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Social Impact Bonds: Expanding Healthcare in Venezuela


David Garfunkel

on 4 April 2013

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Transcript of Social Impact Bonds: Expanding Healthcare in Venezuela

Leveraging NGO and private sector capacity to expand healthcare services in Venezuela. Social Impact Bonds Measuring the Outcome of an SIB SIBs: Conducting a Cost-Benefit Analysis Results need to be measured using data.
We must structure returns to investors based on empirical evidence related to healthcare.
We suggest five measurable impacts for which a Social Impact Bond would be appropriate: David Garfunkel
Kate Glazebrook
Tracey Hsu
Potential Trouble with SIBs Do the Pros outweigh the Cons?
We believe so. Benefits of SIBs Social Impact Bonds: Pros & Cons Bonds must be structured in a way the attracts investors -- but are the outcomes they want the ones we want?
Difficult to pinpoint measurable impact.
SIBs are expensive. Interventions need to yield sufficiently high net benefits.
Impact assessment must be credible.
Bondholders could have an incentive to shut down if things aren't working.
Health outcomes are often long term.
Has the potential to significantly reduce government expenditures.
In addition, the risk is borne primarily by investors, not the government.
Rigorous M&E throughout the program will lead to better results and better learning for future initiatives.
SIBs can lead to greater innovation and successful initiatives for future implementation. General Structure of a Social Impact Bond Contracts intermediary to broker the SIB.
Helps to set guidelines for measurable outcomes.
Works with independent evaluators to determine best M&E standards. Invest money in private sector companies and NGOs that will intervene.
Return on Investment is a function of the results that the intervening organizations attain. Interventions.
Scale up interventions.
Work with evaluation adviser to improve as needed. Infant Mortality Years of Life Lost
due to
Diseases Cost-Efficiency of
Health Provision Readmission Rates Incidence of Dengue Fever and Malaria One Simple Rule: In order to implement our
project, must outweigh . Benefits costs Benefits to Analyze Costs to Analyze Increased societal benefits that are unlocked as government spending on healthcare decreases.
If the SIB is effective, increased benefits of a population with a decreased level of malaria and dengue fever.
Societal benefits of preventative, not reactive, healthcare.
Benefits of increased monitoring & evaluation leading to more effective healthcare interventions for prevention of other diseases, as well. Increased cost of contracting an intermediary to broker the bond + independent monitors to evaluate outcomes.
Increased cost to society of potential unemployment generated by a shrinking public healthcare sector.
Taking into account the probability that the SIB is not effective, the increased cost to society of a less healthy population.
If SIB is not effective and bondholders leave, expensive reactionary measures need to be accounted for. SIB Example: Reducing Dengue Fever and Malaria 04 April 2013
API-102A Private
Investors Service
Providers SIB-Issuing
Organization Government Working Capital Operating
Funds Performance-
Payments Repayment +
ROI for
Performance Source: Jeffrey Liebman. Social Impact Bonds: A promising new financing model to accelerate social innovation and improve government performance. Center for American Progress. February 2011. Aim for a certain percentage decrease in infant mortality rates. A common public health outcome that is easily measured. Evaluate per-patient costs for healthcare. Can we reduce them? Readmitting patients to hospitals is expensive. How can we reduce those rates? Preventable and measurable diseases that have high societal costs. Parties Involved:
SIB-Implementer --> Gates Foundation
Investor --> Goldman Sachs
Service Provider --> www.nothingbutnets.org
Government --> Ministry of Health

Where Implemented:
High-risk, high-malaria/dengue zone of the country where societal returns on mosquito net investment would be high.

Measurable Impact:
Straightforward measurement of number of cases of malaria and dengue treated in target communities.

Contingency Plan:
If bond fails, must have a contingency plan to continue malaria/dengue prevention or country could face an epidemic.

Repayment based on number of cases of malaria and dengue treated in the target communities. Investors will be repaid based on implementing organization's success in reducing the number of treated cases.
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