Rewarding Investment in Social Determinants of Health

Researchers’ proposed funding mechanism appeals to provider and health plan self-interest to erase social woes linked to patients’ health status.

Aug. 10—Healthcare providers and health insurers would be far more likely to spend money on health-improving social programs if they could count on a monetary return on their investment.

That’s the premise of a new report by researchers from George Mason University and the Harvard Business School and published in the August issue of Health Affairs. The report outlined a 12-step process to create a financing mechanism through which providers and health plans in a community can spend money on and accrue savings from social programs that research has shown improve patient health outcomes.

The researchers said a lack of predictable and defined return on investment makes substantial funding by providers and health insurers on social determinants of health (SDOH) “rare.” But, they said, “A properly governed, collaborative approach to financing could enable self-interested health stakeholders to earn a financial return on and sustain their social determinants investments.”

“This is not charity,” Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason and co-author of the report, said in an interview. “This is absolutely about self-interest, and that’s what makes the funding mechanism we’re suggesting absolutely sustainable.”

Challenges to SDOH Spending

In its Healthy People 2020 initiative,  the U.S. Department of Health and Human Services (HHS) defined five SDOH:

• Economic stability, such as employment, food security and housing stability
• Education,such as high school graduation and literacy rates
• Social and community factors, such as civic participation, incarceration, and discrimination
• Health and healthcare factors, such as access to primary-care services and health literacy rates
• Neighborhood and built environment factors, such as crime and violence rates, environmental conditions, and quality of housing

“Decades of research have demonstrated that economic stability, physical environment, education,food, and social context are powerful upstream factors that largely determine one’s health before the health system is able to intervene,” the researchers wrote in their report. “Few payment reform options can rival the cost-saving potential of squarely addressing the deficits in social determinants of health that constrain health and drive spending trajectories for many low-income Americans.”

Yet, despite the clear clinical and financial benefits, providers and health insurers have been reluctant to cough up the money to erase SDOH deficits in their communities, according to the report, which cited three factors for the hesitancy:

• The difficulty in calculating their ROI in SDOH spending
• The lack of faith in community organizations to address SDOH issues efficiently and effectively
• The fear of others, namely competitors, benefiting from their investments

Using a Neutral Broker

The financing mechanism recommended in the report addresses those concerns by defining SDOH as a
“public good” managed by an independent community agency. The agency, which the report described as a “trusted broker,” performs a number of functions. The agency would:

• convene providers and health plans around the table
• identify the SDOH deficits in the community
• project the ROI of interventions to address those deficits
• solicit bids from the providers and health plans to fund the interventions based on their projected ROI
• use the money to implement the interventions and apportions the savings to the providers and health plans

To illustrate how the approach might work, the researchers in their report applied the model to medical transportation in a fictitious community of 300,000 people. Based on national data, they estimated that 7,000 residents in the community miss non-emergent medical care because they lack transportation to see their physician or go to the pharmacy to pick up their prescriptions.

If the hospitals and health plans in the community spent $750 per person per year to get those same transportation-disadvantaged people to their appointments, each person would incur $2,200 less in health care costs per year.

Hospital and health system CFOs should like this model because the money is definitely available, Nichols said. CFOs can see the ROI in the data, he said, stressing “This would help them do their jobs.”   

The model also should be attractive to hospital and health system CEOs, who take a broader view of their responsibilities, according to Nichols, because it can improve the overall health of a community, while at the same time decreasing healthcare costs for the same population.

Theory to Practice

Lisa DiSalvo, senior vice president for strategic development at Signify Health, said the researchers’ idea to pump up SDOH funding is “fascinating.” But, she cautioned that addressing SDOH deficits to improve outcomes and reduce costs is an “incredibility complicated” issue.

Signify Health, based in Dallas, performs in-home health evaluations of people enrolled in Medicare Advantage plans. The evaluations include screenings for SDOH.

“Unless you’re in someone’s home, you really don’t know what’s going on at home,” DiSalvo said in an interview.

She said it might be easier to apply the researcher’s financing model to some SDOH like transportation, food security, and child care than other more complicated SDOH like jobs, housing, and mental health.

Nichols may soon find out how workable the model is. He said he’s applied for foundation funding to test the concept out in two communities starting early next year.

David Burda is a veteran healthcare business reporter. Follow him on Twitter: @DavidRBurda