Voices from PFS Pioneers: Santa Clara County Acute Mental Health Needs Project (Nonprofit Finance Fund)

By Nonprofit Finance Fund

Nonprofit Finance Fund (NFF) spoke with Santa Clara County, Third Sector Capital Partners, Inc. (Third Sector) and Telecare about the Acute Mental Health Needs Project. You can read more about the project here. This blog is part of an interview series with selected project partners from our Social Innovation Fund transaction structuring competition.

Nonprofit Finance Fund: Tell us about the genesis of this Pay for Success (PFS) project. What was the original impetus? Who originally got interested in PFS? How were the stakeholders who have been moving the project forward brought together originally?

Santa Clara County: Our interest in Pay for Success grew from a community-based exploration of the feasibility of local PFS implementation. This feasibility study was initiated by Catholic Charities of Santa Clara County and Step Up Silicon Valley, with technical assistance from Third Sector and funding from The Health Trust. We worked closely with these partners to fully understand the costs and benefits of PFS for the County, to engage with potential service providers and funders, and to identify areas where PFS might be best suited to address the County’s social service challenges. More than ten potential program areas were assessed to determine the ability of a PFS project to generate both cashable savings for the County and substantial, measurable improvements in social outcomes.

Reflecting on our deep commitment to improving outcomes for highly vulnerable populations and creating sustainable, long-term solutions to persistent social challenges, the County Board of Supervisors chose to move forward with two PFS projects. These projects will improve outcomes for chronically homeless individuals and those suffering from acute mental illness. In April 2013, with support from the Sobrato Family Foundation and the Silicon Valley Community Foundation, the County formally engaged Third Sector to finalize and implement the projects.

We were later awarded a grant from the James Irvine Foundation and Nonprofit Finance Fund through theCalifornia Pay for Success Initiative to support constructing PFS contracts for both projects. Project Welcome Home, which launched in summer 2015, positions the County to measurably benefit the extremely vulnerable, chronically homeless population and to ensure that the limited supply of housing resources in the county is deployed efficiently.

The Acute Mental Health Needs project will serve a significant number of adults in Santa Clara County who suffer from severe mental illness and struggle to achieve stability through the current continuum of services. These individuals frequently cycle in and out of the County’s emergency and inpatient mental health facilities. This PFS project offers the opportunity to significantly improve care for this population, to pay only for a high level of performance, and therefore to preserve our scarce resources by generating savings for the County.

The California Pay for Success Initiative continues to support our work on the Acute Mental Health Needs project. In the fall of 2015, we were also pleased to receive support from the Social Innovation Fund, through NFF’s Transaction Structuring Program, to support Telecare’s participation in the project development process for this second PFS project.

Third Sector: As mentioned, we were initially engaged by Step Up Silicon Valley to conduct an in-depth feasibility and provider landscape analysis with the County. We identified suitable Pay for Success target populations and potential interventions to serve these populations, and quantified potential costs and savings for the County.

During the feasibility process, homelessness and mental health emerged as two clear priority issue areas amongst County and community leadership. Several innovative programs targeting these populations had already coalesced in Santa Clara, presenting the opportunity for PFS to build upon existing work. Over the subsequent months, Third Sector and the County collaborated to refine the target populations, determine promising interventions, and identify high-performing service providers for both PFS projects.

For the Acute Mental Health Needs project, Third Sector and the County engaged local service providers, service provider networks, current County mental health staff, and other County partners in the mental health community to determine the need and potential solutions. Multiple sources indicated that a Full Service Partnership (FSP), could generate significant improvements for clients and potentially produce savings to the County. Hallmarks of a FSP include the provision of intensive wrap-around social services and care coordination in a community-based, rather than an institutional, setting.

Based on these learnings, Third Sector helped advised the County to structure a competitive Request for Proposal (RFP) process that led to the selection of Telecare as the service provider.

