1. Pay for Success: Innovative Financing to Improve Child Outcomes
Jennifer Tschantz; Early Childhood Research to Practice Team, OSEP
Bryan Boroughs; Vice President and General Counsel; Institute for Child Success
Donna Spiker; DaSy & Maureen Greer DaSy

2. Agenda Audience check in Pay For Success (PFS) Basics
What is PFS?
Why are we talking about it?
PFS Benefits and Lifecycle
PFS – Real Example in Early Childhood
Nurse Family Partnership
Spartanburg
Discussion

3. How Much Do You Know about PFS?
Little to nothing, I’m here to learn!
Somewhat familiar
Very familiar
Am involved in a PFS project

4. What is Pay For Success? An innovative contracting model that . . .
Can leverage philanthropic and other private dollars to
Finance services for a target population that . .
Measurably improve the outcomes for the individuals and communities and, where
Government can act as the payor (spends taxpayer dollars wisely)

5. What is Pay For Success?
Government contracts to pay for agreed-on, measurable RESULTS
An impartial evaluator assesses whether results are achieved
Service providers expand effective programs with support from foundations or impact investors
This allows government to better partner with and leverage the resources of philanthropic and other investors to help drive evidence-based innovation and invest in what works.
Clearly defined and measurable goals for services are determined upfront
Private funders pay upfront cost of services
Government pays back private funders, with a reasonable return, only if goals are achieved
 It can also be used to test innovative, promising interventions.

6. Benefits of Pay For Success
Remediation
Prevention
Measuring Activities
Measuring Outcomes
Effective pilots
Funding what works, at scale
Original text:
Shifts funds from remediation to prevention in the context of finite resources
Shifts focus from activities to measuring and improving outcomes
Increases funding for what works - Brings private funders to education/social services sector that might not have previously participated at scale

7. Benefits of Pay For Success
Provides for an evaluation– PFS projects include a multi-year rigorous evaluation
Increases the body of knowledge
what works and what doesn’t (at scale)
with innovation
Relies on robust data systems
baseline outcomes for target population
program impact
value of improved outcomes to government and society
Increases transparency and accountability
Additional benefits

8. Why Engage in Pay For Success?
Government
Improved accountability
Efficient use of limited public funds
Leverage private capital
Reduce risk
Pay for what works
Service Providers
Scale or expand programs to meet the need
Resources for what works
Focus on improving outcomes for vulnerable populations
Private Funders
Impact investing
Funding what works
Encourage innovation and public accountability

9. When Does Pay For Success Make Sense?
PFS is in the early states of development
Not every area is suitable for PFS
PFS is NOT a silver bullet! It is one tool in the toolbox.
Additional benefits

10. Lifecycle of a PFS Project
Education
Feasibility Study
Transaction Structuring
Implementation
Learn about PFS
Analyze Issue Area Landscape
Explore Data
More…
Identify Community Needs / Capacity
Analyze Possible Interventions
Estimate Value of Intervention
More…
Specify Evaluation Design
Set Outcomes and Payment Terms
Raise Any Upfront Capital
More…
Deliver Services
Conduct Evaluation
Make Outcomes Payments?
More…
Education - Explore Issue Areas (e.g. Children with Disabilities) & Explore Data Availability (Deep data dive)
Feasibility study: (Mention this is what ED’s OEL’s competition is funding)
Evaluates viability of PFS
Analyzes benefit of an intervention
Identifies outcome measures
Determines public sector and community value (cash savings, cost-avoidance and societal benefit.)
Determines cost-benefit of intervention
Identifies potential partners for PFS partnership

11. South Carolina Nurse-Family Partnership Pay for Success Project
Prenatal & newborn home visits to first-time low-income moms
Enroll 3,200 additional moms over 4 years in 29 counties
Largest PFS investment yet: $30 million
$13 million: Medicaid funds via 1915(b) waiver
$17 million: philanthropic funds:
BlueCross BlueShield of South Carolina Foundation
Greenville County, SC First Steps
The Duke Endowment
The Boeing Company
Laura and John Arnold Foundation
Consortium of private funders
Let’s walk through a recently announced deal around child health and welfare. ICS helped in the early stages of developing the SC project, conducting the feasibility study that served as a catalyst for it.
Nurse-Family Partnership (NFP) provides evidence-based prenatal and newborn home visits to first-time, low-income mothers. Registered nurses conduct home visits from early pregnancy through the child’s second birthday and support first-time moms to have healthy pregnancies, become knowledgeable and responsible parents, and give their babies the best possible start in life.
LOTS of research, considered an evidence-based model
To be served by NFP, mothers must be within 28 weeks of their pregnancy; must be first-time moms; and must be low-income
Evaluation: RCT.
$17 million: philanthropic funds:
$3.5 million, BlueCross BlueShield of South Carolina Foundation
$8 million, The Duke Endowment
$800,000, The Boeing Company
$700,000, Greenville County, SC First Steps
$491,000, Laura and John Arnold Foundation
$4 milllion, Consortium of private funders
$13 million: Medicaid funds
Via a 1915(b) Medicaid managed care Waiver, awarded to the South Carolina Department of Health and Human Services by the federal Centers for Medicare and Medicaid Services – “waiver seeks to provide enhanced prenatal, postpartum, and infant home visit services that are not otherwise available under the State Plan. These services would be available to dually eligible beneficiaries under the waiver qualifying for the HV Pilot Project.“
Essentially, use of more cost-effective medical care provides enrollees with additional services. The savings must be expended for the benefit of the Medicaid beneficiary enrolled in the waiver.
The State Plan currently provides for postpartum home visits at a rate of $96.64 per home visit. However, due to the significant enhancements, additional services and expanded scope of the home visits to both the mother and the child under the HV Pilot Project, the encounter rate for each home visit provided to participating beneficiaries will increase to $ per home visit
SCDHHS intends to contract with all nine (9) of the existing NFP affiliated provider agencies in the state, which include four (4) South Carolina Department of Health and Environmental Control public health 12 departments, three (3) healthcare organizations, one (1) federally qualified health center and one (1) rural health clinic.
Control group “eligible to receive standard State Plan home visit services as medically necessary.”

