Publication

Article

Population Health, Equity & Outcomes
December 2024
Volume 30
Issue Spec No. 13
Pages: e2-e7

Understanding the Financial Return to Investments in the Social Determinants of Health

The policy community should consider these concrete suggestions to address the challenges presented by social determinants of health.

Although the importance of social determinants of health (SDOH) in influencing key individual and population health outcomes has been recognized by the public health and medical communities for decades,1 there has been increased discussion of the topic in recent years, especially in policy circles where the ongoing inequities in health outcomes and health care access and the high cost of care for various segments of the US population remain concerns.2 A focus on social determinants has received renewed interest at the federal, state, local, and private-sector levels as a potentially effective solution to improve these outcomes. At the federal level, the Center for Medicare and Medicaid Innovation (CMMI) has sponsored an intervention called the Accountable Health Communities (AHC) demonstration, and the HHS Office of Disease Prevention and Health Promotion has developed a Food Is Medicine initiative in response to a congressionally funded mandate.3 Several state Medicaid programs have filed for Section 1115 waivers to address social determinants—or health-related social needs, as they are labeled in Medicaid policy circles.4 Some states such as Massachusetts and Minnesota have leveraged Medicaid expansion under the Affordable Care Act (ACA) to experiment with paying health care providers and health care plans to address patient SDOH needs.5 Even private-sector health insurance plans and self-insured employers are considering adding benefits related to food, housing, and transportation to improve the health of individuals and covered populations, with a recent study by Velasquez et al6 indicating that private insurers have increased spending in this area, albeit modestly, to assist patients and clinicians with SDOH screening and needed services.

Despite the increased awareness of and emphasis on the role of social determinants as influential in important health outcomes, these efforts have faced at least 3 fundamental challenges. First, although there is evidence of the association of SDOH with important individual and population health outcomes, there is a dearth of evidence regarding the effectiveness of interventions that seek to improve health outcomes at scale for the population. This is what motivated, in part, the CMMI demonstration mentioned above. Second, and related, there is not a strong understanding of the return on investment (ROI) for SDOH interventions, including important factors such as which stakeholders make the investment, which stakeholders reap the benefits of the investment (including how best to monetize nonfinancial outcomes), and the time horizon for expecting to see an ROI. Third, some believe that attempts to address SDOH in the US have taken a heavy medicine-centric approach, relying on health care providers and systems to lead, rather than capitalizing on the significant expertise and experience that exist within community-based organizations (CBOs), entities that already have an established presence in communities and have a track record of providing services, albeit often doing so with insufficient funding and with little systematic coordination and integration with medical and public health service providers. As a result of these challenges, the field is crowded with lots of discussion of the topic and there has been some movement in terms of intervention, but there also is a significant lack of objective data on the best strategies to address SDOH at scale. SDOH can incorporate many things, which makes general statements about the broad term difficult to assess absent more details about what specifically is meant. In the US, the most discussed components of SDOH are housing, food and nutrition, transportation, income and financial resources, education, personal safety, and health care access.7 In this article, we address these challenges with the goal of providing concrete suggestions for the policy community regarding where focused attention could be beneficial.

Goals of Addressing the SDOH

Some of the often-cited benefits of addressing SDOH include improved population health outcomes and life quality and the possibility of reduced health services utilization that correspondingly lowers costs.8 Approaches to better understanding and intervening in SDOH also have the potential to reduce the substantial health inequities that have been well-documented in the US.9 Because reduced health spending can limit revenue for health care systems and providers, a key question to ask is whether it is reasonable to expect health systems to make investments in SDOH when doing so could harm the financial viability of these health systems and the potential financial benefits of spending reductions might be realized by other stakeholders, such as public-sector or third-party payers (who have made no investment). Alternatively, if health care systems are not incented to make the investment, then who should do so? To help further elucidate the answers to these questions and to sharpen the policy discussion, we developed a conceptual framework to illustrate the investment, outcomes, and ROI associated with addressing SDOH, including consideration of the time horizon for when potential returns to SDOH investment might begin to accrue.

