A Rising Tide Lifts All Boats: Leveraging Outcomes-Based Financing to Build Sustainable Capacity to Address Social Determinants of Health
By Erin Guidry and Matt Lindsay
During the past several years, Quantified Ventures and Humana have developed a national partnership to build value-based payment models and innovative financing solutions to address social determinants of health (SDOH), advance health equity, and improve health outcomes in communities around the country.
We recently caught up with Abbie Gilbert, Associate Director of the Office of Health Affairs & Advocacy at Humana, and Alison Rein, Vice President of Health and Human Services at Quantified Ventures, to learn more about the partnership. We discussed the challenges and opportunities health plans, health systems, community-based organizations, and impact investors must overcome to make headway in improving some of the most widespread and pressing problems facing modern society.
Abbie and Alison’s responses to our questions have been lightly edited for length and clarity.
Why are community-based organizations (CBOs) so important to addressing social determinants of health?
Abbie: The foundation of it all is trust. When we look to solving and addressing health-related social needs at Humana, we understand that there are so many great partners out in the market that are actively doing this work. In some cases, they’ve been doing it for decades. They’ve established trust and credibility with the community and that’s really important. It makes sense for us to try and partner with them to elevate the work they’re doing and help them become more sustainable. When we first started this work and met with community partners, the overwhelming takeaway was “don’t create new things – there are plenty of great things going on, so just help us better integrate and scale the ongoing work.” We’re there to support growth, not to duplicate work that’s already being done well in communities.
Alison: Everything Abbie said is 100% true in our experience. I will add continuity in the community as another rationale. If you built out programs that were purely led and executed by health plans, you would have disruption every time there was a change in the marketplace. The community-based organizations have the trust and expertise and the community connection that Abbie described because they’re part of the social fabric. Many of them have decades if not centuries-old history in those communities that will persist regardless of external factors.
What traditional financial barriers to SDOH program scale do the models developed by Humana and Quantified Ventures seek to address?
Alison: There are a few things at play here. One is that there are varying levels of business orientation for CBOs. Because they’re deeply rooted in the community and driven by mission, they tend to use all of their available resources to do more of the thing they do. Every penny they get in is translated to services, as opposed to taking the pennies and using them for thinking about how to scale. Also, it’s hard for them to access capital without putting whatever resources and physical assets they have at risk. If you don’t have revenue guaranteed as a way to pay off whatever debt you’re taking in, it leaves you highly vulnerable and most of these organizations have boards that are pretty risk averse. Add to that the fact that their primary sources of revenue are government and philanthropy, which are highly unpredictable. They could have a gangbusters year and get a big grant but after that comes the valley of death. What your leadership and your board remember will remember is the valley of death—and that’s what they'll want you to plan for, spend for, and capitalize for. It’s almost the opposite of what you need to be doing, which is leaning into risk in order to build your capacity. But as a community-based organization, your job is to stay there for the community, so it can be hard to take those risks.
Abbie: Another one of the major barriers is the philosophical mission of how those organizations have been operating for decades. Where we’re seeing this model be most successful is with a community-based partner that is ready to make the transition from a traditional non-profit (or from a purely charitable and philanthropic mentality) to say, “I’m providing a service. I’m a community health provider. I’m not just giving away services; I’m actually a provider of something in this healthcare ecosystem and my organization is willing and ready to think differently and operate differently.” Change management is needed—a readiness to be operating differently and be willing to embrace some of those financial things Alison spoke of. If organizations are thinking about making this move, often education is needed with their board of directors. Not only does the organization have to be ready, but the board of directors has to understand the concept and be willing to take that risk.
How are the innovative financing models (including value-based payment) that Humana and QV have developed getting CBOs to think differently and incentivizing health plan collaboration?
Abbie: The concept of value-based payment is not new to health plans. We have seen the shift from fee-for-service to value-based contracting with providers for a long time now. So, when we think about the concept itself, it’s easier for health plans to relate to; they understand it conceptually. When we talk about the value-based payment aspect, it is often a new concept for the CBOs. There is some education needed, but many of these CBOs have been producing outcomes for decades, so shifting to this model is not as large of a risk as they might think. Using outcomes-based financing and using social impact investing capital together—that's where it gets complicated.
