EuroHealthNet Guide for Financing Health Promotion
2.2.4 Outcome-focused payments
Across Europe, there is growing interest in linking public funding to measurable results rather than services provided, especially in areas like health promotion and disease prevention. These areas are notoriously hard to finance because their most significant benefits like reduced chronic disease, longer life expectancy, and lower healthcare costs often only become visible years later, while political and budget cycles operate in the short term.
Outcome-focused payments represent a shift in how services are funded: instead of paying for activities delivered, public authorities pay for the agreed outcomes, making prevention more accountable and effective.
What can outcome-focused payments look like?
Several models fall under the umbrella of outcome-focused payments, including Social Impact Bonds (SIBs), Social Outcomes Contracts (SOCs), payment-for-results schemes, and Social Impact or Outcome Funds. Each follows the same core principle: public money is used more effectively by rewarding what works, but the way they are structured varies.
| Model | Definition and Purpose | Funding structure | Role of Investor | Scale |
|---|---|---|---|---|
| Social Impact Bonds (SIBs) | A SIB is a contract between a public authority and private or philanthropic investors. It is a performance-based loan tied to social impact rather than financial guarantees. | The investors provide upfront funding to implement a service, and the government repays them—often with a return—only if specific, pre-agreed outcomes are achieved. | Provides capital and absorbs the loss if outcomes are not met. | Medium-scale projects |
| Social Outcomes Contracts (SOCs) | Similar results-based principle as SIBs but often allow for more flexible funding arrangements; strong co-design in early stages. | Include partial upfront payments or a mix of outcome- and activity-based funding. | Involved early in the development stage and working in close collaboration with public authorities, helping to align incentives and improve implementation. | Suitable for complex or long-term interventions. |
| Payment-for-results | Direct accountability of providers for delivering results. | Governments pay providers only when results are delivered. | None, no third-party investors. This simplifies administration and reduces transaction costs. | Smaller-scale or early-stage projects. |
| Social Impact/Outcome Funds (SOFs) | Pool resources for multiple outcome-based initiatives. | Aggregated capital from multiple investors/funders. | Indirect, contribute to pooled portfolio. | Can support scaling up successful interventions while reducing risk through diversification. Can focus on larger-scale projects such as housing, inclusion or health equity. |
Social impact bonds in practice
Social impact bonds are currently the most established model. At the end of 2025, there were 320 social impact bonds in over 40 countries worldwide, mobilising over €734 million of investment into tackling complex social issues such as refugee employment support, loneliness among older people, rehousing and reskilling homeless youth, and diabetes prevention.
Considering the potential risks of social impact bonds
While SIBs can introduce innovation into health-promotion financing, they carry risks. Poorly designed contracts may encourage cherry-picking or creaming, which is targeting the 'easiest' participants or results at the expense of harder-to-help groups. This type of perverse incentive can be avoided through careful design and service specification. SIBs should complement, not replace, mainstream public funding and government responsibilities.
SIB’s main value is to pilot interventions, demonstrate effectiveness, and help secure longer-term public financing by sharing initial risk with private investors.
Create a box where we link readers to information from brief 2 (which will be one of the how to get started pages): how to define the health problem and choose the right intervention, especially step 4 - apply an equity and ethical lens
Shared features of outcome-focused payments
Despite their structural differences, these outcome-focused payment models share key features.
- They prioritise prevention by funding early interventions such as reducing chronic disease or improving mental health that improve wellbeing and can lower long-term public costs.
- They also tend to shift financial risk from governments to investors or service providers by linking payments to results.
- Lastly, these models depend on clear outcome definitions, robust data, and independent evaluation, which helps to strengthen accountability and inform future investment decisions.
When well-designed and appropriately used, outcome-focused payment models offer a practical tool to attract additional investment, stimulate innovation, and improve accountability in the financing of health-promoting services.
They are particularly relevant where new approaches are being tested, or where governments want to incentivise measurable improvements without assuming all of the financial risk upfront.
related case studies spinning cards
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