Social outcomes contracting (SOC), also known as outcome funds, is a novel mechanism for investment in health promoting services. SOCs are contracts in which payments are made only when pre-agreed social (or health-promoting) outcomes are achieved by the funded programme or organisation.
SOCs are different to a ‘payment-by-outputs’ approach and social impact bonds (SIBs). The most significant difference is the inclusion of the investor in the development stage. SOCs help participating organisations to align their incentives to achieve social outcomes, while also saving public expenditure due to their focus on prevention and generating return on investment.
The benefits of an outcome-based contract model come forth from its approach to public-service management that seeks to improve value and impact. Payment mechanisms can differ, as arrangements can include a proportion of upfront or activity-based payment that is not contingent on the achievement of a specified outcome. Some form of upfront payment or ‘fee-for-service’ has the potential to make the scheme more attractive to providers and investors. This is because the fee can be used to help start-up costs and reduces the risk they take on in agreeing to the contract.
EFSI - The European Fund for Strategic Investments
The European Fund for Strategic Investments (EFSI) was established by the the EIB group (European Investment Bank and European Investment Fund) and the European Commission to help overcome the current investment gap in the EU. The fund puts public and private money together to invest in the future of Europe. With a total budget of €33.5 billion, it aims to unlock additional investment of at least €500bn by 2020.
The EIB Group uses the support of the fund to provide funding for economically viable projects, especially for projects with a higher risk profile than usually taken on by the Bank. It will focus on sectors of key importance for the European economy, including:
- Strategic infrastructure including digital, transport and energy
- Education, research, development and innovation
- Renewable energy and resource efficiency
- Support for small and mid-sized businesses
For more information about EFSI, watch the video below or visit this website.