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Value-Based Care News

How Addressing Social Determinants of Health Cuts Healthcare Costs

Nutrition programs, housing initiatives, and ridesharing partnerships are some of the ways providers are reducing healthcare costs by addressing social determinants of health.

Social determinants of health and healthcare costs

Source: Thinkstock

By Jacqueline LaPointe

- Population health management and value-based reimbursement success hinge on reducing healthcare costs not only when a patient is in the exam room, but also when they are beyond the walls of the practice or hospital. Therefore, understanding where a patient lives, their income, education level, job status, and other social determinants of health (SDOH) is critical as providers aim to reduce healthcare costs and unnecessary utilization.

Socioeconomic factors are responsible for approximately 40 percent of a patient’s health, while just 20 percent was tied to care access and quality of care, the American Hospital Association (AHA) recently reported.

Despite the impact SDOH have on a patient’s outcomes and costs, many providers are not equipped to address housing, economic stability, education, food security, and other social determinants.

Providers in a recent Leavitt Partners survey cited insufficient appointment time and lack of compensation as top barriers to addressing SDOHs. Fee-for-service payments do not reimburse providers for extending care beyond the practice’s or hospital’s walls and even some alternative payment models have yet to branch out into integrating medical, social, and behavioral services.

But to truly bend the healthcare cost curve, providers will have to start caring for more than a patient’s physical health, according to Kaveh Safavi, MD, JD, Senior Managing Director at the global consulting firm Accenture.

READ MORE: How Social Risk Factors Influence Value-Based Reimbursement

“Context is actually very interesting because what we’ve discovered is that listening to a conversation and how somebody talks about things like how much money they have and whether they have food, matter a lot in their care,” he recently explained to

Success with value-based reimbursement will also depend more on keeping patients healthy and out of the physician’s office. Capitation payments, accountable care organizations (ACOs), and other alternative payment models require population health management and strategies for reducing utilization.

Addressing SDOH is becoming increasingly important for providers seeking greater efficiency and lower costs. The following explores examples of providers who reaped the financial benefits of implementing such programs and provides tips for establishing similar models.

ACO saves $4.8M with a nutrition program

Nutrition programs are one of the most common types of SDOH initiatives undertaken by hospitals and health systems. About 79 percent of hospitals with an SDOH strategy implemented nutrition programs, the AHA reported.

Providers may be establishing nutrition initiatives because the programs significantly reduce healthcare costs as evident by one ACO’s experience with nutritional assistance.

READ MORE: Good Data, Better Value-Based Care Can Boost Population Health

Malnourished patients cost nearly twice as much as their well-nourished peers because they experience prolonged hospitalizations and higher readmission rates, the Health Care Cost and Utilization Project reported in 2016.

To reduce the costs of food insecurity, Chicago-based Advocate Health Care launched two quality improvement initiatives within their ACO targeting malnutrition. The ACO started to screen all patients at admission for malnutrition risk. Patients with elevated risk scores received an oral nutritional supplement within two days of admission.

The ACO also implemented an enhanced nutrition care program in which high-risk patients received nutrition education, post-discharge instructions, follow-up calls, and coupons for retail oral national supplements.

Within six months, Advocate Health Care reduced healthcare costs by $3,800 per patient, resulting in $4.8 million in total savings. The ACO also saw hospital readmission rates drop among patients at risk for malnutrition.

 “As providers, administrators, and payers face added pressures from rising healthcare costs, value-based nutrition interventions should be considered in all hospitals across the US,” researchers stated.

READ MORE: Scarce Public Health Funds Block Social Determinants of Health Aid

For organizations looking to implement nutrition programs, the AHA advises providers to integrate the Children’s HealthWatch Hunger Vital Sign tool into their patient surveys. Organizations should also consider investments in food systems, such as food banks, local pantries, grocery stores, and farmers.

In addition, organizations could also conduct education courses for patients, establish community gardens, and allow food stands from local farmers on their property.

Illinois-based health system reduces costs 42% after housing partnership

After noticing a small group of emergency department “frequent fliers,” the University of Illinois Hospital decided to do something about it, the AHA recently reported.

