A New Source of Capital for Star Ratings and Clinical Innovations

For years, every conversation we’ve had with clients about improving Star Ratings and launching clinical innovation projects involved a common barrier to progress: money. So for months, we have been working to bring a new source of capital to the health plan and provider industries to help drive this evolution, called social impact investing. We are getting some early successes and can ask, “If money was no object, what initiatives would you chase?”

Social impact investing is a British concept that landed here in the US around 2012. Large investment banks and retirement and pension funds are now setting aside growing amounts of cash to fund projects to accomplish social good. This year in the US, it’s on the magnitude of $20 billion. To qualify, projects must:

  • Offer measurable, quantifiable results
  • Return 5% interest on principal committed over a 7-8 year period. Savings are often accrued through reduced inpatient utilization; in some projects, increased revenue (such as from improved Star Ratings or risk adjustment data submissions, or even from leases on certain projects involving real estate) can also be leveraged
  • Involve a manageable number of stakeholders and ideally be scalable
  • Look good in an annual report to investors.

Social impact bonds are often structured like this:


Social impact investors haven’t jumped into the healthcare space much – yet. That’s where we come in. We can help refine ideas and concepts, conduct feasibility analyses on your approach, and connect you to interested social impact investors.

With relatively cheap capital now available, health plans and providers can think big and creatively. Because Star Ratings are evaluated and measured annually, just about anything in Star Ratings, from improving the member experience to drug adherence, is fair game. Innovations around social determinants of health are also fertile soil. We are working with clients on bonds or loans to address:

  • Food security for low-income and recently discharged seniors
  • Transportation for vulnerable and/or homebound members
  • Loneliness and isolation reduction projects
  • Comprehensive diabetes care management
  • Opioid treatment availability on demand
  • Adult day care and nursing home avoidance/diversion
  • Developing physical health care campuses to help improve access to care for the underserved
  • Prescription drug adherence for chronic conditions
  • Pre-hospice services and end of life care in home and community-based settings
  • Development of patient-centered medical homes and retraining/retasking medical management teams

It was reported just yesterday that many Blue Cross-Blue Shield plans will begin offering rides to doctors’ appointments via the ride-sharing app Lyft; we imagine many of those rides will end up being financed by social impact bonds.

We view this capital as a game-changer for Medicare Advantage and Medicaid plans to invest in expensive and transformative projects. Contact me or Gorman Health Group Senior Vice President of Stars Melissa Smith at msmith@gormanhealthgroup.com to discuss how we can help your organization get into the social impact game.



The Gorman Health Group 2017 Forum recently took place in New Orleans with over 200 of our closest clients and partners. John Gorman provides key takeaways from the event here. Make sure to join us next year!


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1 Comment
  1. This article on social impact investing is a great opportunity for th e Gorman Group to be a facilitator for greater engagement/education for its healthcare clients and national community based organizations like Meals on Wheels, National Council on Aging, National Association of Area Agencies on Aging, etc. The more your members understand the value impact of the Social Determinants of Health on their quality, performance and financial outcomes.

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