During our Feb. 27 webinar on financing medical-social partnership, participants had lots of questions about the value of CBOs’ services. Victor Tabbush has answers.
As more healthcare providers understand the critical role of social needs in patients’ health, the services of community-based organizations that meet those needs are in increasing demand. A payment system in which the CBO receives a portion of the actual cost savings generated by its work can make for fair and sustainable partnerships. (My ROI calculator tool, now in development, will equip partners to set up such a system.) However, the question of how to calculate and demonstrate that value is new to many CBOs.
It is actually quite feasible for social-service organizations to make the case for the monetary value of their services. Data on cost avoidance stemming from the integration of social services may be scarce or even nonexistent for certain services. However, often the requisite reduction in acute-care events in order to warrant participation by the health-sector partner is so small that the business case can be predicated on plausibility alone.
That is, for a small added cost, the health-sector partner will regard it worthwhile taking this expense risk, since so little impact is required to get its investment repaid. For a relatively simple calculation, it may be worthwhile to conduct a break-even analysis — i.e. to determine the required reduction in certain medical events for a social service to pay for itself in terms of cost avoidance. The healthcare partner might be swayed by intuition and plausibility that this threshold will be easily crossed and the service will be profitable, despite not having the evidence in advance.
Answers to more of the webinar participants’ specific questions follow.
Q: As a CBO, how do you demonstrate value to medical partners, including cost avoidance if you do not have access to that data?
You need data. If you lack medical event expense data, you can report utilization reductions and let the health partner know that these costs monetize the savings.
Q: How do you convince payers and/or plans to agree to these payment systems with CBOs, especially when research or evidence may be scarce on the effectiveness and impact these non-clinical services have on health outcomes and health care costs?
When information is lacking on effectiveness, convincing the partner may require a “money back guarantee,” meaning gain sharing. So if there are no savings the CBO gets little, if anything. Another option is to get grant funding to demonstrate effectiveness. When proof of concept is demonstrated, then the CBO can charge commercial rates.
Q: Is the ROI in the calculator based on known savings from the various services (e.g., transportation, nutrition). In other words, do we know fairly well what the average savings are for each type of service?
There is ample published evidence that social services produce medical cost avoidance and thus savings. (Here is a helpful summary from Politico.) Several CBOs, together with their health plan partners, also have conducted pilots that have demonstrated attractive returns on investment. However, these evaluations are rarely made public. There is no average per se. The results depend on the population targeted, the specific nature and intensity of the service, and the effectiveness of the specific CBO in implementing the program.
Q: Would data-sharing agreements need to be in place as part of the partnership? How would you suggest these be set up? E.g. sharing a database, or frequent reporting that identifies clients so social service data can be linked to clinical partner data?
Data sharing around medical utilization is helpful for partnerships to work, especially if it is a gain sharing model, in which case it is essential. CBOs, even if paid on a cost basis, need to know what the utilization results of their interventions are so that they can fine tune their components.
By Victor Tabbush
Victor Tabbush is a health economist and emeritus professor at the UCLA Anderson School of Management and Senior Fellow at HealthBegins.
August 2020: Voting is Vital: 3 Ways to Get Out the Vote
In this newsletter Rishi Manchanda discusses the importance and relevance of elections to the Upstream Movement. Now more than ever it is crucial that we protect the health of our democracy as we strive to improve the health of communities.