Healthcare IT Interoperability, EHR interoperability, Hospital Interoperability

Private Payers News

How Investing in Social Services Could Cut Healthcare Spending

Payers who invest more in disease prevention and social services aimed at improving health and wellness may see their healthcare spending drop.

By Vera Gruessner

While healthcare spending is continually increasing, patient outcomes and overall health has not necessarily improved greatly, according to a report from Leavitt Partners and the Robert Wood Johnson Foundation. However, the study also uncovered that investing spending on social services may actually boost general health outcomes.

Health and Wellness

Policymakers and researchers are becoming more and more interested in understanding how healthcare spending and investment outside of the medical system plays a role in strengthening overall health of their community. Healthcare payers can follow in these footsteps and look to keep their policyholders healthy and fit through social services and outside forces. 

This may mean assisting providers in aligning patients with housing resources or food banks if necessary or even simpler methods of incentivizing patients to visit a fitness center and have a gym membership.

Leavitt Partners analyzed in their study total healthcare spending that happens outside of clinical delivery sites. The organization focused on the “social determinants of health.” This type of information helps policymakers better understand the link between various industries and social service agencies to overall health and wellness.

Additionally, lawmakers would be able to make better decisions and appropriately allocate funds to social services and other resources with regard to healthcare spending. Additionally, this type of research is likely to benefit healthcare payers and providers attempting to innovate in new payment models including accountable care organizations meant to coordinate care more effectively between various facilities.

READ MORE: Does Reference Pricing Reduce Costs of Diagnostics for Payers?

The focus on disease prevention and wellness has become a clear focus of the federal government since healthcare spending has been growing extensively over the years. The Centers for Medicare & Medicaid Services (CMS) predicts that healthcare spending as a percent of the gross domestic product will rise from 17.5 percent in 2015 to 20.1 percent in 2025, according to the report, which is called Measuring Total Investments In Health: Promoting Dialogue and Carving a Path Forward.

The second country to come in anywhere close to this type of healthcare spending is France, which has an 11.6 percent of the GDP allocated to medical care. However, despite all the high costs, the United States does not have the best quality of care and superior patient outcomes around the globe.

Life expectancy and obesity rates are not where they could be in the United States, the reports finds, which is why bringing more emphasis to disease prevention and the use of social services is vital for reducing costs and improving overall health in the nation.

The report does outline some challenges with research determining the total spend on healthcare such as defining which social services to include, gathering and reporting data, and a lack of consensus on methodology and measurement when presenting spending data.

“When calculating total spend on health, it can be difficult to determine what factors influence health when nearly everything can or should be counted as a factor. Problems with including all of these factors, however, are two-fold,” the report stated. 

READ MORE: Top 4 Ways Payers Could Improve Patient Health Outcomes

“First, among the factors that are associated with health, not all factors have the same degree of influence. Second, it may be difficult to determine the specific impact or relative weighting of individual factors when including numerous determinants in an analysis as evidenced by various models that weigh factors differently. One approach to overcoming this challenge involves classifying various social programs or determinants into similar groups.”

While the need to invest in disease prevention and wellness through social programs is key for payers to cut their spending, public health funding dedicated to preventing illness has fallen by $40 billion from 2009 to 2014, based on research from David U. Himmelstein, MD, Lecturer at Harvard Medical School and Professor at the City University of New York (CUNY), and Steffie Woolhandler, MD, MPH, CUNY Professor and Harvard Medical School Lecturer.

The researchers claim that the medical industry is spending more money on treating disease today than preventing it. For example, pharmaceuticals are making extensive revenue for cancer and hepatitis C drugs while social programs aimed at anti-smoking ads, drug abuse prevention, and needle exchange programs are in severe need of additional funding, said Woolhandler.

“Our healthcare system is dangerously out of balance. We’re spending more and more treating disease, but less and less to prevent it,” Woolhandler said in a press release. 

“Obamacare was supposed to add $15 billion to public health funding. But in 2012 Congress cut that by $6.25 billion, and sequestration imposed further cuts in 2013,” explained Himmelstein. “This year, public health will get less than half of the $2 billion promised by the ACA [Affordable Care Act]. And state and local government public health spending has also fallen, even while their other health expenditures have continued to rise.”

READ MORE: CMS Cuts Wasteful Medical Spending, FFS Improper Payments

Healthcare payers looking to reduce their overall spending may need to work with their consumer base and provider network to align social services and other measures to prevent disease and improve health and wellness.

Image Credits: Leavitt Partners and the Robert Wood Johnson Foundation


Dig Deeper:

How the Affordable Care Act Changed the Face of Health Insurance

How Health Insurance Mergers Could Change the Payer Industry


Sign up for our free newsletter:

Our privacy policy

no, thanks