A private company plans to launch a “health outcome bond” to provide NHS commissioners with private investment capital in an effort to cut emergency hospital admissions.

The bond is modelled on other social investments where firms are given financial incentives to get long term unemployed people into work or rehabilitate prisoners, for example.

In the health version, investors will be invited to put up the capital for schemes to reduce emergency hospital admissions, with the anticipated savings being shared by the investor, the commissioner and the hospital.

The private company behind the scheme, Integrated Health Partners, believes it will succeed in reducing emergency admissions.

IHP founder and managing director Oliver Bernath told HSJ: “Private investment companies that specialise in social investments will put money into the fund; the fund then pays the operating costs for projects that deliver savings.

“The fund will pay organisations like us or GP consortia, or whoever, to deliver those savings; then the commissioner would pay a reward into the fund once certain targets have been achieved and the investment company takes a cut of that as profit, while the commissioner takes the balance of the savings.

“In this way the commissioner has no risk and does not need its own capital.”

Social investment bonds typically pay the investor 20-25 per cent of savings made and Dr Bernath projects that the emergency admissions reduction scheme would yield eight times the initial investment in savings.

Dr Bernath said reducing hospital admissions was a good place to start with a scheme of this kind.