Pay For Success and Social Innovation Financing: Serving Santa Clara County’s Mentally Ill Residents Harvard Case Solution & Analysis

Pay For Success and Social Innovation Financing: Serving Santa Clara County’s Mentally Ill Residents Case Solution

Santa Clara county was doing the very first PFS task in the psychological healthcare area, and had actually selected the for-profit provider Telecare. However lots of choices still needed to be made: How could the county bring in Social Innovation Financing partners and work out a payment structure that helped all celebrations − while making certain that rewards and inspirations were lined up? How should the county determine the success of this task? Which were the ideal metrics to evaluate-- and which should be connected to payment?

Knowing Objective

The goal of the case is for trainees to assess a brand-new design that federal governments can utilize to pay outdoors providers. Trainees need to have the ability to go over the benefits and drawbacks of this design from numerous stakeholder viewpoints: the federal government, the provider, the residents being served, and the outdoors financiers. The case offers product to allow the trainees to establish an application prepare for a federal government entity deciding to utilize the design.

In 2016, Santa Clara County was introducing a six-year task focused on decreasing the huge expenses of managing its most intense psychological healthcare clients − $45 million a year − even though enhancing their treatment and lifestyle. For the task, the county selected a brand-new design called "Pay for Success" (PFS), where federal governments just pay company if their efforts achieve success. By contrast, in the conventional payment design, service providers bill the federal government regularly for activities and outputs, such as the variety of hours invested therapy customers. To offer provider with working capital throughout multi-year tasks, Spend for Success programs might be coupled with Social Innovation Financing, under which business financiers, structures and high total assets benefactors money the company's continuous operations. They are then paid back to the degree that company satisfy their guaranteed results.

The PFS design was expanding, with $200 million active in 45 tasks around the globe. However its critics raised questions about problems such as 1) utilizing personal funds for services for susceptible individuals being served, 2) the high federal government deal expenses of the jobs, and 3) possible rewards for company to video game the system by cherry selecting customers or offering inferior services to lower federal government expenses.

This is just an excerpt. This case is about Business

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Pay For Success and Social Innovation Financing: Serving Santa Clara County’s Mentally Ill Residents

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