Funding sources, financing strategies, and payment models can all influence a health system’s consideration to invest in or fund non-clinical population health. While health systems recognize the value that providing wrap-around social support services can benefit their patients, beneficiaries and community’s overall well-being, the use of alternative payment models as a vehicle to support such linkages is still nascent. Through the P4PH project, we have identified three primary funding and financing mechanisms that can support community-wide population health interventions: community benefits, operational funds, and reimbursement streams, all with their own benefits and challenges.

Community Benefits

With the passage of the Affordable Care Act (ACA) in 2010, non-profit health care providers have been incentivized to invest savings in community benefit supports to retain their 501(c)(3) tax-exempt status. The ACA also required these providers to conduct community needs assessments (CNAs) to explicitly aid in targeting their community investments and develop population health strategies that also address preventative care and “…social, behavioral, and environmental factors that influence the community’s health or emergency preparedness.” As a result, community benefit dollars have become a commonly used source of funding for non-clinical social support services (i.e., housing assistance, transportation support, employment training). Yet, it is not without limitations. There are no specifications on how much a health system should invest or what type of investments constitute community benefit supports under Internal Revenue Service codes. These projects also struggle to produce measurable outcomes due to the short timeframe and lack of infrastructure and metrics to measure return-ion-investment. By relying on community benefit resources, systems may not feel there is an immediate need to tie their investments to outcomes. Thus, many of these targeted investments have lacked long-term strategy or sustainability. Without a strategic plan, these population health projects are continually at risk of ending, especially if a health system’s operating dollars diminish or another innovative project gains interest and shifts the systems’ focus.

Operational Funds

The use of operational dollars as another source of funding is gaining consideration with health care systems especially when considered anchor institutions. Utilizing operational funds require health care systems to consider innovative ways by which they can redeploy their dollars through strategic personnel, procurement and investment practices. These strategic investments are intended to net positive impact across the community in the form of enhanced economic well-being. By practicing a strategy of “build local, hire local, buy local,” the health system can contribute significantly to the overall health of the community. Unlike community benefits, use of operational funds may better support a strategic and likely long-term commitment by the health system. Yet, like community benefits, these investments may not result in the positive return-on-investment needed for continued investment.  

Alternative Payment Models

The adoption of alternative payment models (APMs) offer an additional mechanism for funding services related to non-clinical determinants of health – one that could offer both sustainable funding and produce measurable outcomes. Yet, it also presents some of the largest challenges. Health systems find it difficult to incorporate a reimbursement structure that provides payment for non-clinical supports but also reaps short-term savings on their balance sheets. Alternative payment models tied to quality improvement or shared risk structures (e.g., pay for performance, shared savings) are likely models to consider, but presently most only incorporate preventative clinical care rather than non-clinical social supports.

A health system’s choice to invest in a non-clinical population health supports is significantly influenced by the need for a strong business case. Two inter-related notions underpin the business case rationale: 1) the need for evidence that an intervention or investment will produce desired results; and 2) a return-on-investment (ROI) calculation that demonstrates the investment is profitable or at least break-even.  Evidence about the impact of non-clinical services and environments on health is beginning to accumulate although still not widely used to support funding decisions. Additionally, many health systems often operate on slim margins so short-term ROI calculations are more palatable. However, short-term savings estimates for many non-clinical social supports, while often related to clinical indicators (e.g., improved asthma outcomes because of a housing mold abatement intervention), are difficult to measure. Often such investments produce longer-term savings or the savings may accrue to other sectors or organizations than the one paying for the upfront investment costs (i.e., the “wrong pocket”).

For health systems that would like to strategically incorporate population health investments into their APMs, and for those that may need a business case rationale, we pose the following questions:

  • Can reimbursements for non-clinical social supports be built into alternative payment models?
  • What sort of evidence is needed, beyond an ROI, for a health system organization to agree to support an investment in an intervention? How robust must the evidence be?  
  • Is a short-term return-on-investment (ROI) required to rationalize an investment in non-clinical population health support services?
    • If so, what does this ROI look like? Is it tied to a clinical service and outcome?
    • If not, is there an ROI length of time that helps support such investments?
  • Are there specific non-clinical social supports (i.e., housing, food insecurities, employment supports, etc.) that are more easily incorporated into an APM?
  • Are there ways to mitigate the “wrong pocket” dilemma of having a health care system investment made by one organization while subsequent savings accrue to a different organization?
  • Is there a more adoptable and/or palatable (i.e., “easier to sell”) source of funding (e.g., community benefit funds, APMs, other financing sources) for non-clinical population health supports? If so, why?

Other Organizations Exploring this Element

The payment and financing foundational element was identified and informed by a multitude of interviews with key informants, thought leaders, health systems, and other community organizations immersed in these discussions. We recognize many other organizations and initiatives are exploring the multitude of issues related to financing and funding non-clinical services and infrastructure in support of improving community-wide population health.

Resources

  • NRHI. Accelerating the Implementation of Value-Based Payment Care and Payment: Recommendation from the 2016 National Payment Reform Summit. (Sessions 1 & 2)
  • CHCS. State Payment and Financing Models to Promote Health and Social Service Integration
  • CHCS. Using Medicaid Resources to Pay for Health-Related Supportive Services: Early Lessons