Pay for Success in Health Care

Health-related PFS efforts to date are largely still conceptual or in planning. Of the 19 PFS projects that have launched in the United States since 2013, only one, the Nurse-Family Partnership project in South Carolina, includes health care system funding as part of the PFS transaction. No projects that have launched include Medicare or private health insurance funding. However, many PFS projects currently in development are designed to repay investors through health care system savings. Many of these projects aim to reduce health care use among high-cost or high-need patients by improving socioeconomic and community factors that can lead to poor health, such as homelessness, poor housing quality, food insecurity, or social isolation.

Although PFS may seem a promising route to finance programs aimed at the social determinants of health, the health care system presents significant challenges as a PFS end payor. Although many of these challenges can be overcome, health care-related PFS projects should expect a long and complex planning process and involve government partners and evaluators early to maximize chances of success and replicability. This brief explores each of these challenges and provides recommendations on the path forward for organizations interested in pursuing health care–related PFS projects.