A workaround for cash-strapped governments and underserved populations
Professor Paula Lantz has spent her career focused on how to improve population health and reduce health disparities. “I think it’s shameful that we live in a very wealthy society, yet our population health indicators are terrible when compared to other developed nations,” she says.
A case in point: The U.S. has one of the highest infant mortality rates among Western developed countries. Prevention, says Lantz, holds the key to addressing infant mortality and many other vitally important health problems.
This winter, Lantz won a $1.2 million grant from the Robert Wood Johnson Foundation to build a health policy research hub at U-M. One of the hub’s main activities will be to evaluate the effect of social impact bonds, also known as Pay for Success programs, a new type of public-private partnership designed to prevent problems that can lead to more troubling issues down the road.
The Pay for Success model mimics that of venture capitalists, allowing investment banks and foundations to invest in pilot programs designed to prevent problems like recidivism, homelessness, unemployment, and unnecessary foster care placements. If a third-party evaluation shows that a program has met its measures of success and saved the government money, investors are reimbursed and, in some cases, can even turn a profit.
The investors bear all the risk, says Lantz. If the program doesn’t end up saving the government money, the government has no obligation to pay.
A relatively new model, there are currently only nine Pay for Success programs underway in the U.S., all funding early interventions designed to head off future problems.
Lantz explains that governments often don’t invest in these types of prevention programs because they have limited budgets and prioritize acute problems. But this immediate-needs approach can be short-sighted, she says, pointing to the current crisis in Flint, Mich., as an example.
“To save money and not treat the water or the pipes [in Flint], we ended up with a huge crisis down the road that has tremendous human, community, and financial costs.”
While social impact bonds aren’t a magic bullet, says Lantz, they can provide a workaround for cash-strapped governments and underserved populations.
One promising Pay for Success program in Cuyahoga County, Ohio, is intended to reduce the number of children in foster care by providing housing and supportive social services for homeless families.
Cuyahoga County spends $25 million a year on foster care, Lantz says, so an intervention that keeps families safely together and moves them out of homelessness—all while saving taxpayers money—would definitely be a win-win.
Lantz is spearheading a landscape analysis that will review all of the Pay for Success projects that have been launched in the U.S. and other countries to date.
“We’re looking at what some of the challenges are with this model and some of the lessons we can learn. There has been a lot of excitement about social impact bonds, but also a lot of question marks,” she says.
One Pay for Success program that promised to reduce recidivism among young men at Rikers Island was stopped early when it was determined that the intervention was not working at all, in stark contrast to what was expected when the project was designed.
Interestingly, none of the Pay for Success projects launched to date have focused on health disparities or population health—Lantz’s areas of expertise. So Lantz and colleagues want to identify good interventions in the health field that will work as Pay for Success projects.
Lantz and her team will also focus on the policies, regulations, and administrative decisions that can be used to foster more successful social impact bonds.
Paula Lantz is the Ford School’s first associate dean for research and policy engagement. Her charge: To provide strategic vision and operational oversight for faculty research activities and to enhance the school’s ability to support policy professionals—connecting research to practice.
Policies for health equity
The Pay for Success landscape analysis described in this article is one of four research activities being undertaken by the University of Michigan’s Policies for Action Research Hub, established with a three-year, $1.2 million grant from the Robert Wood Johnson Foundation.
“Our goal is to produce innovative, timely, and actionable policy research that will accelerate progress toward better population health and health equity,” says Lantz, the principal investigator.
Other hub activities include a study of state and local “health in all policies” efforts, an examination of interventions that target “super-utilizers” of health care services, and simulation modeling of various policy interventions aimed at population health improvement.
The hub will be led by a steering committee with expertise in more than 15 different disciplines, representing nine different schools and research institutes. Lantz’s co-principal investigator is Peter D. Jacobson, a professor of health management and policy in U-M’s School of Public Health.
Story by Julie Halpert for State & Hill, the magazine of the Gerald R. Ford School of Public Policy
Family Photo: Alain McLaughlin
Below is a formatted version of this article from State & Hill, the magazine of the Ford School. View the entire Spring 2016 State & Hill here.