How providers can finance, profit from programs to tackle social determinants

May 22—Hospital and finance leaders have heard much about the theoretical benefits of addressing the social determinants of health (SDOH). But some have found ways to fund such activities — and get an ROI.

Hospitals and health systems have increasingly focused on ways they can address SDOH, like housing, neighborhood safety and nutrition, to improve health outcomes for their patients and their communities. However, Bernard Tyson, chairman and CEO of Kaiser Permanente, echoed the sentiments of many hospital leaders when he noted that research has yet to clearly identify the ROI of many SDOH funding initiatives.

“It’s not going to be a straight line that says, ‘If we figure out how to give you these resources, we will see the direct return somewhere else,’” Tyson said at the Not-for-Profit Health Care Investor Conference this week in New York. “That’s going to take time.”

Kaiser Permanente has begun to calculate financial and other ROI from its growing number of SDOH initiatives, and the organization plans to share those findings with the public to guide similar initiatives. Another type of ROI that KP plans to track is the number of healthy life years the initiatives add to targeted populations.

Kaiser Permanente’s housing investments are an exception to the general lack of clear ROI. The health system’s donations to support housing include:

• $2.27 million to nonprofits in the Pacific Northwest to help find permanent housing for homeless people with mental illness and substance use disorders
• $4.9 million for programs to support the homeless in Southern California
• $4 million to build new housing in Portland, Ore.
• $9 million to help low-income residents in Oakland avoid homelessness

Housing initiatives pay off for another large system

Supportive housing also provided tangible benefits for another health system focused on SDOH.

Pablo Bravo Vial, vice president of CommonSpirit Health (formerly Dignity Health and Catholic Health Initiatives), described how the system provided a $2 million, 2% interest, five-year loan to the Corporation for Supportive Housing. The health system also provided the organization with a $500,000 grant to provide patient navigation services.

“The idea was, once a homeless individual landed in our emergency department, to navigate that individual to a supportive housing environment when they were ready to leave,” Vial said.

The initiative also included a partnership with a federally qualified health center to provide the patients with a medical home.

The loan resulted in the payback of the principal and interest, but the health system also credited it with a:

• 49% overall ROI in reduced utilization
• 27% reduction in length of stay 
• 24% reduction in ED visits

One cost accounting challenge was that the savings did not come in cash but from cost avoidance, Vial said. 

Leveraging investment funds to generate ROI

CMS finalized another requirement that Part D plans create by Jan. 1, 2021 an expanded Explanation of Benefits (EOB) to be sent to enrollees. The EOB must include drug price increases and lower-cost therapeutic alternatives.

“This information will inform Medicare beneficiaries about possible ways to lower their out-of-pocket costs by considering a lower-cost medication,” said a fact sheet.

The rule also implements a statutory requirement ensuring that Part D plans do not prohibit pharmacies from disclosing a lower cash price to enrollees nor penalize pharmacies that do so.

“This provision supports the President’s initiative to help lower out-of-pocket costs of prescription drugs for Medicare beneficiaries by helping inform them about lower-cost alternatives,” said the fact sheet.

Holding off on a new definition

Hospitals and other investors also have found ROI from SDOH investments through investment funds, including off-balance sheet funding vehicles created by the Low Income Investment Fund (LIIF).

Such vehicles combine public and private funding for SDOH initiatives and structure the various funding sources based on the amount of risk the investor is willing to accept, said Kimberly Latimer-Nelligan, chief operating officer and executive vice president of LIIF.

“We have found that is a very effective way to invite banks and healthcare investors into the work that we do,” Latimer-Nelligan said. “Their risk is mitigated and the returns work.”

Over the last decade LIIF has launched about 10 such funds, which raised a total of about $1 billion.

“We’ve deployed most of it, gotten some of it back and haven’t lost a penny,” Latimer-Nelligan said. “That kind of track record is important.”

The group is in the process of raising $100 million to support construction of “purpose-built network sites,” where a range of initiatives are undertaken to improve a variety of SDOH outcomes at the same time. To reduce the investment risks for risk-averse entities, the fund will be secured with a pool of mortgages, and a structure that encompasses multiple investments around the country will minimize the risk that the projects all will fail and not pay back investors.

“We have found that approach to be more effective and to bring more capital and more kinds of investors into the communities we serve, which is our goal,” Latimer-Nelligan said.