Sometimes a long read is what we need. NZNO delegate and member of the Mental Health Nurses Section (as well as NZNO president-elect), Grant Brookes talks about what’s wrong with social bonds for mental health services.

Health services funded by Social Bonds are due to open in New Zealand by the end of the year. Under the controversial new scheme, the private sector will be invited to invest in health and social services in return for “success payments” if targets are met.

ANZ Bank is behind the first of these profit-driven services, designed to get people with experience of mental illness in Wellington into the workforce. Also in the pipeline are schemes to reduce reoffending in Auckland and to “manage chronic illness” in Bay of Plenty/Lakes.

Despite inquiries from NZNO and the imminent launch, little is known about these pilot projects. “There has been a dearth of information”, says NZNO Senior Policy Analyst Marilyn Head.

Dr Charlotte Chambers, Principal Analyst for the ASMS senior doctors union, agrees. “While the minister of health remains adamant that information is readily available on the Ministry of Health’s website, there is a worrying lack of detail.”

Evaluations are therefore forced to rely heavily on recently published cabinet papers dating from 2013; here and here.

Paternalistic, not person-centred

From a nursing perspective, supporting recovery for mental health service users means working in partnership to help identify and achieve goals which are meaningful to them.

In services funded under the Social Bonds pilot, by contrast, goals will not be set in partnership. Instead they will be “selected from ideas generated by the market”.

Clients will be expected to meet the organisation’s goals, rather than the other way around.

In this way, Social Bonds create services which are paternalistic and provider-centred, rather than person-centred.

They will also be prone to the generic problems afflicting all services driven by health targets – the loss of a holistic focus as people are viewed narrowly as “prospective employees”, “offenders”, “sufferers” and so on.

Then there’s the question of whether it’s ethical for investors to speculate on the lives of vulnerable members of our community.

“The introduction of social bonds signals a dramatic change in our values around assisting people with mental health problems”, comments NZ Psychological Society Dr Kerry Gibson. “Many New Zealanders might struggle with the idea of some citizens profiting from the misery of others.”

Failing overseas

Three international examples are cited for comparison in the cabinet papers released by the Ministry of Health. Two of these have since failed.

Launched in 2010, the Peterborough Social Impact Bond was intended to reduce reoffending among a group of male prisoners in England. It was hailed as “a world leader” by the Ministry of Health.

Yet in 2014, just over half way through its seven year term, the contract was cancelled after it failed to meet its targets.

The second international example cited in cabinet papers, a scheme to reduce recidivism at Rikers Island Correctional Facility in New York, also failed to meet its target. It was announced in July this year that it too has been cancelled.

Inherent inefficiencies

The strongest local backing for Social Bonds comes from the New Zealand Initiative (a think-tank formed in 2012 when the NZ Institute merged with the Business Roundtable).

But even these right-wing lobbyists acknowledge that Social Bonds “involve multiple players, agreements and contracts, creating great complexity. As an example, the Peterborough SIB took 18 months to set up, and required the equivalent of 2.5 years of staff time and 300 hours of legal and specialist tax advice” – all in order to deliver a programme for just 936 people, which ultimately did not succeed.

This is not to mention the other private sector inefficiency – the need to divert a portion of funding away from service delivery in order to provide a profit for investors.

Finance minister Bill English has admitted that Social Bond schemes may end up costing taxpayers more.

Flawed pilot?

Although details are sketchy, there are signs that the government may be repeating some of the mistakes of its Charter Schools experiment.

Cabinet papers assure investors that “favourable terms [will be] offered by government as part of the pilot”. “Payments or contracts will be structured to ensure investors have sufficient incentive or obligation to ensure their funds remain in the services”.

In other words, it appears that the government may spend much more on the privatised model than on comparable public services, just as in Charter Schools. This would skew any evaluations of the pilot schemes against existing services.

To this end, $28.8 million has been allocated to Social Bonds pilot schemes in the 2015-16 Budget – at a time when other health services are facing cuts.

In addition, the pilots will only include “proven” services which already have “a track record of success”.

This will make it difficult to generalise the outcome of the pilots across the sector.

No independent health professionals have been consulted in the design of the pilots.

Unhealthy incentives

The cabinet papers acknowledge possible risks that “providers ‘cherry pick’ to avoid hard to reach users” and that “parties delivering outcomes manipulate results”.

This is a feature of many privatised services. Private surgical hospitals, for instance, tend to cherry pick the routine electives and leave the complex cases to the DHBs.

Private operators like Serco have been caught out repeatedly manipulating their performance data and covering up service failures, the world over.

These behaviours are incentivised when the profit motive is made central to service provision.

As the Dominion Post editorial on Social Bonds said: “There are obvious reasons for companies to massage the numbers, to push for lenient contracts, and to make worrying decisions in pursuit of targets. Social bonds smell like a gimmick. The pitfalls outweigh the prospects of a happy ending.”

Ignoring the evidence

Social bonds are touted as an innovative model for tackling “intractable” health problems.

But these problems have social roots. For example, Mental Health Foundation chief executive Judi Clements says, “The biggest issue people face trying to get into work is discrimination, and whether social bonds of themselves will enable that discrimination to be eliminated or reduced I think is a stretch.”

International evidence shows that the prevalence of problems like substance use and teenage pregnancy rates – also mentioned as possible targets for Social Bonds here – correlates with income inequality.

Rather than address this social determinant, Social Bonds reward institutions which are widely blamed for making it worse.

Overseas, the main private investors in Social Bonds are Goldman Sachs and Bank of America Merrill Lynch (John Key’s former employer), which both contributed to the Global Financial Crisis and the rising inequality which followed.

Here in New Zealand, the two firms looking to profit from Social Bonds are the ANZ Bank and Cranleigh, a merchant bank co-founded by National MP Andrew Bayly and his brother.

Neither of these companies are known for their efforts to reduce inequality, either.

Ideological tunnel vision

Social bonds are not the first reform of public services undertaken by the current government.

Privately owned and managed Charter Schools were established back in 2011, and in some cases are now nearing collapse. Prison management has been privatised, under the now-notorious Serco.

State houses are currently being privatised, and the prime minister has acknowledged a possible role for Serco.

He has also signalled the privatisation of parts of CYFS, and social development minister Anne Tolley said she had no problems with companies like Serco picking up contracts.

The fact that such a similar model is being used across widely varying sectors, and that reforms are being rushed through in quick succession, strongly suggests that the changes are not based on careful analysis of the specific needs of service users.

It looks a lot like a template of predetermined “solutions” is being placed over public services, regardless of their diverse characteristics and regardless of past failures.

The cabinet papers stress that “exit points” will be built into the Social Bonds schemes, allowing government to cancel contracts if goals of service improvement are not being met.

But as the crisis at Mt Eden Prison has demonstrated, admitting failure has a high political cost for the government. A month after catastrophic failures forced the Corrections Department to resume responsibility for running the prison, they still haven’t cancelled Serco’s contract.

This all adds to an appearance of tunnel vision, and an inability to contemplate alternatives to privatisation.

These are some of the reasons why the NZNO Mental Health Nurses Section supports the petition to Stop the privatisation of the mental health sector.