Abstract
The financial crisis has put pressure on governments throughout the world to reduce deficits with severe budgetary cuts in many welfare areas by reinforcing the need to modernize social policies and optimize their effectiveness and efficiency. Social impact bonds (SIBs) have rapidly become one of the most innovative financial schemes used by governments to privatize the upfront costs of welfare interventions by reducing taxpayer expenditure. Our analysis focuses on healthcare impact bonds (HIBs) that correspond to the adaptation of SIBs to health programs and are considered to be a viable way to fund out-of-pocket and preventive programs, especially considering the recent cuts to public healthcare expenditure. By using an in-depth qualitative analysis of existing practices based on a multiple case study approach, this study contributes to the ongoing debate on the role of SIBs for the future sustainability of welfare systems by proposing reflections and indications for the scalability and replicability of SIBs. With respect to the existing literature, this paper provides a theorization of the main scaling ingredients to be considered for the development of the SIB market as a supporting financial approach for new and emerging welfare needs by also proposing suggestions and insights and serving as a guide for scholars and practitioners.
Highlights
The financial crisis has put pressure on governments throughout the world to reduce deficits with severe budgetary cuts in many welfare areas by reinforcing the need to modernize social policies, optimize their effectiveness and efficiency, and the way they are financed [1].Health protection activities have been subject to close scrutiny from policymakers [2] and governments worldwide have increased their interest in outsourcing the funding and delivery of welfare services with the aim to reduce public expenditure deficits [3]
We focused on healthcare impact bonds (HIBs), which correspond to the adaptation of these current examples of social impact bonds (SIBs) in recidivism and child removal into new health programs and interventions [15]
By using the special purpose vehicle (SPV) model: (a) the commissioner contracts for outcomes with the SPV and payments are made directly to the SPV if the scheduled outcomes are achieved; (b) the SPV contracts the service providers and a social finance intermediary to set out advisories or other kind of services; (c) investors typically invest directly into the SPV by assuming ownership; (d) the SPV is managed by a board of directors that is comprised of investor representatives; and (e) the board is in charge of monitoring the SIB program and considers the service providers directly accountable to the performance standards scheduled in their contracts [19]
Summary
The financial crisis has put pressure on governments throughout the world to reduce deficits with severe budgetary cuts in many welfare areas by reinforcing the need to modernize social policies, optimize their effectiveness and efficiency, and the way they are financed [1]. Since the first program launched in Peterbourgh (UK) in 2010, SIBs have raised a total amount of $431 million through 132 initiatives distributed across 25 countries (Argentina, Australia, Austria, Belgium, Canada, Cameroon, Congo, Colombia, Germany, Finland, France, Japan, India, Israel, the Netherlands, New Zealand, Peru, Portugal, South Africa, South Korea, Sweden, Switzerland, Uganda, the United Kingdom, and the United States) by targeting social issues such as criminal justice, homelessness, child and family welfare, early childhood education, workforce development, health, poverty and environments, and adults with complex needs [14] Despite this considerable success, previous works have suggested the need for a systematic analysis of the benefits, costs, risks, and contractual schemes in SIB projects in order to understand if and how they could effectively contribute to the welfare issues and what the key dimensions need to be considered for their scalability. We provide a literature overview; we present our methodological approach, research design and main findings; and we conclude by providing a series of enabling factors and discussing the implications of our study
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