Social Determinants of Health (SDoH) are the non-medical but highly critical mileau of experiences and environments which can drive health care needs and spending. From a public health and cost control point of view, it is a fancy way of saying that if basic life needs are not met, individuals are likely to have complex and expensive medical problems that are directly tied to those unmet needs.
SDoH is a big thing, it is the motivation for some payer-provider systems to invest in better housing or air conditioning or de-molding schools or any number of things that don’t look directly like medical care in an attempt to avert medical utilization and costs.
But it is not a panacea. The business case for SDoH spending is a complex case that is dependent on the cost of the intervention, the number of interventions needed to avert an episode and the duration during which the intervening payer can collect the positive outcomes of the intervention. I want to pull out a tweet that is a good teaching example:
Just hearing that care for an asthma attack costs $15,000. Renovating a poor quality apartment to decrease asthma attacks costs $4000. Action on social determinants of health saves lives and money – so some USA hospitals are making renovations available to asthma patients
— Kwame McKenzie (@kwame_mckenzie) September 6, 2018
For the renovation to be a good health and financial investment for a medical care paying entity (a private insurer, Medicare, Medicaid, CHIP etc) the following things need to be true.
1) 1 asthma hospitalization costing $15,000 has to be avoided for every 3.75 apartments. 3.75 is the absolute cost effective limit of the Number Needed to Treat (NNT)
2) The avoided hospitalization has to happen while the people who live in those 3.75 renovated apartments are covered by the entity that paid for the renovation.
3) The avoided hospitalizations have to happen soon enough so that the future avoided costs are still profitable to fund out of current revenue once we factor in opportunity cost of money and attention.
That is a tough business case for most preventative services to meet once we get past flu shots.
And it gets even harder as challenges can often be correlated. When I lived in Pittsburgh, my son had moderate to severe asthma that led to at least four nights at the ER. Thankfully he never had to admit him. We lived 300 yards from I-376. We were next to tightest traffic choke point between Breezewood, Pennsylvania and Chicago (the Squirrel Hill Tunnels). We were also 1,000 yards upwind of the Edgar Thompson Steel Works. Renovating our house could have eliminated or minimized one trigger, but the fine particulate triggers were not going to be addressed. A few blocks further south, the housing stock was far worse and the residents were far more likely to have respiratory distress. Renovations would be a solid improvement in their standard of living but renovations would probably not be a cost effective asthma intervention because of the steel mill six hundred yards away.
SDoH as a business case will vary dramatically based on churn of the targeted population. A locally prestigious integrated delivery network (insurer and hospital system) (IDN) that runs both a Medicare Advantage plan and a Medicare Fee for Service Accountable Care Organization (ACO) has far less effective churn of membership than an insurer that only sells ACA individual market policies in a competitive market. We would expect the IDN to be able to make SDoH investments that are profitable at the corporate level even if the accountants fight to the pain over internal transfer payments between the Medicare Advantage team and the ACO team. An ACA only insurer in a competitive market has almost no business case to pay for SDoH as any benefit that would be gained by its members will be reflected in lower healthcare costs that another insurer pays out as the ACA market is a high churn, short duration market.
SDoH can be a good thing to do in and of itself from a societal point of view. But the business case for SDoH investments as a purely financial matter is heavily dependent on the cost of the intervention, the cost of the avoided medical expense, the number of interventions that have to happen for the medical event to be avoided and how long the payer is responsible for the healthcare costs of the people who are receiving the intervention.
We should expect low SDoH investments as a cost reduction strategy from payers in competitive, multi-insurer regions with high churn markets. We should expect more SDoH investments in low competition regions and sticky markets.