|SOCIAL IMPACT BONDS||
DIABETES PRESS RELEASE:
Israel leads the way in introducing a Social Impact Bond for prevention of Type II Diabetes
Social Finance Israel is pioneering the first Social Impact Bond to delay the onset of Type II Diabetes in 2,250 people in Israel. It will raise $5m to fund a series of two-year lifestyle interventions for patients at risk of developing the disease. If the interventions are successful in averting the disease (compared to a refrence group), two Israeli public health organisations and the National Insurance Institute will repay investors in return for the savings in the reduction of healthcare and disability costs. The UBS banking corporation, which in the past few years has been vigorously active in the Social Impact investments, will assist in promoting the Social Impact Bond in Israel and abroad.
Type II Diabetes affects more than 600,000 people in Israel as part of a global epidemic. The International Diabetes Federation predicts that the number of diabetics could grow by 50% in the next 25 years. There are currently 415 million people living with the condition and global public health spending on diabetes is predicted to rise to well over $800 billion a year by 2040.
However, the disease is preventable. Pre-diabetics can be identified through simple blood tests and lifestyle changes can reduce the risks of becoming diabetic. Recent international medical reports confirm that it is possible to delay the onset of the disease for more than 10 years and even to prevent it completely by introducing exercise and a change of diet.
At present though, global health systems are not designed to invest in the early prevention programs needed to reduce the spread of diabetes. They cannot deliver tailored programs for patients to delay the disease and private investment into preventative interventions is needed to establish the evidence base.
Social Impact Bonds – a new way to invest in prevention
Social Impact Bonds combine social expertise, private funding and rigorous evaluation to transform how governments respond to chronic social problems. Funders provide upfront capital to deliver effective social services and governmental entities pay only if it delivers predefined results. Independent evaluators measure the effects of a program based on specific, predetermined metrics that benefit both individuals and society.
Sir Ronald Cohen, Chair of the Global Steering Group on Social Impact Investing and co-founder of Social Finance Israel: “Social Impact Bonds are a powerful tool for governments in testing new prevention programs. They transfer the risk of failure to philanthropically minded investors and pay only for outcomes achieved. Enthusiasm for the model has not risen since it launched in the UK in 2010, with 58 Social Impact Bonds operational in 12 countries and more than 100 proposals in development across the world. Social Impact Bonds enable investors who want to align their financial returns to their values and to play a pivotal role in introducing private capital and discipline into innovative social programs that improve lives."
Social Finance Israel is launching the first Social Impact Bond with the Clalit and Leumit Health Management Organisations. Based on international studies, it has developed tailored interventions for Israeli pre-diabetics that include regular meetings with dieticians, group exercise and educational courses in healthy living. Similarly, activity trackers and other tech supports might be introduced to monitor their progress. The interventions will last for two years and participants on the program will be supported for a further three years.
Prof. Itamar Raz, Chairman of the Israeli Diabetes Council, has lead an international advisory board that oversaw the intervention embedded in the Social Impact Bond. Professor Jaakko Tuomilehto, the world renowned expert on Diabetes is also on the advisory board. Among the project initiators, and leading the perspective of the HMO’s in the design of the intervention and model, was Prof. Ran Balicer, doctor and researcher, founder and Director of the Clalit Research Institute.
Diabetes is an epidemic that crosses national boundaries and populations. It is expensive, with medical costs in the US reaching $10,902 mean health expenditure per person with diabetes a year. Aside from the concentration of diabetics in South East Asia and their genetic disposition to the disease, diabetics globally share similar characteristics and the lifestyle interventions should have a similar impact. The Israeli Diabetes Social Impact Bond is the first of its kind and the model can be replicated across the world. By launching a pilot with a large and diversified population in Israel, the Social Impact Bond will establish an evidence base for the lifestyle interventions and generate data on the impact of the program.
Yaron Neudorfer, CEO of Social Finance Israel: “If the pilot is successful, the Israeli health system will have sufficient tools to scale diabetes prevention to many more people. This innovative public-private partnership, driving government resources toward effective social services via an outcomes-based contract, could and should be tailored to the needs of governments everywhere. One of the greatest achievements in the design of the Social Impact Bond is bringing health and welfare public bodies together to tackle the entire lifecycle of the disease and its complications. By analysing extensive data from the HMOs to clearly identify and accurately predict the transition to Diabetes, Social Finance has created a very precise program for each individual patient. I am confident that we can achieve great results and hope that others will follow our lead.”
Caroline Ansty, Head of UBS and Society: “Global Head UBS and Society, Caroline Anstey: As part of the UBS and Society program, offering innovative financial instruments is part of our commitment to help our clients to invest for social impact. We aim to pilot innovative financial solutions to address societal issues, thereby testing what works with the potential to catalyze systematic change. These solutions can then be scaled up and replicated. By focusing on outcomes, a social impact bond re-aligns policy in favor of prevention rather than crisis management. Social impact bonds foster partnerships and pool resources across the private, public, and non-for-profit sectors – as the world's largest wealth manager we have the networks and financial expertise to foster impactful partnerships."
The program will launch in July, and will operate in 3 annual cohorts. The first results will be measured 2 years after the beginning of the first cohort.