Among the thousands of events at the Legislative Office Building in Hartford, once in a while a gathering of experts congeals ideas in a way that reverberates for years.
That happened in June 1997, when a group of corporate executives and Michael E. Porter, a Harvard Business School expert on industry clusters, presented six clusters that would come to define economic development in the state — with plans to expand research at the UConn Health Center, for example.
It happened again on Tuesday as the Connecticut Association for Human Services and other groups brought in experts on private funding of social and health services — with the buzzword social impact bonding. It’s clear this relatively new instrument, shifting risk of government programs onto private investors and agencies, is one of many ways around the years of fiscal crises we’re facing and will continue to face.
Social impact bonds and pay-for-performance deals between government and private service providers are part of a broader way of thinking about the structure of public agencies and private companies. The many strands of social enterprise, in which firms organize around goals other than shareholder profit, are part of a related trend.
My column today scratches the surface of social impact bonding. In addition to the negotiations underway between the state and a Boston firm, state Social Services Commissioner Rod Bremby said he’s interested in using this structure to advance preventive health programs that may not otherwise get off the ground.
And a Simsbury firm, Collective Health LLC, founded by Rick Brush, a former Cigna executive, is working on several social impact bond projects, including one in Fresno, Cal. to reduce asthma, which is endemic there.
So, just as we got used to industry clusters as part of the landscape, we’ll see more about social impact bonding for years to come, spurred partly by Obamacare. And not by coincidence, Social Finance, the Boston firm that’s in talks with Connecticut, has on its board one of the world’s foremost experts on competitive strategy — Michael E. Porter.