Thursday, July 20, 2017

A radical proposition for changing the way we design SIBs – A service provider perspective

We have both written, previously, with energy and enthusiasm for SIBs; about the benefits they can bring. We still believe that to be true but we also believe that it is important not to lose sight of the potential challenges and downsides. From a service provider point of view, there is a risk that we can find ourselves in a difficult position once the SIB funding has gone. It can be difficult to sell something you have been able to deliver for free for three or four years under a SIB model. It is not impossible: you can sell to some, but not to all.

We recognize that the issue of having to charge for a previously ‘free’ service is not an issue that confronts all previously SIB-ed services. This is where the issue of ‘who has been paying’ and ‘who has been benefitting’ comes in. With SIBs being deployed across cross-cutting social issues, those who pay for outcomes are not always the only ones benefitting. At the end of a SIB, it can be challenging to persuade those other organizational beneficiaries to pay for some of the outcomes they have been enjoying over the duration of a SIB.

What that means is that the people who have been working tirelessly to get the expected results are left wondering: “What next? Another SIB? Great, if there is one on the horizon, or alternatively, look for another job.” It would be a real shame to lose good staff with all their knowledge and passion. The uncertainty towards the final phases of SIB delivery can affect the quality of delivery at a time when delivery needs to be at its best — the opportunity to ‘sell’ the product subsequently.

So what can we do? We could build in a period of adjustment, into costs, say, to cover six months of adjustment post the SIB delivery period. This would allow for the service provider to adjust to the change in a way that minimizes the impact on delivery during the final phases of the SIB.

It would allow those organizations that have benefitted from some of the outcomes from the SIB-ed service to have a period when the service is longer there. This is, of course, a contentious issue and is meant to be provocative. There is a case for arguing, nonetheless, that those organizations that have been benefitting from programmes but who have never had to pay often end up taking these programmes for granted. They do not necessarily understand the real value of things that they have been enjoying for free. Planning proactively for a period of withdrawal could prompt these other organizational beneficiaries to miss the programme and consider more clearly the case of buying in the service. All the while, the infrastructure and workforce for the intervention remain intact so that the programme can be mobilized at short notice. We all know that, sometimes, to truly appreciate something, you may have to do without it, feel the loss and take action to get it back!

So who could pay for this? Well, social investors. In the spirit of re-investing in services, this would go a long way to demonstrating their commitment to its principles. They could set an amount to support the service provider during this period of transition. This would allow the service provider to maintain good staff, engage with ‘new clients’ directly and agree costs. After all, it’s always cheaper to maintain an existing service that has been proven to work than to scrap it and rebuild it subsequently.

Indeed, true social investment is about sustainability. Under a SIB model, we continue tracking outcomes for those in direct receipt of services for a period of time after the SIB-ed programme delivery has ended. If we can do this for the direct service recipients, why would we not want to do that for delivery partners? There is growing recognition of the importance of capacity building within the voluntary and community service provider worlds to engage in outcomes contract and public service delivery more generally. There is further recognition that a healthy market for service provision should include diverse, small local players, so as to avoid larger players monopolizing the market. Changing the design of SIBs to actively promote the sustainability of such players will be transformative.

We continue to look at ways in which Social Investment can be utilized to support better outcomes for Children and Young People and are in early discussion with investors to see how Social Investment can support the growth of the newly formed Manchester Youth and Play Trust-Young Manchester

 

Michelle Farrell-Bell, Chief Executive, Young Manchester

Dr Chih Hoong Sin, Director of Innovation and Social Investment, OPM Group

Tuesday, May 2, 2017

The impact of learning and sharing on the development of Social Impact Bonds

In this third blog of my 2017 series inspired by my advisory visit to Japan, I reflect on the importance of international learning and sharing for improving Social Impact Bonds (SIBs). While honoured to have been an expert advisor to colleagues in Japan over the past three years, helping the country take its first steps to develop SIBs; I have also benefitted hugely from the opportunity to learn from them and others.