Providers found that a large portion of the individuals frequently seeking services in their emergency department were also chronically homeless, meaning they had been continually homeless for at least one year or had faced four episodes of homelessness within a three-year period.

Performing a cost profiling analysis, the hospital found that just 200 of its chronically homeless patients were in the 10th decile for patient cost, with annual per-patient expenses ranging from $51,000 to $533,000.

To reduce excessive healthcare costs, the University of Illinois partnered with a community group called the Center for Housing and Health to launch the Better Health Through Housing initiative in 2015.

Under the initiative, hospital providers identified emergency department patients who were experiencing chronic homelessness and referred them to the community group. A panel of physicians, social workers, and other experts would then determine each applicant’s needs and pair qualifying individuals with an outreach worker who connects the individuals with the needed services.

Individuals who accept the hospital’s help move into a “bridge unit,” or transitional housing unit, and case managers develop long-term solutions for independent living.

Almost immediately after partnering with the Center for Housing and Health, the University of Illinois Hospital saw participant healthcare costs fall 42 percent, and more recent studies have found that costs dropped by 61 percent.

In terms of utilization, the emergency department reported a 35 percent reduction in use and the hospital noticed an increase in the use of its clinics.

The AHA recommends that provider organizations take the following steps to implement similar housing initiatives:

  • Identify issues, opportunities, and risk
  • Establish strategic partnerships inside and beyond the hospital
  • Research potential interventions, such as successful programs run by other health systems
  • Consider funding implications and what sources are available for funding (i.e. local government and community agencies)
  • Educate patients, providers, and the community about the initiative
  • Assess and modify initiative to improve housing options, patient eligibility, and outcomes

“Housing interventions are part of a wider recognition that addressing the social determinants of health, like housing, income, employment, education and food security, is a necessary component of the journey toward improved population health,” the industry group wrote.

Health systems partner with ridesharing orgs to recoup revenue, improve care

Approximately 3.6 million individuals did not receive the necessary medical care due to transportation barriers, research showed. And transportation was the third leading challenge to accessing health services among older adults.

Transportation is a key social determinant impacting patient outcomes. Without access to reliable, affordable, and convenient transportation, patients miss appointments and end up costing providers.

Missed appointments and care delays cost the healthcare industry $150 billion each year, and individual organizations lose revenue for every patient who does not show up for a scheduled appointment.

Patients without transportation are also less likely to adhere to medication regimes. One study found that 65 percent of patients felt transportation assistance would enable them to fill prescriptions after discharge. Other research has also shown that Medicaid reimbursement restrictions for transportation payments resulted in fewer prescription refills.

“There is a strong business case for hospitals and health systems to address transportation needs since individuals experiencing these issues are more likely to miss appointments or not fill prescriptions, leading to delays in care and potentially to disease progression and complications or readmissions,” the AHA explained.

To recoup revenue and improve care quality, some health systems like MedStar Health and Denver Health Medical Center are teaming up with Uber, Lyft, and other ridesharing companies to connect patients with transportation.

Other organizations are bringing healthcare to patients. For example, CalvertHealth Medical Center, the only hospital in the Southern Maryland county of Calvert, brings its Mobile Health Center to residents who are unable to seek healthcare services at the facility, the AHA reported.

The hospital used funds and donations from community organizations to purchase a truck with two fully equipped exam rooms and one transitional room.

Bringing healthcare services to patients with limited transportation access boosted preventative care and allowed the hospital to extend its reach to more patients.

The AHA suggests that hospitals and other organizations aiming to address transportation issues develop targeted programs and these programs may need to employ multiple strategies to access all patients who are not coming into the facility.

Addressing social determinants of health will help providers reduce costs and unnecessary resource use, especially as alternative payment and care delivery models emphasize preventative care and population health.

But the biggest takeaway is that they cannot do it alone, the AHA explained.

“Knowing that hospitals and health systems alone cannot address all of these issues, external partnerships will be critical,” the industry group explained. “Externally, hospitals and health systems can partner with other stakeholders or make other investments in their communities. This allows hospitals to not only serve as part of the solution, but to work with other stakeholders to better use limited resources to match the needs of their communities.”

Reaching out to other providers or community agencies in the region will ensure patients receive the right care at the right time in the right location, resulting in lower costs and appropriate resource use.


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