NFF: An innovative element of this project is the use of a private, rather than a public or nonprofit, service provider. Can you tell us a bit about the selection of Telecare? Did you discuss having this opportunity open to private providers from the start? If so, what was the discussion like? What are the benefits and/or challenges of working with a private provider?

Santa Clara County: To ensure the selection of a highly qualified service provider, we intentionally wrote the RFP to provide applicants flexibility in crafting their proposals. This decision encouraged a diversity of responses from all types of organizations—public, private and nonprofit—and provided us with a varied, competitive pool of proposals to choose from.

Based on our experience with mental health service providers here in the county, we prioritized several criteria during the service provider selection process, including: experience offering an evidence-based service delivery model; a proven track record serving a similar, challenging population of severely mentally ill individuals; and demonstration of flexibility, resourcefulness, and a collaborative approach that we think is required to operate in a complex environment. Moreover, the County’s experience working with Abode in Project Welcome Home highlighted the importance of attracting a service provider with committed senior leadership resources, the ability to move quickly, and previous experience scaling programs to new areas.

These qualifications and several others, including Telecare’s prior experience working with government agencies, led the County to select Telecare. As a private entity, Telecare possesses strong organizational resources and a broad geographic footprint, increasing the potential to replicate and scale this PFS program in other jurisdictions.

Telecare: Telecare was excited to respond to the RFP for several reasons.

First, we were eager to demonstrate that a flexible, individualized, population management approach is more clinically effective for persons with serious mental illness and more cost effective for public systems of behavioral health care than repeated hospital admissions and emergency psychiatric visits.

Second, the PFS approach to funding would allow more innovation and ingenuity in program design as long as, in the end, the cost savings could be achieved.

Third, and finally, we know that health care in general is moving away from volume-based payments to models that reward quality and outcomes. We see PFS as an opportunity to be at the forefront of this trend.

We were confident we could put forward a compelling and responsive proposal because of our extensive experience working with County systems of care and our track record of helping to reduce high cost utilization through community-based wrap-around services.

NFF: As you know, the road to launching a PFS project is a long one! Can you share with us what the biggest challenge to date is/has been? How are/have you and your partners approaching/approached this challenge?

Santa Clara County: The County is keenly aware of the significant amount of time required to construct PFS projects. Minimizing the need to “reinvent the wheel” for each project remains a significant challenge, despite the increasing number of launched projects. To increase efficiencies, the County intends to leverage contracting templates and learnings from Project Welcome Home for the Acute Mental Health Needs project.

Another key focus for us is the need to construct programs in the County that, if proven successful, can easily be replicated or scaled up without additional PFS financing or complicated, often costly evaluation structures. In Project Welcome Home, for example, the County was very careful to include a rigorous Randomized Control Trial (RCT) evaluation, but also create a success payment metric that operates independent of the RCT. This ensures that the overall efficacy of the program in delivering positive outcomes can be measured without the need to continue the RCT evaluation. This will allow us to easily extend and scale the program if it is successful. We intend to implement a similar methodology in the Acute Mental Health Needs project.

Third Sector: A common challenge in exploring PFS is the significant level of staff time that project construction requires. The size and complexity of the environment that PFS projects operate within may add to this issue as there is a need to have focused, targeted conversations while maintaining familiarity with all key stakeholders.

While technical advisory can facilitate the process, the commitment of senior government and nonprofit leadership remains essential to making decisions swiftly and expediting project construction. Creating a smaller, core team of key decision-makers is one helpful practice to speed the pace. Effective project management and communications structures are also important. As more PFS projects launch, best practices, such as these will continue to emerge and be refined, helping to alleviate the staff time required for PFS construction.

Telecare: Any provider wanting to do a PFS project must be able to commit significant staff resources, in addition to having a champion on the executive team. The project build process is very involved, but it is a healthy process that will yield a strong and well-designed program. There is a lot of internal coordination to manage, in addition to collaboration with other project partners. It has forced us to look at target population, responsive clinical models, budgeting, and performance measures in ways that will benefit our organization - and we hope also the system of care - beyond PFS.