Here I reflect on the impact of international learning and sharing on two specific areas, based on my Japanese experience.

Role of government

In a previous blog, I argued that governments have key roles to play in supporting the growth of SIBs (and social investment more widely). As I shared the UK lessons during the Social Impact Forum at Yokohama City, I also heard from Australian colleagues who put forward a similar view. What was notable was the fact the New South Wales Government in Australia has actually issued a social investment policy committing to two SIB transactions per year. While the UK Government has been hugely supportive of SIBs, the support has been enacted in different ways. We do not have a specific policy committing us to a specific number of SIBs per year. As Australian colleagues noted, this policy really focusses minds and has mobilised everyone to work together. The machinery of government has been aligned to support this, for example by building in evaluation; by developing policy reviews and analyses; by assessing the effectiveness of known interventions in priority policy areas, etc.

Japanese colleagues, reflecting on their (still very recent) experience, observed that while the Japanese government has made certain overtures indicating interest in SIBs, they have been far less proactive and engaged in stimulating growth, compared with Australia and the UK. It has been very challenging to engage with central government, leaving local governments and their non-profit organisation partners to try lobbying for change while attempting to make things happen on a very small scale.

This comparative approach enabled us to work closely with Japanese colleagues to share specific recommendations for engaging with central government, while also drawing in lessons from related developments and how these have successfully captured the imagine of governments, such as Climate Bonds.

The purpose of SIBs

Another area where the comparative approach surfaced important issues for scrutiny is the motivation behind SIBs. While much of the discourse in the UK, US and Australia is underpinned by a strong ‘savings’ narrative, Japan seems to be more minded to develop SIBs that are focussed squarely on improving wellbeing even when this may not lead to any discernible savings for the public purse.

In challenging the dominant discourse around SIBs, Japanese colleagues tapped into a creative seam of thinking around constructing SIBs on a very different foundation. We were able to share specific models of how this may be done, proceeding to advise Japanese colleagues about the implications for outcome metric selection and outcome modelling. At the same time, this re-focussing enabled us to build a stronger narrative and practice around more meaningful user-defined outcomes in the UK, counter-balancing the more dominant system-defined outcomes approach. I have certainly woven this into my work with Northern, Eastern and Western Devon Clinical Commissioning Group on their SIB to tackle alcohol dependency.

Conclusion

One of the downsides of working in the SIB field is that although we all assert that “things change very quickly”, we have yet to demonstrate willingness to share experiences, learning and data. Indeed, I have often encountered strong opposition towards sharing, under the guise of “commercial and/or political sensitivity”.

At the same time, we all call for transaction costs to be reduced as the current high costs make it difficult for SIBs to be sustainable. Surely one of the ways to bring down transaction costs is for better sharing of information and experiences so that others do not have to reinvent the wheel every time a new SIB is being developed. This glaring contradiction does not escape me and many others. It is time that we have the courage and humility to learn and share more widely.

Dr Chih Hoong Sin, Director, Innovation and Social Investment

Tuesday, May 2, 2017

The impact of learning and sharing on the development of Social Impact Bonds

In this third blog of my 2017 series inspired by my advisory visit to Japan, I reflect on the importance of international learning and sharing for improving Social Impact Bonds (SIBs). While honoured to have been an expert advisor to colleagues in Japan over the past three years, helping the country take its first steps to develop SIBs; I have also benefitted hugely from the opportunity to learn from them and others.

Here I reflect on the impact of international learning and sharing on two specific areas, based on my Japanese experience.

Role of government

In a previous blog, I argued that governments have key roles to play in supporting the growth of SIBs (and social investment more widely). As I shared the UK lessons during the Social Impact Forum at Yokohama City, I also heard from Australian colleagues who put forward a similar view. What was notable was the fact the New South Wales Government in Australia has actually issued a social investment policy committing to two SIB transactions per year. While the UK Government has been hugely supportive of SIBs, the support has been enacted in different ways. We do not have a specific policy committing us to a specific number of SIBs per year. As Australian colleagues noted, this policy really focusses minds and has mobilised everyone to work together. The machinery of government has been aligned to support this, for example by building in evaluation; by developing policy reviews and analyses; by assessing the effectiveness of known interventions in priority policy areas, etc.