Conceptual Framework

Building from a diagram used by Hussein and Collins,10 the Figure was developed to help policy makers understand the complexities of addressing SDOH and the possible business case for the government and various partners to make SDOH investments with the goal of improving well-being and health outcomes for individuals and populations. As illustrated in the Figure, the existing scientific literature has fairly solidly established that the elements that make a person—and subsequently a population—healthy are divided among 4 basic categories: socioeconomic factors (eg, adequate housing, available transportation, economic security, personal safety), individual health behaviors (eg, diet, alcohol and tobacco consumption, exercise), health and medical care services (eg, access to doctors, drugs, medical devices and procedures), and the natural environment (eg, clean air, water, climate conditions). The literature estimates that the percentage that each of these categories contributes to the health of an individual or given population is 40% for socioeconomic factors, 30% for health behaviors, 20% for health and medical care services, and 10% for the natural environment (Figure).11

Historically in the US, the 4 basic categories of factors affecting health have been addressed through a collection of complex social and health initiatives implemented independently by various stakeholders, including federal and state governments, medicine and public health providers, CBOs, and various private and philanthropic actors. For example, housing and education systems involve federal entities such as the Department of Housing and Urban Development and the Department of Education, whereas there are also state-based entities with similar areas of focus, often relying to some degree on federal funding and guidelines. The same applies to other SDOH areas as well, such as energy, food, safety and security, transportation, etc. The 4 horizontal arrows in the Figure represent these SDOH areas. As mentioned previously, in the US, a disproportionate share of funding goes to health care systems to provide curative or restorative care rather than to these other social services.12

Rather than operating in silos, as is often the status quo and is depicted by the 4 parallel arrows in the Figure, the premise for SDOH policies and investment is that better integration or partnership between the traditional health and medical care sector and the various social service organizations responsible for SDOH would yield better outcomes more efficiently. The Figure shows this concept with the overlapping circles representing more thoughtful and planned cooperation and collaboration among medicine, public health, and other sectors such as education, housing, transportation, and food. An example of a federal policy attempt to promote such alignment is the AHC program launched by CMS in 2016. The AHC demonstration sought to show that systematic integrated approaches for addressing the SDOH needs of Medicare and Medicaid beneficiaries could both improve population health outcomes and decrease overall costs of care.13 The AHC model looks to hospitals and health systems to partner with other public and private stakeholders to generate synergy in focus and effort around improving access to SDOH services. The Venn diagram in the Figure represents the degree to which silos are removed and stakeholders find common ground to work together, with the hypothesis that better coordination and collaboration will result in better outcomes (eg, improved health and social outcomes, improved service coordination, lower health costs, and shared savings to invest in client needs). The expected improvement in outcomes is hypothesized to result in savings in the form of reductions in health care costs and expenditures—for example, by preventing unnecessary emergency care or hospital readmissions, thus generating a positive ROI over some reasonably defined time horizon. As the Figure illustrates, a portion of the savings resulting from reduced spending can potentially be reinvested to generate future investments in SDOH, illustrating the cyclical and iterative nature of these efforts, including the investment, health and nonhealth returns, and reinvestment that might result due to efficiencies. Stated differently, the information in the Figure hypothesizes that an ROI exists and can be demonstrated if better integration and partnership among the various existing silos and associated stakeholders can occur.

Current Evidence

When considering the existing published literature, it is important to recognize that although numerous studies have reported that SDOH play an important role in influencing the onset, progression, and maintenance of disease as well as promoting well-being,8,14 a number of these studies come from outside the US, where far more public resources are devoted to addressing SDOH.15 For example, as Bradley and Taylor12 discuss, the largest percentage of financial resources for addressing health in the US has gone to health care systems and curative or restorative care and not to preventive care or social services. This becomes important when considering international comparisons because both social systems (eg, tax and housing policy) and health care systems (eg, many nations provide some form of universal health care coverage) are very different in European countries, for example, which the US is often compared with on health outcomes and expenditures.

Taylor et al reported in a 2016 literature summary of 39 peer-reviewed articles that less than 20% of integrated health systems that invested in social services reported concurrent cost savings with improved health outcomes, with some organizations reporting monetary losses.16 Authors of a 2017 report on 200 health system/community partnerships reported that only 65% realized some cost savings.8 When considering these findings, it is important to remember that the perspective is that of the health system and thus a lack of cost savings to a health care system does not mean there were no potential gains that accrued to other stakeholders such as government payers, etc.

