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.
For an example of how social outcome contracting is used in Sweden to decrease sick leave and build health-promoting workplaces, watch this video and read the case study below.