Japanese colleagues, reflecting on their (still very recent) experience, observed that while the Japanese government has made certain overtures indicating interest in SIBs, they have been far less proactive and engaged in stimulating growth, compared with Australia and the UK. It has been very challenging to engage with central government, leaving local governments and their non-profit organisation partners to try lobbying for change while attempting to make things happen on a very small scale.

This comparative approach enabled us to work closely with Japanese colleagues to share specific recommendations for engaging with central government, while also drawing in lessons from related developments and how these have successfully captured the imagine of governments, such as Climate Bonds.

The purpose of SIBs

Another area where the comparative approach surfaced important issues for scrutiny is the motivation behind SIBs. While much of the discourse in the UK, US and Australia is underpinned by a strong ‘savings’ narrative, Japan seems to be more minded to develop SIBs that are focussed squarely on improving wellbeing even when this may not lead to any discernible savings for the public purse.

In challenging the dominant discourse around SIBs, Japanese colleagues tapped into a creative seam of thinking around constructing SIBs on a very different foundation. We were able to share specific models of how this may be done, proceeding to advise Japanese colleagues about the implications for outcome metric selection and outcome modelling. At the same time, this re-focussing enabled us to build a stronger narrative and practice around more meaningful user-defined outcomes in the UK, counter-balancing the more dominant system-defined outcomes approach. I have certainly woven this into my work with Northern, Eastern and Western Devon Clinical Commissioning Group on their SIB to tackle alcohol dependency.

Conclusion

One of the downsides of working in the SIB field is that although we all assert that “things change very quickly”, we have yet to demonstrate willingness to share experiences, learning and data. Indeed, I have often encountered strong opposition towards sharing, under the guise of “commercial and/or political sensitivity”.

At the same time, we all call for transaction costs to be reduced as the current high costs make it difficult for SIBs to be sustainable. Surely one of the ways to bring down transaction costs is for better sharing of information and experiences so that others do not have to reinvent the wheel every time a new SIB is being developed. This glaring contradiction does not escape me and many others. It is time that we have the courage and humility to learn and share more widely.

Dr Chih Hoong Sin, Director, Innovation and Social Investment

Monday, April 24, 2017

Unleash the creative potential of Social Impact Bonds

In a previous blog based on my latest advisory trip to Japan, I noted that Japan is currently ‘translating’ the SIB model in order for it to be implemented in a way that is appropriate to its specific social, economic, political and cultural context. I have encouraged Japanese colleagues not to simply think that SIBs are and always will be what they currently look like. Instead, they should approach it creatively, making it work better for all. There is a risk that an innovation, such as SIBs, may be abandoned because of disillusionment with early versions of it, which may not have fulfilled the creative potential that may be on offer. Here, I describe four reasons why I think current SIBs have only scratched the surface of what may be possible.

Outcome payers

In the UK, we have become rather lazy with our terminology. I often hear people swap ‘commissioner’ for ‘outcome payer’. In doing so, there is a real risk that we limit the way we think about who outcome payers can or should be. Apart from public bodies, who else may be interested in paying for outcomes? What types of outcomes may they be interested in paying for?

If outcome payers are ever only going to be public sector commissioners, then we need to question whether SIBs are indeed channelling ‘new’ or ‘different’ funds. After all, if all outcome payments to investors are ultimately made by public sector commissioners, then the monies will only ever come from direct taxation.

Transaction costs

Read any publication or attend any conference on SIBs, and you will head the refrain: “SIBs have high transaction costs”. Again, rather than simply accept this as an immutable fact, I challenge the market to design these costs out of future SIBs. We have good evidence that this is possible, at least for some types of transaction costs. For example, we know that vested commercial interests can cause some intermediary organisations to develop SIBs that are unnecessarily complicated. Similarly our evaluation of the Essex County Council SIB found that when the various players are more concerned about minimising risks to themselves, they can end up with a contract that is too complicated and therefore imposes ongoing costs. As our experience in Essex shows, these can be designed out of a SIB even after it has gone ‘live’.