RTI International has been evaluating the CMMI AHC initiative for several years and has made some important observations. For example, it found that the AHC program promoted the systematic use of screening tools for purposes of estimating individual patient needs in the areas of SDOH, with food-related needs being the most frequently reported by beneficiaries. It also found that providers had difficulty meeting the SDOH needs identified in screening and often did not have the expertise to know how to address these needs, suggesting a role for developing a less health system–centric approach to addressing SDOH and creating more robust partnerships with CBOs that have the knowledge and skills to address specific needs and that could scale up their existing efforts if additional funding were available to support doing so. In the CMMI evaluation, bridge organization is a term assigned to entities in a community that serves as a conduit to help facilitate addressing the needs of those identified through screening. The CMMI demonstration included 2 specific tracks for providing assistance with SDOH—the assistance track and the alignment track, which varied the degree of formal navigation and assistance to SDOH resources (rather than simple referral to resources) provided to demonstration participants. Results from the 2018-2021 evaluation found that those receiving more formal navigation assistance had significantly fewer emergency department visits. There were also improvements in other outcomes, but these improvements did not achieve levels of statistical significance.17

The lack of conclusive evidence that addressing SDOH improves patient and population health outcomes while reducing health care costs creates a dilemma for policy makers and other stakeholders considering investments in SDOH programs. Hence, understanding whether there is a business case for health systems to invest in addressing SDOH is critical. Similarly critical is a need to understand and evaluate more dimensions of SDOH investment and impact. For example, there is evidence needed about the time horizons for measuring ROI and understanding variations in the efficacy of various types of SDOH interventions (eg, navigation, screening, direct cash equivalent assistance, tax policy changes). Although the Figure is intended to be illustrative of the business case for SDOH partnerships among health care, public health, governmental entities, and community-based social service organizations, the reality is that the business case for this work is very complex and involves multiple stakeholders, including federal and state governments, for-profit and nonprofit health care systems, CBOs, and others. In addition, the scientific evidence base for particular interventions is not well understood, and as a result, many interventions are being designed and implemented absent such data or absent implementation with fidelity in cases where an evidence base does exist. It is because of this dearth of information that Thimm-Kaiser et al9 developed a heuristic framework that highlights 8 different pathways by which SDOH can lead to the exacerbation or improvement of health inequities.

