Fresno has been chosen to pilot a health-care project that could lead to new ways nationally to improve public health and reduce costs for treating chronic diseases.
About 200 lower-income children with asthma are at the center of the two-year demonstration project to show the financial benefits of asthma management and entice investors to invest in a social-impact bond.
Only a handful of such bonds have been sold in the U.S. -- most for prisoner recidivism. Fresno would be the first for health care.
"A health-impact bond is a way of raising money for a proven health program and prevention that result in better health outcomes and lower costs," said Rick Brush, founder and CEO of Collective Health, a Connecticut-based social enterprise company that helped develop the idea for the asthma demonstration project.
The California Endowment has put up $660,000 to launch the Fresno project with Collective Health and Social Finance, Inc., a Boston nonprofit organization and social-impact bond intermediary.
The endowment's funding will pay for data collection and evaluation to demonstrate that the number of emergency room visits by children with asthma can be reduced through disease management.
Getting investors to pony up money for a social-impact bond will be "based on our ability to demonstrate we've saved money on health-care spending and we can pay back investors a portion of those savings," Brush said.
Under the social-impact bond model, the investment risk is on the shoulders of investors. They agree to loan money, but on evidence that they will get their money back with interest. For example, Medi-Cal funds previously used to pay for medical services could cover an investment to reduce asthma hospitalizations.
Foundations, billionaires and even financial institutions under their charitable donation arms have invested in the bonds.
Brush said asthma was a good fit for the first health-impact project because it is the No. 1 chronic disease among children. And there is evidence showing that in-home management programs help reduce the number of emergency room visits and hospitalizations, he said.
Fresno was chosen as ground zero for the demonstration project because asthma affects about one in five children here.
The Fresno demonstration project will track emergency department visits and inpatient hospitalizations of the 200 children who are covered by Medi-Cal, the state-federal insurance for low-income people. If successful, the program could expand to 2,000 children, Brush said.
There's no doubt about the need for asthma management in Fresno County, Brush said. About 16,000 children between ages 2 and 19 have been in hospital emergency departments in the past year for treatment of the illness.
So far, 40 who had been hospitalized at least once in the past year have been enrolled in the demonstration project. "They're sick kids," said Kevin Hamilton, chief program officer for Clinica Sierra Vista, a federally qualified health center. Clinica and Central California Asthma Collaborative were chosen to design and implement the asthma management program.
It's estimated that asthma costs in Fresno County total about $35 million a year, including lost productivity.
Hamilton estimated $28 million in medical costs Valleywide: By comparison, he said, "we can do this intervention for around $300 to $400 (per child)."
The collaborative has conducted initial home visits to identify and look for asthma triggers in the homes -- dust and fragrant cleaning products are two of the common ones, said Farhat Hanifi, associate director of programs and program manager for the Fresno Asthma Impact Model.
The participating families can get a vacuum with a high-efficiency filter, hypoallergenic pillow cases, a machine to measure indoor humidity, vinegar and baking soda -- "green" cleaning products -- deep carpet cleaning to help reduce symptoms and other products.
Asthma educators will also sit down with families to discuss using asthma medications properly.
Gina McCarthy, administrator for the U.S. Environmental Protection Agency, said Wednesday that the demonstration project has her approval because "asthma is just out of control."
Hamilton, Brush and others briefed the EPA chief on the project goals during her visit to Clinica Sierra Vista on Elm Avenue in southwest Fresno. Health educators use an EPA indoor-air quality checklist when visiting family homes, they said.
McCarthy, who has a background in health-care delivery, said the pilot project "hits every button I've been thinking about for so long," adding, "I'm excited about the opportunity to build public health and prevention into an economic model."
The California Endowment hopes the demonstration project "will be a catalyst for social-impact bonds not only in California but across the nation," said Sarah Reyes, a program manager for The Endowment. "Preventative measures are always better than an emergency room visit."
Even if the health-care cost savings aren't realized, 200 children's lives will have been improved by the in-home health visits, said Dr. Tony Iton, the endowment's senior vice president for the Healthy Communities initiative.
Melody Torres doesn't need convincing. Since her daughter Carah Torres, 5, was enrolled in the program four months ago, she's been healthy.
Carah hasn't been to the hospital once since health educators brought a vacuum and showed her simple ways to reduce asthma triggers in her home, Torres said.
That wasn't the case in the past, however. Carah often was hospitalized, her mother said, and "there are times she would literally cry because she couldn't sleep because of the cough."
The reporter can be reached at (559) 441-6310, firstname.lastname@example.org or @beehealthwriter on Twitter.