Alison: I will add that increasingly there are two distinct networks that plans work to engage. There’s contracting for clinical healthcare services and there’s what has started to emerge more recently, which is the need to have a broader network that is attending to health-related social needs of members. The parties who deliver against those health-related social needs sometimes intersect with the parties who deliver the clinical services and when they do, they’re at a relative advantage because they already do things like bill for Medicaid services. They have some business and reporting functions that have allowed them to be a part of the more traditional infrastructure. There is another set of CBOs that haven’t done any of that infrastructure-building work yet. So, what we’re trying to do is extend this payment model to those other parties and provide them with a ladder they can grab onto to start taking advantage of that too.
What do health plans need to believe in order to collaborate?
Abbie: When it comes to SDOH and health related social needs, everyone is pointing at someone else to solve the challenge. It also is a tremendous opportunity and ultimately, this type of collaboration takes away the financial risk that any one organization could be assuming in order to address that challenge. Health plans are uniquely positioned to be part of the solution. It would never make sense for a plan to build their own medical respite facility, residential treatment program, or some of these bigger, more costly innovations. One month a plan might need five beds and the next month they might need one. Therefore, increasing the capacity in the community is the more efficient and cost-effective opportunity as opposed to trying to solve these problems on your own.
Alison: The metaphor that comes to mind for me is, “A rising tide lifts all boats.” We’re not totally eliminating risk with this model, but we’re minimizing it and redistributing it in a way that’s tolerable for everyone.
Why did you decide that Family Focused Recovery would be one of the initial focus areas of this work? Where does the Family Focused Recovery health outcomes fund initiative stand?
Abbie: Honestly, Family Focused Recovery found us. We knew there was opportunity in the space to address a really serious problem (which has only gotten worse in the wake of COVID-19) and we felt like Volunteers of America as a partner was ready to go on this journey with us. The timing felt right and these are partners doing really hard work for a very vulnerable population in our own back yard. [editor’s note: Humana is headquartered in Louisville, Ky., as is Volunteers of America Mid-States’ Freedom House]. The program is evidence-based and scalable. It was just a great fit.
Alison: From the financing side, we tend to think of good candidate programs as falling in a certain spot on a continuum. On one end are the really expensive populations—narrowly defined groups of people such as individuals experiencing homelessness—who need intensive intervention. On the other end are generally healthy people who need very light touch intervention. The marginal benefits derived from the latter intervention is small but more broadly applicable and far less expensive. A good example of this would be something like meal delivery or ridesharing. But those things don’t solve for a big chunk of the issues a person might have if they’re high need. When you do something like Family Focused Recovery, though, you are taking a population on that narrow end of the spectrum and you’re wrapping around them a comprehensive and expensive program. But you're able to derive significant impact from doing that. You can connect the dots between intervention and impact in a way that is much harder to do with some of the other intervention models that are less intensive and more broadly applicable to much larger populations. That’s a big reason why this model is a good candidate—because of where it falls on the spectrum.
How can other stakeholders—such as impact investors—play a role in building CBO capacity and advancing health outcomes funds?
Alison: Impact investors are able to assume some of the program performance and financial risk by deploying capital to outcomes that are important to multiple stakeholders. This in turn creates a market where capital is connected to prioritized outcomes. They’re doing what they do really well, which is taking on reasonable risk in a space where most people are highly risk averse. The health market is highly regulated and it’s very difficult to get people to think outside the box. But bringing in new payers and bigger dollars can help solve really big, thorny problems that have historically had much smaller bags of cash at their disposal. If we can start to create this virtuous cycle of demonstrating impact and returns, the sky is the limit on how much we could capitalize solutions that actually start to create meaningful reductions in some of the poor outcomes and big societal challenges we face.
Abbie: Health plans are willing to take on risk but it’s helpful to have impact investors so we can focus on the payment innovation and other investment in partnerships versus just the funding sources. In the case of Family Focused Recovery, Humana Inc. is both an investor and a payer of outcomes. We wanted to put up the money to establish the fund and hope that others will want to join. These are big systems-level opportunities for change, so the more hands and minds on the issue the better.