Policy Recommendations

  • Leverage the federal government’s existing playbook to address SDOH. In November 2023, the Domestic Policy Council and Office of Science and Technology Policy publicly released The U.S. Playbook to Address Social Determinants of Health.2 This 49-page document reports on the data that establish the connection between SDOH and health outcomes and also suggests 3 main action areas—called pillars—for advancing investments in SDOH: expanding data gathering and sharing, supporting flexible funding for social needs, and supporting backbone organizations. Many of the suggestions contained in this playbook are consistent with the other recommendations provided here and could easily be combined with a focus on better understanding and measuring the ROI of SDOH interventions, including an analysis of how to both incentivize investments across traditional SDOH silos, while also figuring out practical approaches to redistributing subsequent returns across various stakeholders and silos to support ongoing SDOH investments.
  • Leverage the existing and underfunded expertise and experience of CBOs. The AHC demonstration and other efforts have placed too much of a primary focus on health care providers having the responsibility to screen for and solve SDOH needs. Health care providers—and the associated systems and organizations they work for—with few exceptions (eg, federally qualified health centers) have not been trained to address SDOH needs, nor do they have a reputation in the community for doing so. In fact, many CBOs that have credible experience in meeting SDOH needs have felt threatened by a health care provider–centric approach to solving SDOH issues. The federal playbook for addressing SDOH calls for improving the ability of community organizations—also called backbone organizations—to leverage their expertise and capacity and to encourage and incentivize meaningful partnerships for collaboration with health care providers.2 Implementing this suggestion at scale requires acknowledging that addressing the SDOH needs of patient populations requires financial resources. For example, navigators, community health workers, translators, peer coaches, and other types of nontraditional health care provider resources can be deployed to more effectively and efficiently assist those with SDOH needs rather than relying on already short-staffed health provider organizations to do the same.
  • Connect the dots and dollars to understand the impact of nontraditional health sector policies on population health and health expenditures. The federal and state governments should do an inventory of all relevant policies and government-funded assistance programs to assess the potential externalities related to health. This might be called a “health in all policies” examination. The idea is to look closely at the possible positive and negative health and health expenditure externalities associated with expenditures and interventions in each nontraditional health-related area to understand potential opportunities and synergies. This suggestion is consistent with the recommendation of The U.S. Playbook to Address Social Determinants of Health,2 which calls for expanding data gathering and sharing across existing silos. For example, by examining the impact of homelessness on health care expenditures (eg, increased emergency department use, increased hospital readmissions), government can start to understand potential linkages that may lead to an ROI in a specific area (eg, avoidable health care expenditures resulting from reduced rates of homelessness that may materialize from investments in housing policies). This suggestion encourages a deep reflection across traditional silos where budgets and associated spending that provide assistance may have an impact on health and health-related expenditures, but that impact is not currently measured and therefore is underappreciated. The playbook’s recommendation to align federally administered programs to support SDOH information exchange is a first step in this direction.2
  • Invest in the development of an evidence base for SDOH interventions and measurement of the ROI for SDOH interventions. Although the National Institutes of Health, National Science Foundation, and other federal research programs provide billions of dollars for research studies, very little of this money is devoted to truly understanding the impact of SDOH interventions on the health of individuals and populations, including the societal ROI resulting from such interventions. The federal government should repurpose some of this existing research spending (or allocate new monies) to fund well-designed scientific studies that will provide valuable and guiding knowledge in these areas. These include studies that examine the efficacy of specific SDOH interventions, factors that lead to fidelity of intervention implementation when an evidence base exists, and the ROI of SDOH interventions. Studies that focus on the ROI should include recognition of the time horizon and associated lags before a return may be realized, as well as the ability to account for and measure the fact that investments in one traditional siloed sector may yield returns in another traditionally siloed sector.
  • Reevaluate and repurpose the ACA’s community health needs assessment (CHNA) requirement. This ACA provision requires nonprofit hospitals to identify and address the health needs of their communities. Nonprofit hospitals are required to conduct a CHNA every 3 years and implement strategies to address these needs. The ACA requires that hospitals make public both their CHNA and their implementation strategy. However, in a 2021 cross-section study of 500 hospitals published in JAMA, investigators reported that only 60% of the hospitals in the study published the necessary documentation to meet this requirement.18 Given the federal SDOH playbook, perhaps it is time to strongly consider repurposing this ACA requirement to address SDOH needs more directly in a community. Such a repurposing would be consistent with the other recommendations mentioned above and would ensure that SDOH is an explicit priority when understanding the health improvement needs of a community.
  • Tie value-based payment models to health and SDOH health-producing activities and interventions. Although CMS has set goals to move 100% of health care payments to value-based models by 203019 and has incorporated some incentives to address health-related social needs, fee-based transactional payments, or retrospective spending reconciliations based on fee-based transactions, remain dominant in the US. CMS and CMMI should strengthen their value-based models to think more robustly about how to screen for and measure SDOH needs and how to better incentivize investments in SDOH. A caveat is that this suggestion is made with the understanding that the evidence base for SDOH is both limited and still emerging (as per the suggestion to invest in more research to produce such evidence).

Conclusion

In the past decade, we have seen a growing emphasis on and experimentation with local health care and social service organizations collaborating on addressing SDOH, but there has not been a systematic effort to accumulate outcomes to create an evidence base for future efforts or investments. Addressing the SDOH would align the US with other high-income countries in recognizing that individual and population health is determined by many factors beyond the traditional health care system. Although the US spends the most on health care as a portion of gross domestic product and per capita, in comparison with other high-income nations, it spends the least on social services that would address SDOH. Our recommendations are practically feasible and would likely be met with significant bipartisan support, especially because consideration of both spending and outcomes across existing silos is not only compelling on its own but can also be considered fiscally responsible.

Acknowledgments

The authors would like to thank several former students and research assistants, including Bethany Shaw and Dora Hunter, for their input and assistance with prior versions of this manuscript. They also appreciate the editorial assistance of Tess Wilson.

Author Information

Dr Scanlon is Distinguished Professor of Health Policy and Administration at The Pennsylvania State University in University Park and the editor in chief of Population Health, Equity & Outcomes. Dr Sciegaj is Professor of Health Policy and Administration at The Pennsylvania State University.

REFERENCES

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