Region Stockholm is first out with a Health Impact Bond with a new funding model

Region Stockholm has the ambition to develop their work in social entrepreneurship and social financing. This has now resulted in a decision to fund a type 2 diabetes prevention pilot with a Health Impact Bond. This is a bond where repayment and interest are linked to how successful the preventive work is. The funding model that has been developed by Region Stockholm is thought to be the first of its kind, anywhere in the world.

On a global scale, the healthcare sector is facing numerous challenges with ageing populations, significant increases in lifestyle diseases and chronic illness, rising medical costs a need to find new ways to structure care. The majority of healthcare costs go to providing care to those who are already ill. Only a small amount is allocated to preventive measures aimed at reducing the inflow of new patients.

“Moving from reactive health care to prevention is not a simple process. Decisions to invest in preventive healthcare models are complicated by a range of challenges. The purpose of this project has been to develop a model for more efficient steering and financing of prevention efforts, particularly adapted to the major life style diseases, such as type 2 diabetes. In the long term, this will enable us to reduce human suffering as well as to reduce costs”, explains Magnus Thyberg, Head of Department at Region Stockholm’s Public Healthcare Services Administration.

The provision of care related to type 2 diabetes currently costs Region Stockholm around SEK 2.5 billion every year. The allocation of preventive resources at an early stage helps to prevent citizens from falling ill, and people become activated in safeguarding their own health instead of relying on being cared for by the healthcare system. Over time, a greater focus on prevention can significantly reduce Region Stockholm’s healthcare costs and thereby free up major resources that can be used for other health care purposes.

According to scientific studies, lifestyle-promoting efforts of the type that the Health Impact Bond will fund can result in a risk reduction of 58%. This represents a potential to avoid healthcare costs of approximately SEK 1.4bn a year if Region Stockholm at a later stage should choose to scale up this intervention and offer it to all prediabetics in the county.

“The project is financed by a Health Impact Bond – something that Region Stockholm is the first to implement. By linking repayment and interest to the success of the prevention programme, the model achieves an element of risk-sharing. In the longer term, a Health Impact Bond represents an opportunity for efficiency improvements within Region Stockholm”, says Katarina Holmgren, Chief Financial Officer at Region Stockholm.

“Just as Region Stockholm has played a leading role in the work with green bonds, we also have the ambition of being forward-thinking in the fields of social entrepreneurship and social financing. We have therefore developed a Health Impact Bond, which has a unique financial structure”, says Frida Korneliusson, CEO of Region Stockholm Treasury.

The prevention programme uses a digital tool to gather a number of health services and providers, and also the help of health coaches to personalise a prevention programme for each individual. Tied to the digital platform are a number of service providers in various areas such as physical activity, diet, sleep, stress, etc. As part of this project, Region Stockholm has collaborated with Skandia (as the investor) and SEB (which developed the financial model). Health Integrator is the service provider for the digital platform.

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