Santa Clara County Partners in Wellness

Last updated Wednesday, November 8, 2017

Quick Facts

Current Phase
Issue Area
Project Scope

This Pay for Success project is designed to serve adults with severe mental illness who frequently utilize the County of Santa Clara’s emergency and inpatient psychiatric services. Telecare Corporation, the service provider for the project, will use an Assertive Community Treatment approach to provide comprehensive services, including behavioral health interventions and counseling, care coordination, supportive social services and connections to housing to at least 250 individuals with acute mental illness. The goal of the project is to improve participants’ wellness and reduce costly hospitalizations by providing care in community-based settings. This will be the first Pay for Success project focused on mental health outcomes with success payments generated through cashable savings. 

Analysis

  • Market Overview

    • Year Launched
      2017
    • Service Delivery Term (Years)
      6
    • Motivation for Project
      In Santa Clara County, a small subset of severely mentally ill residents frequently cycle in and out of the County's psychiatric emergency room and inpatient facility. These individuals are also at risk for homelessness, incarceration, and extended psychiatric hospitalizations.
    • Project Objective(s)
      Reduce utilization of costly County emergency, inpatient, and contracted psychiatric services and jail days; improve or maintain health and wellness
    • Individuals Served
      250
    • Geography
      Santa Clara County, CA
    • Issue Area
      Mental Health
    • Initial Investment ($ millions) [Note 2]
      $11.20 [Note 3]
    • [2] This category captures the initial private investment raised to support the project that has the potential to be repaid if the project achieves its pre-determined outcomes. Many projects, particularly those in the supportive housing and health arenas, leverage existing public resources, such as subsidized housing and health insurance, to achieve program impact; the value of these resources is not included in these dollar values but are discussed in more detail in Sections 7, 8 and 9 of this report.
    • [3] Represents PFS Contract Expenses that will be paid by the County to Telecare (service provider) if project achieves its target level of success across the six year service delivery term.
  • Project Partners

    • Service Provider(s) [Note 1]
      Telecare Corporation
    • Payor(s) [Note 2]
      Santa Clara County, California
    • Transaction Coordinator(s) [Note 3]
      Third Sector Capital Partners
    • Evaluator [Note 4]
      Stanford University, Department of Psychiatry and Behavioral Sciences
    • Validator [Note 5]
      None
    • Project Manager [Note 6]
      None
    • External Legal Counsel [Note 7]
      Fenwick & West LLP
    • Technical Assistance Provider(s) [Note 8]
      Palantir Technologies
    • [1] Delivers program interventions to target population over the course of the PFS contract
    • [2] Makes payments when pre-determined outcomes have been met
    • [3]Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
    • [4] Design and implement plan for determining whether outcomes have been met
    • [5] Verify accuracy of data used in evaluation plan, or evaluation plan itself
    • [6] Intermediary during service delivery phase, and/or fiscal sponsor for project funds
    • [7] Provide assistance in drafting, reviewing and negotiating PFS contracts
    • [8] Provide support and expertise to project stakeholders in the project development and/or project implementation phases
  • Evidence and Program Design

    • Service Intervention(s) Model and/or Type
      Assertive Community Treatment (ACT) / Full Service Partnership (FSP) services with housing supports
    • Evidence base for intervention
      Provider performance data [Note 8] [Note 10]
    • Has effectiveness of the intervention for PFS project target population been evaluated?
      Yes
    • Has the service provider provided this intervention previously?
      Yes
    • Is PFS project: Scaling an existing intervention by replicating at a larger scale? Demonstrating the effect of a new program model or combination of services? Transplanting an existing intervention(s) to a new target population and/or service delivery setting?
      Demonstrating; Transplanting
    • [8] The evidence base for assertive community treatment is summarized by the Washington State Institute for Public Policy, which includes a cost-benefit analysis based on studies using a comparison and treatment group, available at: http://www.wsipp.wa.gov/BenefitCost/ProgramPdf/283/Assertive-Community-Treatment. These studies are not all specific to a chronically homeless population.
  • Evaluation

    • Evaluation Design Methodology
      RCT
    • Data Source(s) for Evaluation
      Santa Clara County
    • Outcomes Tied to Success Payments
      1) Reduction in clients' utilization of costly emergency, inpatient, and contracted psychiatric services and jail days
    • Outcomes Tracked, Not Tied to Success Payments
      Client's health and well-being as compared to a similarly situated control group of clients not receiving care
    • Length of Evaluation Period
      6.5 years
  • Service Provider Characteristics and Service Delivery

