Second Pilot Project for “Social Impact Bond” StructureFukuoka City, Matsumoto City, other Local Governments Participating in METI’s Dementia Prevention Project

On June 8, the Nippon Foundation decided to join, as a participating organization, the Ministry of Economy, Trade and Industry’s (METI) Healthcare Industries Division’s “FY2015 Project to Outsource Creation of Industries that Extend Healthy Life Expectancy,” which is being undertaken by the Kumon Institute of Education (Kumon). With several local governments including the cities of Fukuoka and Matsumoto also participating, a Social Impact Bond (SIB: see attachment) pilot project was launched on July 1 in the area of dementia prevention using the “learning therapy” method created by the Kumon Learning Therapy Center.

The number of persons in Japan with dementia was estimated at 4.62 million in 2012, and is projected to grow to more than seven million*1 by 2025. Furthermore, social costs*2 related to dementia are estimated at ¥14.5 trillion annually (medical costs: ¥1.9 trillion; nursing care: ¥6.4 trillion; informal care: ¥6.2 trillion; May 2015 report of the Ministry of Health, Labour and Welfare). By 2035, when the baby boom generation reaches the age of 85, these costs are expected to balloon to ¥22.9 trillion, meaning that results need to be researched relative to these social costs to verify how to make the best use of limited resources going forward.*3

The pilot project consists of two components, with the aim of implementing learning therapy programs that have proven successful in improving cognitive function to improve the quality of life of older persons while at the same time reducing public costs. The first is to implement learning therapy programs at senior care facilities and measure changes in the degree of care required by patients. The second is to introduce learning therapy in health care classrooms and verify reductions in medical and nursing care costs. Data will be collected from a total of 200 people, and a final social impact evaluation will be made. The verification data will be used with the patients’ consent, and the medical and nursing care costs, with personal information removed, will be disclosed to the cooperating local governments.

METI’s outsourcing period is for six months, and Kumon plans to continue the project using its own funding for an additional six months, to measure the results of the program over a full year. The pilot project will verify the degree of change or improvement in patients’ symptoms after implementing the program, and the resulting cost reductions to local governments. Using this data, a project using a SIB is expected to be implemented from fiscal 2016. Under the current structure, as the required degree of appropriate nursing care declines, the limit on payments decreases as well, and as a result there are concerns that this will put pressure on nursing care institutions. The introduction of a full-fledged SIB program will explore a structure under which the nursing care institutions receive performance-based compensation.

As an intermediary supporting organization, the Nippon Foundation is providing support for coordination among the related parties for the formulation of the pilot project proposal and project management. This is the Nippon Foundation’s second SIB pilot project, following the project with the City of Yokosuka to promote special adoption programs launched in May 2015. Final coordination is also underway for a third pilot project, with Amagasaki City.

Reference: Exploring “Social Impact Bond” Structure in Japan (April 14, 2015, press release)

  • 1. Comprehensive Strategy to Accelerate Dementia Measures (New Orange Plan)
  • 2. In addition to direct costs including group medical and nursing care costs for dementia patients, social costs include society’s total costs that cannot be seen, like the lost productivity of patients and their families.
  • 3. Research report by a joint research group of the Ministry of Health, Labour and Welfare and the Keio University School of Medicine.