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.
Health Inequalities Impact Assessment (HIIA)
One tool that has potential to be used across financial approaches and health promoting services is a Health Inequalities Impact Assessment (HIIA). A HIIA is a tool to assess the impact on people of applying a proposed, new or revised policy or practice. HIIA assesses the impact on; health inequalities, people with protected characteristics, human rights, and socioeconomic circumstances. Many policies, plans, proposals or decisions have the potential to impact on health and potentially widen health inequalities. By conducting an HIIA the potential impacts can be considered and action taken to reduce those impacts.
Impact assessments help to:
- ensure non discrimination
- widen access to opportunities
- promote the interests of people with protected characteristics.
The HIIA should be conducted when the policy, plan or financial instrument is still in draft. It should be well enough developed to understand the potential impacts, but not so far developed that changes are not possible as a result of the assessment.
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.