The US spends $2.6 trillion a year on a health care system that…
- Fails to address primary sources of health and health risk; and
- Misaligns incentives with the treatment of illness rather than prevention and health promotion.
An alternative strategy is presented in “Impact Investing in Sources of Health,” a paper commissioned by the California Endowment and co-authored by the University of California Berkeley and Collective Health. The authors, including noted social epidemiologist Dr. Len Syme, contend that “impact investment in upstream sources of health represents a substantial opportunity to improve downstream health outcomes and costs in a meaningful and sustainable way.”
The paper examines the growing movement toward impact investing, the launch of social impact bonds (also known as Pay for Success initiatives), and application of this strategy to address causes of asthma-related emergencies among children in Fresno, California. The approach generates investment capital in evidence-based interventions that reduce health care utilization and costs for financial stakeholders like public and private insurers, employers and health care providers; a share of the savings achieved is returned to impact investors to cover principal plus interest.
“Pay for Success initiatives are beginning to move forward in the US,” note the authors. “We believe this effort can be greatly expanded and accelerated with a market-based approach that engages private investor support.” Collective Health has created a number of innovative financing vehicles, such as the Health Impact Bond℠, to drive this market-based approach. Read the white paper here.