We finally understand that medical care is not the main driver of health outcomes and that the social determinants of health (SDoH) account for 60 percent of one’s health outcomes. This is a consequential realization and, in an era of value-based care and risk sharing, many healthcare organizations “get it.” In fact, forward-thinking health plans, health systems, and state Medicaid programs across the country are experimenting with programs designed to help low-income populations in their communities lead healthier lives.
These programs are promising, but they are limited in scope and size. If SDoH initiatives are to succeed more broadly, communities need to overcome two key barriers:
First, SDoH programs need to establish a means of connecting healthcare providers and health plans with community-based organizations (CBOs). CBOs have a high degree of trust in their communities and work directly with at-risk populations in their communities. As such, they should be integrated into care teams. It’s not enough for a health plan or provider to simply identify a CBO in their community, send out a referral and hope that the job is done. Health plans and providers must partner with CBOs to create collaborative networks of resources. A network-based approach reduces fragmentation between settings by enabling organizations to effectively coordinate care and close-the-loop on referrals, while longitudinally tracking outcomes and needs.
Second, successful SDoH programs need to establish a means of aligning incentives between healthcare organizations and CBOs. CBOs provide integral social and community services and have a history of successfully engaging at-risk populations. However, these organizations remain underfunded. So while healthcare organizations are keen on developing partnerships with CBOs to improve care delivery, CBOs are uncertain of how those relationships would work and how they will benefit from them. By reallocating dollars to the tens of thousands of CBOs that play an essential role in this work, healthcare organizations can increase the long-term sustainability and success of SDoH programs.
Fortunately, there are proven ways to both establish high-functioning networks and to ensure that dollars within the network are allocated appropriately to ensure incentives are aligned.
Paying for SDoH Services
America’s CBOs are under intense pressure. Roughly one in eight CBOs are technically insolvent, and barely one-third have the reserves to cover a month of expenses, according to the Alliance for Strong Families and Communities. Compounding the problem, the Tax Reform Act passed by Congress in December 2017 will significantly reduce the federal, state, and local funding available for CBOs. To survive, organizations must depend on other sources of government funding and philanthropic grants.
It’s no surprise that CBOs are beginning to turn to healthcare organizations for new sources of funding to support their shared missions. Health plans and providers that have developed SDoH partnerships have relied on a variety of strategies and models to fund their efforts, including delivery-based payments, fee-for-service, value-based and case rate structures. One of the most promising sources of funding are community benefit funds.
Hospital community benefit funds
Not-for-profit (NFP) hospitals have always been required to spend a portion of their revenues on community health-related activities to maintain their tax exemptions. Under the Affordable Care Act (ACA), these hospitals are required to conduct community health needs assessments every three years and to develop strategies to meet those needs.
In theory, hospitals spend a great deal on community benefits. In 2016, for example, Connecticut hospitals devoted $1.7 billion, or 15.4 percent of their total revenue, to help their communities. But most of this amount consisted of covering shortfalls in Medicare and Medicaid payments, plus charity care and bad debt. Only about 3 percent of the total went to community health services.
Typical of these community services are health fairs, early prevention programs, and opioid recovery programs. In Minnesota, health screenings, health education, immunization clinics and other subsidized health services account for the bulk of hospital community benefit spending. Some hospitals try to relieve hunger in their communities. Other facilities target homelessness.
But these cases are the exception rather than the rule. Although 85 percent of doctors believe that unmet social needs are leading to poor health outcomes for Americans, most hospitals do not use a significant portion of their community benefit dollars to address SDoH. That may change as market forces, and state initiatives begin to push more organizations in this direction.
Health plan Initiatives
Another strategy for funding CBOs is unique to health plans. A handful of leading health insurers are using their resources to launch SDoH programs because they view them as indispensable to improving health outcomes and lowering costs. Kaiser Permanente, for example, recently announced plans to invest $200 million in preventing homelessness and improving access to housing. The large HMO has formed a coalition with 17 mayors and CEOs in 11 states.
Similarly, UnitedHealthcare recently said that it would invest $35 million to provide access to affordable housing in Michigan. The company noted that the financial burden of housing could prevent families from obtaining healthcare.
Geisinger Health in Danville, Pennsylvania, has a robust SDoH initiative that includes programs designed to improve its patients’ economic and housing stability, food security, education, transportation and environmental improvement. Its Fresh Food Farmacy, for example, provides fresh, healthy food and nutrition education to those in need. By doing so, it aims to combat high rates of obesity and diabetes.
Meanwhile, Medicare Advantage supplemental benefits are expanding, allowing Medicare Advantage plans to cover benefits such as in-home support services, transportation to medical appointments, and home-delivered meals.
State-sponsored programs
States are also focusing on improving their approach to SDoH with funding from their Medicaid Managed Care Plans, which cover the bulk of Medicaid beneficiaries. Nineteen states now require Medicaid plans to screen for and/or provide referrals for social needs, and most Medicaid plans across the country report engaging in SDoH activities. Some states are also providing housing support through referrals, support services, and case management services.
In 2014, New York State launched its 5-year, $8 billion DSRIP program, which aims to reduce hospital utilization by 25 percent. Under this program, Value-based Payment (VBP) contractors (hospitals, accountable care organizations, safety-net providers, etc.) that share risk must implement at least one SDoH intervention and contract with at least one CBO, starting in January 2018. This means that DSRIP money flows from Medicaid to the healthcare provider to the CBO. Among the areas covered under this plan are economic stability, education, health and healthcare, neighborhood and environment, and social, family and community context.
CBOs are universally underfunded, but with the right incentives, they can play a powerful role in addressing social needs. If the healthcare industry aims to improve health outcomes and reduce the costs associated with care, health plans and providers must ensure that these partnerships are equitable for each organization involved. With this approach, both sides benefit, and so will the communities in need.
Manik Bhat is the CEO and Co-founder of Healthify, a social determinants of health management company based in New York City.