    • Single or multiple service providers?
      Single
    • Service provider type(s) (nonprofit, government, private)
      Private
    • Service provider OR site selection method
      RFP
    • Service Provider Experience with PFS Intervention
      Experience with ACT; currently operates 90 programs serving individuals with severe mental illness
    • Referral Method for PFS Target Population
      Eligible participants referred by Behavioral Health Services Department
    • Did the project have a ramp-up phase? (Y/N; brief description)
      Yes: ~3 month ramp-up period prior to project launch
  • PFS Contracting and Governance

    • Operational Oversight Structure [Note 1]
      Operating Committee includes 1 County representative and service provider staff
    • Frequency of meetings and/or reports
      Monthly
    • Executive Oversight Structure [Note 2]
      Executive Steering Committee includes 2 county representatives and 2 service provider representatives
    • Frequency of meetings
      Quarterly
    • Investor role in project governance?
      Not available
    • Frequency of reporting to investors
      Not available; quarterly reporting to the committees
    • Non-standard Contract Termination Events [Note 3]
      1) Insufficent referrals/underenrollment; 2) Insufficient supply of adequate housing; 3) Substantial reduction in Medi-Cal funding
    • Appropriations Risk Mitigation Strategy [Note 4]
      Annual appropriations part of County baseline budget; service provider can terminate contract for cause in case of annual appropriations failure
    • [1] Committee or working group involved in regular and/or day-to-day monitoring of project progress
    • [2] Oversight and decision-making body for PFS project
    • [3] Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
    • [4] Means by which to mitigate risk that funding is not available for investor repayment
  • Investors

    • Senior Investor/ Lender and Total Senior Investment ($MM)
      None
    • Subordinate Investor/ Lender and Total Subordinate Investment ($MM)
      None
    • Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]
      Telecare ($1.4)
    • Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2]
      None
    • Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]
      None
    • Guarantor and Guarantee ($MM) [Note 4]
      None
    • Illinois Dually-Involved Youth Project
    • [1] Deferred fees are delayed payments for the services provided by service providers, transaction coordinators and/or project managers. Deferred fees are one way of structuring projects so that more stakeholders have a financial interest in ensuring project success.
    • [2]Philanthropies can use either their regular grant making protocols, or protocols for program-related investments (PRIs), to contribute to PFS capital stacks. If a foundation does not use a PRI, their investment may be structured as either a loan or a recoverable grant. The distinction between the two is in the expectation of repayment. A loan, even if from a philanthropic source, is expected to be repaid, and structured accordingly. A recoverable grant does not bear the same expectation of repayment.
    • [3] Non-recoverable grants are traditional grants contributed to capital stacks; if the project is successful and generates full repayment, the non-recoverable grants can remain with the service provider or project manager, or be recycled by the original funder.
  • Basic Repayment Structure

    • Initial Investment ($Millions)
      $11.20 [Note 1]
    • Maximum Repayment Funds Committed by Payor ($Millions)
      $12.60 [Note 2]
    • Full service delivery term (years)
      6
    • Full repayment period (years)
      6.5
    • Interim outcomes reported? Tied to payments?
      Yes/Yes
    • Sustainability/ Recycling of Funds
      None specified
    • [1] In total, the County will allocate ~$12.4M to success payments with the remaining success payment funds coming from grant awards.
  • Detailed Repayment Terms

    • Interest
      Not applicable
    • Trigger for initial repayment of principal [Note 1]
      Not applicable
    • Threshold for full repayment of principal
      Not applicable
    • Threshold for full repayment of principal plus maximum success payments
      Not applicable
    • Repayment timing
      Not applicable
    • Return to Investor [Note 2]
      Not applicable
    • Success Payment to Other Stakeholders? [Note 3]
      Yes: Service provider [Note 11]
    • [1] Initial repayment does not equate to full principal return. Investors may recover only part of their principal if projects do not meet a certain level of success.
    • [2] There is no standard methodology for calculating investor return. These numbers are what is publically reported, and comparing from one project to another may not be an apples-to-apples comparison for the reason of potentially different calculation methodologies. Calculation methodologies may be provided in investor agreements, which are not available publically and were not available for this report’s analysis.
    • [3] Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
    • [11] Due to this project not having investors, success payments will go to the service provider, Telecare.
  • Project Costs

    • Project Development Costs Not Covered by PFS Capital Raise
      Legal services; Transaction coordinator services; Evaluation services; project ramp-up period
    • Funding source(s) for project development costs, if any
      Pro bono legal support; the Health Trust and the City of San Jose; The Sobrato Family Foundation; California Pay for Success Initiative; California HealthCare Foundation; Nonprofit Finance Fund through the Corporation for National and Community Service’s Social Innovation Fund
    • Project Implementation Costs not covered by PFS Capital
      $16.9 million Medi-Cal agreement
    • Funding sources for implementation costs not covered by PFS capital
      Santa Clara County; State of California