NFF spoke with Social Finance and the Tuscaloosa Research & Education Advancement Corporation (TREAC) about the Veterans Workforce Recovery Project. This blog is part of an interview series with selected project partners from our Social Innovation Fund transaction structuring competition.
NFF: Tell us about the genesis of this PFS project. What was the original impetus for this project? How were the project stakeholders brought together?
Social Finance: In May 2014, Bank of America Merrill Lynch engaged Social Finance to assess the viability of using Pay for Success to better serve U.S. military veterans. Their investors have had growing interest in the concept of Pay for Success after Bank of America invested in the New York State Recidivism and Workforce Development Project in December 2013.
Our research, published in “Improving Outcomes for Veterans: Feasibility Study Assessing Pay for Success Opportunities”, helped identify interventions and programs ready to scale. At the same time, we hope that these insights will measurably improve the lives of veterans and their families by driving government resources towards programs that work.
Out of all of the interventions we assessed, we identified Individual Placement and Support (IPS) as the project closest to being ready for a Pay for Success project, and we engaged Tuscaloosa Research & Education Advancement Corporation (TREAC) to serve as the clinical research partner. TREAC is a leader in IPS research and is an affiliated nonprofit research corporation that serves the Veterans Affairs (VA) Medical Center system.
Tuscaloosa Research & Education Advancement Corporation (TREAC): We are enthusiastic about the opportunity to expand the use of IPS, as it is a strong intervention that provides our veterans the in-depth wraparound support they need—and deserve—when faced with mental illness and reintegration in the workforce.
Like many workforce development programs, IPS promotes rapid job search, person-centered job development and placement, and retention services. Unlike many more traditional programs that serve individuals with mental or physical disabilities, IPS focuses on job placement in competitive, or “real world” employment rather than in a sheltered workshop environment. But what really sets IPS apart is the truly client-centered approach that keeps the interests and desires of the client as primary in the search for competitive employment, and integrates employment services with wraparound services delivered by a mental health treatment team. The IPS specialist acts as a coach and companion to encourage and support clients to adhere to treatment plans so that they maintain their ability to work and stay on the trajectory of recovery and community integration. Another distinguishing element of the IPS program is its embrace of “zero exclusion.” This means that clients who want to work are eligible to receive services, and cannot be denied IPS services due to psychiatric diagnosis, cognitive impairment, substance use, or legal history. IPS assists the client in maintaining stability, employment and reintegration in the community. This approach builds self-confidence, reduces hopelessness, and thus, may prevent suicidal thinking.
We first began to study IPS, in concert with the VA, for individuals with a serious mental illness, such as schizophrenia or bipolar disorder. The intervention has shown robust and consistent improvement in employment outcomes for the treated population, and these improvements persist over time. We felt strongly that the intervention could be applied to veterans returning with post-traumatic stress disorder (PTSD) and conducted the first study at the Tuscaloosa VA Medical Center. We found that 76% of the IPS participants gained competitive employment, compared with 28% of those in a more traditional vocational rehabilitation program. We are excited by the opportunity that PFS presents to scale this effective program.
NFF: An innovative element of this project is the intention to launch two phases with different back-end payors: first, a pilot phase leveraging private philanthropy, and second, potentially a more conventional PFS project with the Federal Government for the full project. Can you speak a little bit more about the intention of this two-phased approach and how you think it will grow or diversify the existing PFS field?
Social Finance: Many PFS projects utilize either pilots or ramp-up periods to allow for early course corrections to work through potential operational challenges such as target population recruitment, before launching the full scale project. To date, a national PFS project has not been launched in the United States and the larger scale has the potential to present new hurdles. Leveraging philanthropic capital for the pilot will allow the TREAC team to work through any hiccups. If the philanthropic phase is successful, federal partners could launch a more robust project, building on the project parameters and outcomes established during the pilot phase.
TREAC: Specifically, during the pilot, we will be working with up to 12 sites nationally to test the project. Simultaneously, we will be expanding our database on potential outcomes, in alignment with those that are the most important to our federal partners, in efforts to structure a larger, sustainable project. Keeping an eye towards this potential second phase, we’ve been in active conversations with the VA leadership to inform them about our progress. We intend to keep them in the loop throughout the pilot. Thus far, VA leadership are enthusiastic about expanding IPS for a broader group of veterans.
NFF: As you know, the road to launching a PFS project is a long one! Can you share with us what the biggest challenge to date has been? How have you and your partners approached and/or overcome this challenge?
Social Finance: Pay for Success is rooted in partnership. Aligning priorities in program parameters and project development takes compromise. For example, selecting projects that respond to significant community needs also in geographies that are a priority for payor and investor partners, or agreeing on eligibility criteria based on existing evidence and defined target population, are critical compromises to navigate among project partners. Working nationally is exciting and emphasizes the importance of creativity. Pay for Success projects ask partners to challenge the status quo across all project components from procurement to outcomes payments, which requires finding champions for new strategies to serve vulnerable populations.
TREAC: The private partners add momentum to our sometimes conservative pace as a government, nonprofit system. While it’s exciting to know we will get these services to our veterans more quickly, maintaining an ambitious timeline for planning and program launch requires attention to detail and assertive action. Fortunately, TREAC has received funding from Nonprofit Finance Fund’s Social Innovation Fund transaction structuring competition to jump start this exciting and high impact initiative that serves veterans in need of stable employment and community reintegration.