The Business of Health Care

We Know We Have to Address the Social Determinants of Health. Now What?

By REBECCA FOGG

In the run-up up to this month’s mid-term elections, health care appears to be just one of many burning political issues that will be influencing Americans’ votes. But delve into nearly any issue—the economy, the environment, immigration, civil rights, gun control—and you’ll find circumstances and events influencing human health, often resulting in profound physical, emotional and financial distress.

Evidence suggests that separating immigrant children from their families could cause lasting emotional trauma. Gun violence and adverse weather events destroy lives and property, and create hazardous living conditions. Structural racism has been linked to health inequities, for instance where housing discrimination leads to segregation of black buyers and renters in neighborhoods with poor living conditions. The list goes on, and through every such experience, affected individuals, their loved ones, and their communities learn implicitly what health care providers have long known: that health status depends on much more than access to, or quality of, health care.

Some of the most influential factors are called social determinants of health, and they include education, immigration status, access to safe drinking water, and others. Society and industry must collaborate to address them if we are to reduce the extraordinary human and economic costs of poor health in our nation. Fortunately, many providers have embraced the challenge, and are tackling it in myriad, innovative ways.

Hundreds of providers across the country, like Yale New Haven Health, are helping patients who lack reliable, affordable transportation to stay on top of their health by offering free rides to the doctor’s office via ride-sharing services Uber and Lyft. Geisinger Health’s fresh food pharmacies help patients living in food deserts eat nutritiously, and thus head off or better manage chronic diseases like diabetes. Hospitals are paying to house homeless people, given evidence that stable housing helps reduce the need for acute medical care. An increasing number of providers (perhaps with an eye on the U.K.’s social prescribing movement) are also forging processes and partnerships to connect patients with assistance for a variety of health-related social needs.

Such innovative initiatives represent an encouraging trend. However, their positive impact and sustainability depend upon further rigorous study of their objectives, design and results. Their success also ultimately depends upon the type of business model supporting them. A business model encompasses an organization’s resources, processes, profit formula and value proposition. Depending on how these elements are designed, they can constrain or enable innovation toward a particular end. Evolution in the realm of provider payments illustrates how one such element of an organization’s business model—profit formula—affects innovation, depending on its design.

Most providers in the U.S. have historically been, and continue to be, paid a fee for each medical service they provide, usually by insurers. Because this payment method rewards pure volume of care, it creates the perverse incentive to deliver unnecessary care. It also constrains innovation, because it deprives providers from reimbursement for services that aren’t on an insurer’s approved services list, no matter how beneficial they may be to patients. Undoubtedly, many providers deliver unreimbursed services anyway from time to time. But care delivery organizations can’t run on compassion alone.

By contrast, “value-based” payment methods, which are gaining traction across the industry, are designed to reward providers for quality and cost-effectiveness of care, rather than pure volume. They take various forms, ranging from service fees with a bonus attached for care quality, to a fixed or “capitated” fee for all the care an individual needs over a specific period of time (usually a year). Payment models toward the latter end of that range facilitate innovation because they aren’t tied to a defined set of services.

Innovation to address social determinants of health is therefore much more likely to succeed and thrive within a business model whose profit formula is rooted in the appropriate form of value-based payments. And yet the right profit formula, while essential, is insufficient to ensure providers’ success in discovering and addressing patients’ social determinants of health. Resources (like funding and expertise) and processes (like strategic planning and performance management) must be aligned to enable these activities as well. Otherwise, providers will always be fighting an uphill battle to achieve their objectives.

The bottom line is that innovation isn’t some isolated, protected process in an organization; it’s profoundly shaped by an organization’s business model. Providers aspiring to positively influence the social determinants of patients’ health would be well-served to consider the ways in which their business model might enable or constrain innovation toward that important end.

Rebecca Fogg is a senior research fellow at the Clayton Christensen Institute, where she studies business model innovation in healthcare delivery, including new approaches to population health management and person-centered care.

