In their report entitled “Impact Investing in Sources of Health,” Maria Hernandez and S. Len Syme, researchers at UC Berkeley and Rick Brush from Collective Health, LLC, explore the possibility of using an impact investing vehicle, namely Health Impact Bonds, to improve health outcomes in a cost-effective and sustainable way.
Over the past couple of years significant efforts have been made to make health care accessible to all Americans. However, more health care does not necessarily lead to healthier individuals. The report’s authors argue that in order “to reduce the growth rate of chronic health conditions we must look at the context and quality of life that individuals experience.” We must examine physical environments, social networks and other “social determinants of health.” The challenge is that organizations, such as nonprofits and public agencies that focus on these social determinants of health usually lack the financing for their prevention and intervention programs. Health Impact Bonds offer one solution to this problem. Similar to Social Impact Bonds, Health Impact Bonds would involve investors providing upfront capital to pay for social and environmental interventions that will potentially save money for health payers like Medicaid and other insurers (enough to provide a profit to investors) and also lead to a healthier society.
So will Health Impact Bonds really replace health care? No, but they do have the potential to reduce the need for clinical treatment by preventing the underlying problems of many health conditions.
Read more about health impact bonds and a case study in Fresno, California.