Who bears the risks?

An attraction of SIBs is that we introduce a new group of stakeholders called ‘social investors’ into the picture, who have higher risk appetites and are socially minded. However, the fact that 7 out of the 10 SIBs in the US have over half of their values guaranteed by philanthropic organisations really causes us to question who is really bearing the risk? Are we attracting the ‘right’ types of investors into the market or are we distorting the market to suit certain types of investors? In addition, there is also evidence that some social investors can try to pass on some of the risks to service providers, for example, by providing part of the capital as a loan rather than as revenue. We must therefore be clear about who bears what risks, and whether these models are true to the ideal of the SIB aspiration.

Is it all about savings?

In a blog I wrote last year, I argued that SIBs do not have to be about savings, and showed different ways of constructing alternatives. SIBs are about social outcomes. To reduce social outcomes to only those that generate financial savings for the public purse is highly limiting. This, again, draws attention to the limitations of thinking of ‘outcome payers’ only as ‘commissioners’. Even amongst commissioners, financial savings do not have to be the only motivator. We need to ask ourselves the question: “Outcomes for whom?” when we design SIBs. If we never ask service users what success looks or feels like to them, then what message are we sending out about SIBs? Whose interests do they serve?

Conclusion

Current SIBs have barely scratched the surface of what may be possible. Rather than allowing them to ossify into what they currently look like, we should challenge ourselves to keep pushing the creative potential of the idea of a SIB. In the process of doing so, we must never lose sight of outcomes and how they can be meaningfully defined.

Dr Chih Hoong Sin, Director, Innovation and Social Investment

Thursday, April 6, 2017

Working together for a stronger society – Our response to the Lords Select Committee of Charities Report

Charities play a vital role in the ongoing social and economic success of the UK. At the same time, funding for charities has changed significantly. Funding received as grants has decreased over time, while contract funding has been increasing dramatically.

Our response to the Charities Report shows that charities need better support to build their capacity, so they can deliver public services and access suitable finance. Commissioners also need support to develop social value for service users. OPM Group’s social finance experts Dr Chih Hoong Sin and Sheila Pardoe have summarised their experience and comment on the Charities Report.

 

Tuesday, March 31, 2015

Systems Leadership: A view from the bridge

Across the public and third sectors, we are beginning to accept a new way of thinking about the leadership required, applying the theory of ‘systems thinking’ to the practical reality of trying to achieve complex change. For both practitioners in OD, leadership development and for leaders themselves, there is an important opportunity now to exchange learning about how to lead well in these difficult times.

This paper is a personal account from OPM’s Sue Goss on how to make systems leadership work in practical terms. It is not simply about toolkits and ‘hot tips’ – there is a need for new theory to help explain what is happening, as well as carefully observed learning from practice. The paper has been shared widely with OD and HR colleagues and we hope it can form the basis of a wider conversation, so that the next five years can build on the discoveries of the last five.

Thursday, May 15, 2014

Revolutionising the NHS with Patient Power

This paper highlights how patient power can be used to transform all levels of the health service – from shaping policy and system reforms, effecting service delivery changes, to transforming the dynamic between patients and their healthcare providers. In it we draw on OPM’s own experiences, as well as good practice examples from a recent OPM-hosted seminar, and consider how the health service can put the needs and wants of patients at the heart of everything it does through effective patient and public involvement.

Thursday, March 6, 2014

Opportunities to exploit and challenges to overcome in the implementation of integrated care

This policy paper is intended to aid policy makers and local health and social care leaders who are taking the integration agenda forward. Informed by a recent roundtable discussion, as well as OPM’s own experience, the paper shares lessons and insights from people actively implementing different integration models.