Hiroshima Prefecture and six local governments worked together on the promotion of colon cancer screening by utilizing social impact bond (SIB) to improve the rate of residents who undergo colon cancer screening for early cancer detection and ultimately, a decrease in mortality rate. For the execution of the project, a pay-for-success contract was concluded with private sector investors to raise funds from individual investors.

Investment Overview

The project was implemented as part of a 2017 Ministry of Economy, Trade and Industry (METI) program to promote the new industrial structure made possible by healthier longevity.

Hiroshima Prefecture and six regional cities worked together on the promotion of colon cancer screening for early detection of cancer to reduce deaths by cancer and improve quality of life (QOL) of citizens in the prefecture.

For the execution of the project, a pay-for-success contract was concluded with a private sector, Cancer Scan Co., Ltd. Cancer Scan oversees and operates a business which promotes colon cancer screening for eligible residents. Hiroshima Prefecture makes outcome-based payments to Cancer Scan. The six cities pay JPY 3.88 million, regardless of the outcome of the success indicators. The success indicators in this project are “number of cancer screenings” and “percentage of screenings that led to follow-up exams.”
Financiers in this project are Japan Social Impact Investment Foundation (SIIF)*, The Hiroshima Bank, Ltd., Mizuho Bank, Ltd., and individual investors. Crowdfunding services “Securite” operated by Music Securities, Inc was made available for individual investors.

* Currently Social Innovation and Investment Foundation
K-three Inc. evaluates the project, constructs a financial model and overall structure, and coordinates among the stakeholders.

Implementation structure

• 1)Providing an SIB investment opportunity to individual investors

In this project, crowdfunding services “Securite” operated by Music Securities, Inc was made available for individual investors to widely raise funds.

“Securite” allows individual investors to invest from a few tens of thousands of yen through an investment-type crowdfunding, and a total of JPY 12.08 million was raised in this project.

In fundraising from individual investors, a page has been created to provide information regarding the significance and the mechanisms of SIBs. SIIF assumed the position as the most subordinate debtor, combined with financing by the service provider who invested their own funds, thus constructing the project in a way that offers the highest incentive of the service provider for the project to succeed. This serves to counterbalance the difference in access to information and minimize risk on the part of the individual investor.

• 2)Realizing region-wide SIB

Establishing SIB requires costs related to success measurement and fundraising activities. SIB implementation requires a large business scope to absorb such costs, making SIBs inaccessible to municipalities that are sparsely populated and only require small scale projects.
In this project, the population size of the three cities (Takehara, Shobara, and Fuchu) is not large, about 20,000 to 30,000 people. However, collaboration between Hiroshima Prefecture and six cities in the prefecture consolidated common tasks that occur on a case-by-case basis to reduce intermediary costs. This enabled the regions with relatively small population to participate in the project utilizing SIB.

• 3)Expansion of the SIB case from one region to a different region

This project was established, referencing the project implemented by Hachioji City in 2018 to increase colon cancer screening rates and rates of people who underwent follow-up exams. Establishing models for business, measurement design, implementation, and finance based on the precedent has led to smoother business development.