Making The Connection Between Health Care Costs & Social Support Services

Executive Briefing | by | June 11, 2015


Monica E. Oss
Monica E. Oss

Last month, my colleague Athena Mandros put a spotlight on the social determinants of health, which is the concept that there are “conditions in the environments in which people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks” – see The Social Service Factor In The Health Care Value Equation. These social factors – lifestyle, education, and environment – are likely responsible for as much as 40 percent of health outcomes (see Addressing Patients’ Social Needs: An Emerging Business Case for Provider Investment). This premise is illustrated by the Robert Wood Johnson Foundation report, Health Care’s Blind Side, that found that physicians think that a high proportion of their consumers have primary social support service needs, like the need for fitness programs, nutritional food, and transportation assistance.

Todd A. Landry

Her article got some great feedback. Most of the comments were from executives of social service organizations expressing frustration about continuing budget cuts for those very social support services, at a time when the need for those services has not declined – and their impact on health care spending is increasingly apparent. One responding OPEN MINDS Circle reader, Todd A. Landry, Executive Director of Lena Pope, wrote:

I found this…both informative and, to be honest, a bit infuriating. It is amazing to me that in the examples of Health Leads and HealtheRX, the health plans are happy to capture any savings but aren’t willing to actually pay for any of the “social services” they are referring patients to. At some point, if the social services side of the equation is going to provide more services, some of the benefit the health plans are receiving needs to be passed on to the social service agencies providing these services – a logical extension of the closing argument about sustainability and scale. Maybe this kind of effort would be a good possibility for a social impact bond?

After reading this, I couldn’t agree more that the current state of affairs is both interesting and perplexing. Of course, health plans do not pay for social services. In fact, CMS has been quite clear that Medicaid funding cannot be used for social services such as housing (see For Supportive Housing, Creativity Required). And, there is some speculation that, compared to other “developed” nations, our underfunding of “social services” is, in large part, the reason that our health care spending per capita is so much higher than other “first world” countries, and our health outcomes are so much lower (see Health Care Spending Vs. Social Service Spending).

Despite this gulf between payment systems, the requirements for organizations providing medical home services to “facilitate” the access to social services is quite clear. One of the five core competencies for medical homes is “infrastructure to locate and coordinate non-health social services” (see What Matters In Making Health Homes Sustainable). And, in the accountable care organization world, the TACO concept (meaning totally accountable care organization) – including managing social services – has been raised as a necessity for serving the most complex consumers (see TACOs, Anyone?).

So if you’re the manager of a health plan, an ACO, or a medical home, what is the solution? There are only a couple options. The first, as raised by Mr. Landry, is to use social impact bonds or pay-for-success (as opposed to pay-for-performance) financing models to fund social services for a population. The care management organization could organize an initiative that connects funders and social service organizations to achieve very specific goals (see Is Your Organization Ready For Social Impact Bonds? and The First Social Impact Bond Project – Where Are We?).

A second option is earmarked philanthropic funding by health plans of social services. I was pleased to see the announcement by Magellan about the shift in their corporate philanthropy approach. Magellan has established the new non-profit Magellan Cares Foundation, Inc., and starting in 2016, the foundation will provide grants to improve the health and well-being of communities where Magellan Health has operations or contracts (see Magellan Health Establishes Non-Profit Magellan Cares Foundation).

A third option, but one that will take some development by an entrepreneurial social service provider organization or association, is to develop a blended health/social service program offering, offer it to health plans in some pay-for-value reimbursement formula, and measure the return-on-investment (ROI) in terms of health status and health resource utilization of the target consumer population. While this may sound a bit “out there”, it is the model of the future as we look at moving more of the “complex” consumer population to managed care financing models. It’s a challenge. On one hand, measuring the “ROI” of social services is not easy – and it also could wreak havoc with assumptions about what social services could be funded. But, it has the big reward at the end of quantifying the return of specific social service interventions in the broader health and human service system.


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