by GK Strategy 16th August, 2018
3 min read

What can social prescribing mean for private equity?

The government has said that they will invest nearly £4.5 million in ‘social prescribing.’ This will include programmes that refer patients to local voluntary and community services such as walking clubs, gardening or arts activities. A recent UK study found that after 3 to 4 months, 80% of patients referred to a social prescribing scheme had reduced their use of A&E, outpatient appointments and inpatient admissions.

What is ‘social prescribing?’

Social activities are ‘prescribed’ to patients, instead of drugs. Patients are referred to non-clinical services such as sport programmes, healthy eating support, art activities or volunteering groups. The aim of social prescribing is to improve patients’ quality of life by acknowledging that health is determined by many factors. These factors include social, economic or environmental conditions. Social prescribing hopes to deliver a holistic approach to quality of care. It attempts to empower individuals in taking control of their health. It aspires to have positive economic and social impact.

23 social prescribing projects will be rolled out in England. They will focus on hard to reach communities. These groups include those struggling with mental health, from the BME and transgender populations, and with complex needs. Most social prescribing models utilise a link worker who support people to access the different services. The Bromley by Bow Centre in London is perhaps the best example of a good social prescribing model. The Centre hosts more than 30 local services ranging from gyms to ESOL classes.

What is the need for social prescribing?

Globally, we are facing emerging health predicaments which cannot be dealt with solely using the traditional medical model.  Health predicaments which we now attempt to understand through the lens of social determinants of health (SDH). The World Health Organisation defines SDH as ‘the conditions in which people are born, grow, live, work and age.’  These determinants can be analysed through the distribution of power and wealth. They can also be examined in terms of how this influences health choices amongst different socio-economic classes.

The aims of social prescribing are driven by key strategies for change including the NHS five year forward view (2014). The plan draws attention to prevention, wellbeing, patient-centered care, and better integration of services. It also draws upon the importance of working with the third sector to help deliver more social prescribing services. This compliments one of the three key priorities for the new Health Secretary, Matt Hancock. He has set out that he wants to see a reduction in over-prescription in favour of approaches like social prescribing. The Government is committed to achieving true parity between physical and mental health, says Hancock. He aims to achieve this through better access to modern mental health services with a holistic approach to prevention.


What role can private equity firms have?

Private equity firms are beginning to increase investment in social impact. They are a significant source of financial support for small businesses, social enterprises and charities. Care Minister Caroline Dinenage said: ‘’The voluntary and community sector has such a vital role to play in working with our health system to provide the kind of support that you can’t receive at your local GP surgery or hospital.’’ This can further be expanded to include private equity firms to invest in health as a social good. Private equity firms can also utilise their working capital into promoting sustainable health outcomes. They have the skills and business acumen already in place to be able to carry out cost-risk analyses. They have the ability to understand the nuances of financing social prescribing projects.

Such sentiments are echoed by David Floyd, managing director of East London community organisation Social Spider. Floyd who has developed social enterprises and projects combining the arts and homelessness. “Can we draw on the expertise and the money of the financial services industry and private investment to deliver social change? The answer is yes, and we should do,” he says.

Ex-head of UK investment banking at Dresdner Kleinwort and chief executive of Social Finance, David Hutchinson spoke on the issue. He said there is ‘’considerable mileage” in anticipating investment principles to weigh in on social driven organisations. He mentioned in particular “a focus on performance management and a sense of accountability for delivery.” Previously, when private equity firms have attempted to fund social impact projects, corporate duty has seemed more important. Social impact is “an attractive by-product”, says Hutchison. “What you need to find is capital that values the social impact being delivered and doesn’t just tolerate it. [This] is more than an extension of philanthropy.”

Professor John Middleton, president, Faculty of Public Health argues that the answer has to be greater investment in prevention. He says that a healthy economy powered by healthy people is mandatory for the preservation of all public services. This would resolve any issues around sustainability.

According to estimates, the social care funding gap will reach £2bn by 2020. Projections say there will be a NHS funding gap of at least £20bn by the end of this parliament. Funding for the immediate secondary care will most certainly surpass funding for future preventative care. The ringfenced public health grant is substantial. The last spending review revealed £16bn was spent on public health compared to over half a trillion on the NHS. This calls for more creative ideas to respond if we hope for long-term sustainable outcomes.

Examples of private equity firm in quest of to reshape this outlook include Bridges Ventures. Bridge Ventures was crowned sustainable investor of the year in 2012 by the FT and the International Finance Corporation. The ‘’father of social impact investment’’ Sir Ronald Cohen has backed the firm. They have invested in eco-friendly care homes, affordable gyms in deprived urban areas and charity-run social enterprise for vulnerable teenagers. Bridge Ventures have a “fundamentally different approach to most other investors” says co-founder Michele Giddens. They talk about having a “social mission” at its core. The key sectors it looks to invest in are health and well-being, education and skills, property and sustainable living.

Bridges Ventures now has almost £275m in funds. Private equity organisations and entrepreneurs Apax Partners, 3i, Doughty Hanson and New Look founder Tom Singh have backed the firm. This is evidence, says Giddens, that the industry recognises that there need be no “trade-off between financial return and impact”.

Claridge Capital is a finance advisory firm focusing in frontier markets and social enterprises. Their Managing Partner, Rupert Gather, says to increase awareness there must be adherence to the UN’s Principles for Responsible Investing. Since its launch in 2006, a thousand plus managers became signatories to the UN principles. This represents $32tn (£20tn) – or 15% of the world’s investable assets.


A major challenge faced by private equity firms is that “the values of private investors are different.” David Floyd says people “fear” private equity firms will act purely to make massive profits. Worries include paying staff really low wages to cut costs and corners. This is something that private equity firms will have to contend with and work hard at earning the public’s trust.

However, ahead of every major health strategy, investing in sustainable services is paramount. This investment is necessary to address the health challenges we face. Working with private equity firms to capitalise on better health outcomes through regulation, philanthropy and innovation isn’t a fool-proof solution. Yet rather than focusing on seeking more governmental funds to bridge the gap in social care spend, we could perhaps make an alternative case for the private funding of social prescribing.  As we must ask the question about the state of social care: is it broke and does it need fixing?

To learn more, email marjan@gkstrategy.com

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