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Comprehensive Report on Project for Preventing Severe Diabetic Nephropathy in Kobe City under the Social Impact Bond

October 9, 2020

In FY2016, the Ministry of Economy, Trade and Industry (METI) supported some companies and municipalities in introducing projects based on a social impact bond (hereinafter referred to as the “SIB”)* system as a first initiative in Japan. As a result, in FY2017, Kobe City started a “Project for Preventing Severe Diabetic Nephropathy Taking Advantage of Social Impact Bond.”

In response to the completion of the project in March 2020, METI and the Social Innovation and Investment Foundation (SIIF) jointly compiled a comprehensive report on the project.

On October 9, 2020, Kobe City released the results of its final assessment of the project, including this report. Along with this, METI hereby announces the results and report.

*Note: Outline of the SIB system
▶ Some municipalities and other public organizations have introduced the Pay For Success (PFS) system, a system in which a municipality, etc. commissions a pay-per-outcome project to the private sector. Under the PFS system, when a municipality or other public organization commissions a project to a private company as an operator of the project, it will set “achievement indices” in association with a target “administrative challenge” which the project aims to solve and it will pay expenses or other compensations to the private company in accordance with the level of improvement in terms of the indices after having commissioned the project to the company in order to solve the challenge.
▶ The SIB system is one of the types of the PFS system. Under the SIB system, a private company to which a municipality has commissioned a PFS-based project will raise funds for the project from such funders as financial institutions and make repayments of the funds to the funders based on the payments from the municipality, which will be payed to the company in a pay-per-outcome style.

1. Overview of METI’s measure for supporting municipalities in introducing projects

As part of the FY2016 Project for Promoting the Creation of New Industries for the Enhancement of Healthy Lifespans, which was commissioned to the Japan Research Institute, METI, in cooperation with SIIF, supported Kobe City in introducing a project titled “Project for Preventing Severe Diabetic Nephropathy Taking Advantage of Social Impact Bond” (hereinafter referred to as the “project”) into the city.

Specifically, METI participated in opportunities of discussions by Kobe City, the organizer of the project, the commissioned operator, academic experts and other stakeholders and, working together with SIIF, it collaboratively organized approaches to achievement indices of the project and deliberated design of the project as an SIB-based project.

As a result of this support measure, Kobe City started the project in FY2017 as the first SIB-based project in Japan.

2. Overview of the project by Kobe City

Kobe City commissioned operation of the project to DPP Heath Partners Corporation (hereinafter referred to as “DDP”).

Specifically, the municipality conducted a six-month health instruction program from July 2017, targeting about 100 subjects who: are insured by the national health insurance program; fall under the category with a high risk of diabetes or diabetic nephropathy as a result of specific health checkups; and have never made any consultations with medical institutions or have stopped treatments at such institutions.

In the project, a third-party assessment organization assessed three achievement indices: the completion rate of the program, the improvement rate of lifestyles, and the inhibition rate of kidney function decline. DDP reimbursed funds to the funders with the payments of the expenses for commission by Kobe City based on the assessment results.

3. Overview of the comprehensive report on the project

Concerning the achievement indices, the completion rate of the program and the improvement rate of lifestyles were higher than the target values, while the inhibition rate of kidney function decline was below the target value.

Moreover, it was found that participation of an intermediate support organization and a service provider in the project contributed to achieving better results and improving the quality of the project.

For details, see announcement below:

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Healthcare Industries Division, Commerce and Information Policy Bureau