12. South Carolina Nurse-Family Partnership Pay for Success Project
Payment outcomes: $7.5 million in success payments possible
Preterm births
Child ER use due to injury
Healthy birth spacing
Moms served in high poverty areas
Reduction in preterm births
Reduction in child hospitalization and emergency department usage due to injury
Increase in healthy spacing between births
Increase the number of moms served in ZIP codes with high concentrations of poverty
STOP FOR QUESTIONS

13. Hello Family Pay for Success Project

14. Hello Family
A proposed continuum of support for families in the City of Spartanburg
Home Visiting
(prenatal/newborn)
Parent Education & Support
(children ages 0-5 years)
Early Learning
(ages 6 weeks – 4 years)
BirthMatters
Low-income mothers under age 24; prenatal
PFS
Triple P
Positive Parenting Program
PFS
Expansion of Quality Counts
Salary Supports
Family Connects
Universal access; newborn visits
PFS
Text4Baby
&
Ready Rosie
Additional Slots in Quality Centers
Nurse-Family Partnership
Expanded via SC PFS project
Model Early Learning Center
PFS
= to be financed by Pay for Success transaction, separate from statewide PFS deal, with Nonprofit Finance Fund development support

15. Potential Pay for Success Outcomes
Home Visitation
Reduced cesarean birth rate
Fewer preterm births
Fewer low birthweight births
Fewer prolonged hospitalizations
Fewer NICU admissions
Fewer repeat pregnancies
Reduced infant hospital readmissions and emergency care visits
Reduced maternal anxiety and depression
Parent Education and Support
Reduced parental depression
Child social-emotional outcomes
Improved child behavior/reduced child problem incidents
Reduction in substantiated abuse/neglect cases
Out of home foster care placements
Emergency room visits as a result of abuse/neglect
Again, criteria for inclusion as a PFS outcome: evidence; impact outcome; measurable; timeframe
Home Visitation
Reduced cesarean birth rate (BM)
Fewer preterm births (BM)
Fewer low birthweight births (BM)
Fewer prolonged hospitalizations (BM)
Fewer NICU admissions (BM)
Fewer repeat pregnancies (BM)
Prevented infant hospital readmissions and unnecessary emergency care visits (FC)
Reduced maternal anxiety and depression (FC)

16. Early childhood investment
Potential Benefits
Birth spacing
Substantiated abuse/neglect cases
Preterm births
Foster care placements
Cesarean rate
Reduced hospitalization
Low birthweight births
Kindergarten readiness
NICU admissions
Early childhood investment
Economic development

17. A Feasible Pay for Success Project?
Currently in transaction structuring phase.
Feasibility analysis based on a hypothetical structure that would:
Implement full continuum for 5 years
Pay for outcomes in years 3-6
With payment terms that may include:
lower-risk maternal/child health outcomes,
child welfare outcomes
measures of child care quality (output measure)
economic indicators
Using a combination of government, philanthropic, and impact investment funding

18. Anticipated Costs and Return on Investment
Program
Cost, Year 1
Total, 5 Years
Continuum Total
$1,147,000
$5,556,000
Program
Return on Investment
Family Connects
$3 per $1 invested
Triple P
$9.60 per $1 invested
Doula home visiting
(e.g. BirthMatters)
$410 saved per Medicaid participant
$938 per private insurance participant*
Family Connects
A study calculated the benefit-cost ratio of $3.02, meaning that for every $1 spent on the Durham Connects Program, $3.02 were saved on emergency medical costs.
Triple P
WSIPP prepared an analysis of costs and benefits for all levels of Triple P programming in Washington State. They determined the net present value of benefits ($1,278 worth of benefits per participant) and a benefit-to-cost ratio ($9.58 benefit per $1 cost).
BirthMatters
A 2016 study, not specifically looking at BirthMatters programming but at doula services, identified a number of discrete opportunities where doula services can produce savings. Notably, this includes $ for Medicaid births and $ in private insurance births in estimated savings per birth across the states examined (Minnesota, Oregon, and Wisconsin).

19. Questions?

20. Discussion Questions
How might the two SC examples be relevant to Part C and 619 programs?
Do you see ways that early childhood PFS projects might be relevant to Part C and 619 programs?
What kinds of questions do you have about how PFS works and how is could be used for Pat C and 619 programs?