Social Outcomes Contracting

Social Outcomes Contracts (sometimes referred to as Social Impact Bond, Development Impact Bond, or Health Impact Bond) is an increasingly popular model for addressing current social and health challenges. The health and social sector face problems with short-termism, lack of incentives, organizational silos, and unclear objectives, especially when it comes to prevention and early intervention. A Social Outcomes Contract - and outcomes-focused collaboration in general - is a potential way to address this.  

The focus of a Social Outcomes Contract (SOC) is to achieve improved social and health outcomes for a defined target group. Based on this objective, an intervention model is designed, including funding, monitoring, evaluation, as well as a role specification for involved actors. The work is regulated by a contract between the responsible actor(s) for the outcome, the funder(s), and the provider(s). The role of the collaborating actors in a SOC can vary depending on the context and area, and thus the structure may look different. There is always at least one public part responsible for the outcome. Sometimes private contractors (commercial or non-profit) and investors are included in the model, but a SOC can be structured between only public sector actors. A guiding principle for models is to align the incentives for all parties so that they recognize a profit when the outcomes are fulfilled to a large extent and a loss when positive outcomes are lacking. Gains in this context do not need to be in monetary terms, but typically financial transactions occur between the parties linked to the estimated economic consequences of the actual outcomes. These calculations are based either on a socio-economic analysis or measured direct cost effects in the public sector.

Providers are procured with outcome-based agreements and thus receive compensation that partly depends on the outcomes achieved. The focus on the outcomes strengthens the need for transparency and robust monitoring, which is typically assisted by an intermediate organization (e.g., RISE). RISE initiates and assists other parties to identify the needs of target groups, designing SOC models if suitable, and defining and measuring outcomes. RISE is an independent implementation support specialist for all actors involved.