If it wasn’t already clear that the U.S. does a poor job of investing in things that keep people healthy, the coronavirus crisis and its disproportionate effects on people of color has made this abundantly clear — even though we spend more per capita on health care than any other nation.
If we could tie more of that investment to low-cost preventive services that deliver positive health outcomes, we could keep more people healthy in “normal” times as well as during a pandemic. The Trust for America’s Health has estimated that community-based interventions in areas like obesity prevention, wellness screening, asthma prevention, and pedestrian safety could return more than $5 for every dollar invested.
Take Meals on Wheels. It provides a crucial service for home-bound seniors in the form of the “More than a Meal” program. By coupling food delivery with a short social visit and check around the home, it has been shown to help seniors avoid expensive trips to the hospital and support their ability to live at home as they desire instead of moving into costly nursing facilities.
Yet programs like these operate on razor-thin margins and are supported by a patchwork of grants, donations, and government contracts that rarely cover actual program costs. This impedes innovation, expansion, and long-term planning. The lack of sustainable funding also inhibits widespread adoption of these solutions as service providers are unable to invest in infrastructure and attract the support of payers who require scale to comfortably contract out their services.
To change this problematic cycle, we need new ways to channel funding to these underresourced community-based organizations and provide them with the capital they need to expand the essential services they offer, especially to vulnerable populations.
Increases in federal spending have traditionally been viewed as the remedy for this resource shortfall, but those proposals end up competing for scarce discretionary dollars and usually come up short. And if recent events teach us nothing else, we can’t afford a strategy of wait and hope.
Instead, we need to see more managed care organizations rewarding community programs that deliver results. When health care companies pay community-based organizations to achieve outcomes, everybody wins: The recipients of the services are healthier and happier, health care spending decreases, and community-based organizations have service contracts that provide the solid financial platform they need to fully meet their missions.
The real magic happens when community-based organizations use the income from these service contracts to borrow money, scale up operations, and invest more deeply in the communities they serve. The model can spark a virtuous cycle of payment based on outcomes while creating a revenue engine that is self-sustaining and independent of traditional funding sources.
Right now, those with the biggest incentives to partner in this way with community-based organizations are Medicaid managed care organizations. These are health plans that contract with states to provide for the delivery of Medicaid health benefits and additional services at fixed payment rates. As Medicaid managed care organizations assume increasing responsibility for managing the health and cost of Medicaid beneficiaries in 41 states, more are seeking contracts with community-based organizations to increase spending on prevention and reduce spending on “sick care.”
This trend is being accelerated by state Medicaid agencies like those in the District of Columbia, Louisiana, and Ohio that are looking to managed care organizations to invest in solutions that address the underlying causes of poor health, including food and housing insecurity.
Covid-19 is putting far more pressure on states, and therefore on managed care organizations, to do more with less. And as jobless claims and Medicaid rolls expand, many of the needs of those new plan members are likely to be best addressed through programs offered by community-based organizations. This should serve as both a wake-up call and a massive opportunity for managed care organizations and community-based organizations to innovate new service and payment models together.
That’s what’s happening in Washington, D.C., where the nonprofit Volunteers for America Chesapeake and Carolinas is working with managed care partner AmeriHealth Caritas D.C. to create a new care model for homeless men in which the provider is paid for improving health outcomes for participants and reducing health plan costs. Instead of going back to the streets or a shelter after a hospital stay, plan members are offered temporary housing in a community setting where they can get the medical care needed to recover as well as substance-use counseling and support to access more stable housing.
With basic needs met, the men can start to address any underlying chronic conditions exacerbated by homelessness and reduce relapses that send them back to the hospital for another costly stay. Through its value-based payment arrangement with AmeriHealth and other plans in the market, Volunteers for America Chesapeake and Carolinas can secure revenue based on successful outcomes.
The thousands of community-based organizations in the U.S. represent an untapped source of health care value, waiting to be identified, properly compensated, and scaled up. There is also strong growth in the $500 billion impact investing market, which aims to generate positive social and environmental results along with financial returns. The evolution of value-based payments for human and social service providers will increasingly allow them to tap into the pool of impact capital to expand their footprints.
While investors are important to this growing industry, the critical foundational work is being done by managed care and community-based organizations: the former by investing in prevention and reducing low-value health care spending, and the latter by creating more innovative programs where performance is tied to specific and measurable outcomes.
Their efforts could be accelerated by continued pressure from state Medicaid agencies in the form of rules, bidding processes, and contracts that encourage managed care organizations to invest in partnerships and programs that focus on holistic health needs and deliver better outcomes at lower cost.
In the midst of a pandemic and a surge in unemployment that is rapidly adding to the ranks of the needy, we should seize this opportunity. Redirecting resources to services that clearly drive better health can make big improvements in people’s lives, reduce overall health care spending, and help insulate millions of Americans from this crisis — and others to come.
Eric Letsinger is the founder and CEO and Alison Rein is vice president of health and human services at Quantified Ventures, which works with managed care organizations and community-based organizations to create and finance programs that address social determinants of health.