TEL AVIV, March 14 (Reuters) - Some 2,250 Israelis at risk of Type 2 diabetes will be helped to make lifestyle changes that could prevent the disease developing under a pioneering scheme to be financed by private investors.
If the interventions are successful in preventing the onset of diabetes, two Israeli public health organisations and the National Insurance Institute will repay the investors from savings made by reducing healthcare and disability costs.
To fund the trial, Social Finance Israel, which describes its activities as a hybrid of philanthropy and investment, and partner UBS will sell a $5.5 million social impact bond -- the first related to diabetes prevention -- to foreign and Israeli investors.
Caroline Anstey, Head of UBS and Society, a global initiative launched by the Swiss investment bank in 2014 which covers activities in sustainable investing and philanthropy, told Reuters on Monday the Israeli bond will serve as a pilot. Countries such as Mexico and India have expressed interest in similar projects.
Type 2 diabetes -- a condition that causes a person's blood sugar level to become too high -- affects over 500,000 people in Israel and 415 million people globally. The International Diabetes Federation predicts the number could grow by 50 percent in the next 25 years although Type 2's association with factors such as obesity mean its onset is often preventable.
Pre-diabetics can be identified through blood tests, and introducing exercise and changes in diet can reduce their risks of developing diabetes.
Yaron Neudorfer, CEO of Social Finance Israel, said that, if the pilot is successful, the Israeli health system will be able to extend diabetes prevention measures to many more people.
The programme will be launched in July for three cohorts of people identified as having a high diabetes risk. First results will be measured three years after the first cohort begins the trial.
Ronald Cohen, chair of a global steering group on social impact investing, said 54 social impact bonds are operating in 12 countries since the first launch in 2010. Most investors in such bonds are philanthropic organisations and entrepreneurs.
Funders of social impact bonds provide upfront capital to deliver social services, and governmental entities pay only if predefined results are achieved.
Cohen told a news conference he believes impact investment will eventually overtake investment in private equity and venture capital "because there is such a great need for this".
Last year, Social Finance Israel launched a social impact bond that will finance mentoring and support for computer science students with the aim of reducing the number who drop out of education. (Editing by Catherine Evans)