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fsgoldsteinHealthViewXPeterPharmaviewRes Morgan M.D. Recent comment authors
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fsgoldstein
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fsgoldstein

Two comments to add to this, 1) As others have stated, I believe that the Medical system may not be the right group to organize and operate approaches to SDoH, but they certainly are holding onto the funds (30% of Healthcare is waste fraud and or abuse) that could be allocated to these areas. See this blog “Running to the Ball, the Shiny Object of Social Determinants of Health” https://accountablehealth.wordpress.com/2018/08/20/running-to-the-ball-the-shiny-object-of-social-determinants-of-health/, and PJNelson you are on target … this may be some more assistance: 2) A group of us now has a bill before congress with bipartisan support, the Community Health… Read more »

HealthViewX
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HealthViewX

A very well written blog.

It is very important to include new approaches to population health management and person-centered care/ patient-centered care. HealthViewX patient referral solution, care management solution, chronic care solutions, etc are some the industry can look into.

Pharmaview
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Pharmaview

http://pharmaview.info/

Pharma View | A Leading Newspaper In Pharma Trade

Pharma View Newspaper foremost and one of the top Pharma trade newspaper and web portal in India having headquarters in Hanumangarh, Rajasthan with long….

Res Morgan M.D.
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Res Morgan M.D.

Attempting to correct social issues through the medical care system is by far the most expensive, least effective and least efficient way of doing so. This is just dumping on doctors problems that no one else wants to address.

That the moronic-to-the-point-of being-dangerous clowns at the AAFP are incredibly enthusiastic about holding family physicians responsible for all aspects of their patients’s lives – housing, transportation, nutrition, etc., – is good evidence of what a terrible idea this is.

Peter
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Peter

“Attempting to correct social issues through the medical care system is by far the most expensive, least effective and least efficient way of doing so. This is just dumping on doctors problems that no one else wants to address.” Sadly I have to agree. It’s the same as expecting police/correctional officers to fix social problems by being mental health workers. The foundational way to correct these problems (over time) is spending money, lots of it, on neighborhoods with public health workers, schools, and life coaching. But as long as Americans choose to invest more tax subsidies on the top 1%… Read more »

pjnelson
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pjnelson

Maya Angelou said: “I’ve learned that people will forget what you said, .people will forget what you did, .but people will never forget how you made them feel.” The likely reality is that a portion of the cost and outcome attributes of our nation’s healthcare industry are caused by the worsening “social determinants” of population HEALTH. It is similarly unlikely that the healthcare industry should be held responsible for solving the “social determinants” occurring within within each citizen’s community. An investment by our nation must coordinate a locally-managed focus on the neighborhood citizens that live within a city-block of each… Read more »

Peter
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Peter

“To believe that a new governmental financial commitment can establish caring relationships within the micro-neighborhood network of each person’s family is ridiculous.” Well we believe that bestowing huge and disproportionate tax cuts on the wealthy (individuals and corporations) is the way to solve societal problems – is that working? “On the other hand, could the local stakeholders convene within each community to develop the problem solving strategies for resolving their own Social Capital deficits? It is already occurring within most communities, especially for homelessness.” By the homeless themselves? These at risk communities usually have no intellectual expertise to even know… Read more »

pjnelson
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pjnelson

For community based change for homelessness. SEE https://www.community.solutions/about-us

Peter
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Peter

pj, good work by Community Solutions , but I think lacking in the scope of the needed housing. I like the mixed housing solution as low income warehousing never works, but the funding is a little bit of a mystery other than foundation/donors/partners using tax deductible money, then patting themselves on the back. I’m not all negative, but would need more information beyond what I read on the web site. We need to also force builders to add mixed needs to their developments, but sadly buyers and neighbors would have to accept lower income in their backyard. I only see… Read more »

pjnelson
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pjnelson

Housing for the chronically homeless is supported by “permanent supportive housing vouchers” that a community may obtain through local non-profit contracts with HUD and the Veterans Administration. These housing vouchers include support for “wrap around” services to engage the other community services that are helpful as in mental health. The ROI for these vouchers is >7:1 as documented by its reduction in the cost of healthcare for these folks. There are also “temporary supportive housing vouchers” for young adults leaving Medicaid and person’s leaving penitentiary housing ordered by a Court. I spent 2 1/2 years volunteering with an out-reach team… Read more »

Res Morgan M.D.
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Res Morgan M.D.

