advocate. To access this and previous editions, click here.