Evaluation of social impact bonds for health and social care

Social Impact Bonds (SIBs) became part of the public services landscape in the UK and internationally around 2010. In a SIB contract, public sector commissioners partner with private or Third Sector social investors to fund interventions that seek to tackle complex social issues. Under these arrangements, non-government investors cover the upfront costs necessary to set up the interventions implemented by service providers, while the government commissioner commits to pay a return on investment if pre-defined desired outcomes are reached.

In the field of health and social care, nine projects across England, collectively known as the SIB ‘Trailblazers’, received seed funding from the government’s Social Enterprise Investment Fund in 2013 to evaluate and potentially implement a SIB.

The Department of Health’s Policy Research Programme commissioned an independent evaluation of these projects from PIRU, in partnership with RAND Europe, to assess their potential benefits and costs over a three-year period from the initial planning to stage to the early years of service provision.

The aim of this evaluation was to assess the potential costs and benefits of the SIB Trailblazer programme in health and social care over three years from the planning stage to the early years of provision, June 2014 - May 2017.

The evaluation comprised:

• a literature review to develop a conceptual framework to guide subsequent data collection and analysis;
• analysis of Trailblazer plans and contracts;
• semi-structured interviews with national policy makers, local participants in Trailblazer SIBs (commissioners, investors, intermediaries (SIB Specialist Organisations) and providers), and local participants in comparable non-SIB services.

The planned quantitative comparison of SIB and non-SIB sites providing similar services to similar clients via the same providers proved impossible due to problems of data access and quality.

The first evaluation of Social Impact Bonds (SIBs) in health and social care in England suggested that, while they encouraged a stronger emphasis on demonstrating results than comparable ways of commissioning public services, there was still no clear evidence that SIBs led to better client outcomes or that they were more cost-effective than alternative approaches. 

The SIBs funded a wide range of different interventions for different clients: older people who are socially isolated; people with multiple chronic health conditions; entrenched rough sleepers; adolescents in care; and people with disabilities requiring long-term supported living. 

Three models of SIB were identified: the Direct Provider 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. 

Providers in the Trailblazers were more outcome-focused than providers of comparable non-SIB services. Despite this, the up-front financing of providers by investors tended to be provided in instalments related to hitting volume and/or throughput targets rather than improvements in client outcomes. The bulk of the subsequent payments to investors for achieving targets came from central government and sources such as the Big Lottery rather than from local commissioners. 

Only one Trailblazer reported having made any cashable savings during the evaluation period as a result of its SIB-financed interventions. Typically, the planning of the SIB services and subsequent oversight were better resourced, and the services more flexibly provided than in similar non-SIB services. 

The findings show that policymakers should focus on the components within SIBs that show promise in developing outcome-based contracting, such as personalised support to clients, and greater flexibility and innovation in service delivery, while avoiding the notion that SIBs offer the only way forward for such contracting. 

Despite the claims that SIBs should generate rich quantitative information on the costs and outcomes of SIB-funded and non-SIB services, in practice, the researchers were unable to access suitable quantitative data to make this comparison. 

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. 

This research provides important information for governments looking for new financing mechanisms for health and care. 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. 

The research concludes that SIBs, as currently conceived, may have a role in specific circumstances, especially where outcomes are uncontroversial, easily attributable to the actions of the provider and easily measured, but are unlikely to be widely applicable in public services. 

A limitation of the study is that, with the exception of one Trailblazer which ended during the evaluation, the other four operational SIBs were evaluated during their early to mid-period of implementation, making it possible that the performance of these projects could change as they mature over time.