“It’s the same as expecting police/correctional officers to fix social problems by being mental health workers.”

And it’s the same type of stupidity that has destroyed the teaching profession.

LeoHolmMD
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LeoHolmMD

Continuing the sentiments already spoken: Do you really think that medicalizing the address of social ills will be cost effective? You will hit 30% GDP trying to prove it I suspect. Social problems need to be solved directly, not by handing it to some growth driven industry. Sort of like the so called “correctional” industry where we have more people in jail than some countries have free. Not sure what that is correcting. “Prevention” has fallen into the same trap (because most of it has nothing to do with prevention). It is simply medicalized hyper-vigilance. SNAP is another fantastic example… Read more »

pjnelson
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pjnelson

I have a belief that true structural healthcare reform should be limited to $1.00 per citizen annually for a new semi-autonomous institution, similar to the Federal Reserve. This new institution would mobilize a nationally identified, @800, collection of separate communities nation-wide (about 400,000 citizens each). These groups would be locally funded and managed by their community’s legitimate stakeholders. They would receive nationally coordinated and regionally mediated training/advisory processes. . See my URL beginning at https://nationalhealthusa.net/initiative/ and its five Sub-Pages for the duties of the new institution, provisionally identified as NATIONAL HEALTH. Its home office would be located in Saint Louis… Read more »

BobbyGvegas
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BobbyGvegas

“You’re going to have such great health care, at a tiny fraction of the cost, and it’s going to be so easy.” – Candidate Donald Trump, Oct 2016 Florida campaign rally.

“Who knew health care could be so complicated?” – President Donald Trump, 2017.

https://khit.org

William Palmer MD
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William Palmer MD

Two disruptive ideas: 1.Because the demand for inpatient care is–or should be–highly inelastic, try running it somewhere as an experiment in a public good (no bills or charging apparatus; only medical records kept). Inelastic means your costs are essential so that you might avoid some gaming through moral hazard on the part of the patient. And, if you run it through a local hospital district or county, you avoid provider-induced demand because these payers are never going to have a surfeit of money. [Everyone on salary; drugs obtained through monopsonic purchasing; funding by local or county taxes and perhaps CMS… Read more »

pjnelson
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pjnelson

The level of Social Capital shared among our nation’s citizens, the expression of Trust, Cooperation and Reciprocity, is at an all time low. We would need to implement a generational, community by community strategy to augment this attribute nationally. With slow implementation and locally driven strategies to enhance their own Social Capital, you are correct for a staged implementation of individual/family health care financing. I am still a bit hesitant about the sustainability of social responsibility within the C-Suite of most hospital-based enterprises. Maybe they just need to be threatened by the Joint Commission accreditation review process based on their… Read more »

Adrian Gropper, MD
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Adrian Gropper, MD

@pjnelson below clearly understands what healthcare incumbents and the consultants that cater to them clearly do not. Our “providers” are already wasting (and sometimes defrauding) society to the tune of $1 trillion per year as compared to healthcare prices in other rich nations. This $trillion would be much more effectively spent on education, healthy food, and parks than among the healthcare incumbents.

pjnelson
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pjnelson

A kindred spirit!

pjnelson
Guest
pjnelson

Is it possible that our nation’s healthcare industry is the least efficient and effective among the other 34 OECD nation’s of the world? See the JAMA population health study reported by Irene Papanicolas et al ( https://doi.10.1001/jama.2008.1150 ). Oddly, the effectiveness issue might be, best described as uneven. Look up Maternal Mortality on page 1030 of the JAMA report. I won’t cite the reported data, its a black mark on our nation’s health priorities. This statistic has worsened now for 30 years annually, with no evidence of improvement. We speak of social determinants as if it could be identified as… Read more »