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Pay for Success: 101 on an Innovative Payment Mechanism

Thu, Dec 14, 2017  -  Comments (0)  -   Posted by Kirstin Craciun

The following blog post was written in collaboration with Jacqueline Matloub, research associate, Case Western Reserve University’s Center for Community Health Integration.

I had the good fortune recently of partnering with Jacqueline Matloub, a research associate at Case Western Reserve University’s Center for Community Health Integration, on an Issue Brief focused on the Pay for Success model. Jackie is certainly more of an expert than I am on this topic and I was thankful for the opportunity to learn from her wisdom and depth of knowledge about this topic.

We set out to try to contribute something to the field that would be helpful for those seeking to understand how this type of an innovative payment mechanism can be used to help address social determinants of health. We know that focusing on clinical care alone is insufficient if we want to improve the health of populations, but when we start talking about all of the conditions in the environments in which people are born, live, learn, work, play, worship and age that can impact health, it’s easy to get overwhelmed. And that’s before even wading into the always controversial subject of who should be charged with addressing conditions in a person’s environment that might be hampering their ability to be healthy.

Enter Pay for Success.

This innovative payment mechanism really offers an interesting model that can be considered by anyone seeking to impact social determinants of health. I’ll share some of the key takeaways from our brief if you’re looking for the CliffsNotes version (I know those bailed me out a time or two over the college years). 

What is Pay for Success?

Social services are traditionally funded through government agencies that finance direct services to treat, but rarely solve, root causes. All of that changes in a Pay for Success model. Pay for Success focuses on prevention, tests the effectiveness of innovative approaches, is designed to scale up successful interventions, provides upfront funding from private investors, and carries no financial risk for government agencies.

As you may have guessed, Pay for Success projects are pretty complicated. Fortunately, Third Sector Capital Partners, Inc. has a visual that’s helpful in understanding the various stakeholders and their roles in a Pay for Success model.

Pay for Success: 101 on an Innovative Payment Mechanism

Pay for Success Models Across the U.S.

Wondering how common Pay for Success projects are in the U.S.? Data from the Nonprofit Finance Fund shows that of the existing pay for success projects in the U.S., those that aim to impact health outcomes are most common, followed by those with a focus on impacting early childhood.

Pay for Success: 101 on an Innovative Payment Mechanism

Pay for Success projects are underway throughout the U.S., but many of the projects are occurring in California or along the East coast. Check out our Issue Brief for some highlights of Pay for Success model projects occurring across the country.

Pay for Success: 101 on an Innovative Payment Mechanism

Cuyahoga County’s Partnering for Family Success Program

For those interested in what’s happening in our neck of the woods, Cuyahoga County’s Partnering for Family Success program is a Pay for Success project that launched in December 2014 that aims to positively impact homelessness and child welfare. It’s actually the first county-level Pay for Success project in the country(!) and strives to serve 135 families over a 5-year timeframe. Key funding partners include both foundations and private investors.

The contracted outcome is to decrease the number of days homeless children spend in foster care placement by 25 percent. In addition to striving to decrease the length of stay that children experience in foster care, additional project goals include achieving permanent housing and family reunification. To help achieve all of these goals, housing assistance and supportive behavioral health interventions are provided to families in the treatment group.

Lessons Learned

Dave Merriman, Administrator, Cuyahoga County Job & Family Services, has learned many lessons from his involvement in the Pay for Success project since its inception. His breadth of understanding about designing and implementing a Pay for Success project has led him to advise local, national and international partners that are seeking to launch a Pay for Success project – pretty cool. He sat down with us and shared the following lessons learned from Cuyahoga County’s project:

  • Leadership support from Armond Budish, Cuyahoga County Executive, and Sharon Sobol-Jordon, Chief of Staff in the Cuyahoga County Office of the Executive, has been essential.
  • This project helped Cuyahoga County’s Division of Children and Family Services match client needs to acuity, which is something they had never been able to do prior.
  • Focusing not just on monetized savings but also on other outcomes they are seeking to achieve is critical.
    • For example, one investor might want to see government more focused on outcomes using randomized control studies; for others that may not be a key outcome.
  • Many Pay for Success projects never get past the design phase, but there are important lessons learned regardless.

Pay for Success and Lead Harm Reduction in Cleveland

Another Pay for Success project – this time focused on lead harm reduction – is currently being explored in Cleveland. The Cleveland Foundation, the City of Cleveland, the Cuyahoga County Board of Health, and the Greater University Circle Community Health Initiative are currently working with Third Sector Capital Partners to develop a feasibility plan for eliminating lead poisoning in Cleveland using a Pay for Success model. I don’t know about you, but I’m really interested to watch these and other Pay for Success projects take shape and see how effective they are at achieving improved outcomes.

Posted in Population Health
About the Author

Kirstin Craciun

I grew up in Canada where access to healthcare for all citizens is a core principle. I bring that thinking to the work I do as The Center for Health Affairs’ director of community outreach. I spend my days helping Northeast Ohio hospitals assess health needs in the community; develop collab...

See other articles by this author and view full bio »


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