Lisa Thirer, Associate Director – Advisory Services, Nonprofit Finance Fund
Relationships between health care institutions and networks of community-based organizations can improve health outcomes, but what does it really cost, and who should pay?
For many health care institutions, the shift toward values-based payments is accelerating efforts to address housing, food, safety, and other community needs.
You might expect this is good news for local community-based organizations (CBOs) with relevant expertise. Yet, in our work with CBOs—including networks of CBOs whose structure is meant to make it easier to partner with large health care institutions—we’ve found there are significant hurdles for the field to clear before we’ll see the improved health outcomes that everyone wants.
Suppose a person with complex medical needs, who is experiencing long-term homelessness, is discharged from an emergency room. What if through a hospital-partnership they were able to choose to be discharged to a local nonprofit that has built trust with the community and has demonstrated expertise in supportive housing? That seems like a win for everyone involved.
But what if reimbursement rates don’t cover the nonprofits’ full costs? (They often don’t.) So for every person the hospital refers, the nonprofit faces a larger gap between revenue and costs. And what if the hospital wants evidence of improved health outcomes and not only client service engagement? The nonprofit has no existing process for tracking medical appointments or screening & measuring for chronic conditions. And what if the partnership requires the nonprofit to add and train staff, invest in HIPAA-compliant systems, and otherwise scale to meet increased needs? Who will assume the cost of those upfront investments that are critical for success? Would a for-profit business or health system be expected to expand their business without making necessary investments or preparations? So why aren’t we paying the price for nonprofits to invest in themselves, too?
Over the past several years, the importance of the social determinants of health in driving health outcomes has become widely accepted. But the question of who pays for the partnerships that address social determinants persists. NFF’s work on the ground shows us that CBOs in partnerships have largely been unable to move sustainable contracts forward with their health care partners. In almost all cases, contract discussions break down because health care partners are unable to commit to pay for the full cost of CBO services, including the upfront investments required. Health care partners consistently cite the political and policy landscape as a limiting factor in paying full cost. So, whose responsibility is it to pay?
If we’re going to realize the benefits of results-oriented approaches to health, there needs to be an investment in the organizations delivering critical services in our communities. Specifically:
Invest in infrastructure: The demands for data capture, coordination, and HIPAA-compliant sharing made by health care institutions require an infrastructure build-out for CBOs, and it is unclear where funding for that build-out will come from in the current system.
EngageWell IPA is a newly formed New York City-based CBO network that helps clients with HIV address complex health and social needs. Its vision is to coordinate care across complementary service provider members, but as value-based payment structures are still emerging, the business plan needs to be flexible enough to accommodate a range of scenarios. To prepare behavioral health providers such as
EngageWell for value based payments, New York State did provide a significant investment in infrastructure. This is critical as funding at the network level provides support, but still doesn’t account for the member-level investments that need to be made. However, as EngageWell seeks partnerships with myriad health care institutions, coordination requirements multiply and additional investments will continue to be required down the road.
Most CBOs don’t have the resources to invest in the significant infrastructure needed to develop “ready to buy” solutions for health care institutions. And solutions developed in partnership with health care institutions carry their own challenges, as it may require CBOs to make additional changes in program structure, delivery, and measurement that also come with substantial costs.
Build capacity: CBO networks could better serve their members, and ultimately, their networks’ clients, if they had more organizational capacity to manage research, operations, implementation, ongoing analysis, and more.
For example: Thomas Jefferson Area Coalition for the Homeless (TJACH) is committed to making homelessness in Charlottesville, Virginia, a rare and brief experience. NFF’s work with TJACH’s permanent supportive housing and rapid-rehousing providers includes determining the full cost in providing existing services, system-wide projections to assess what it would take to address the demand and need, and navigating an evolving Medicaid expansion landscape.
TJACH makes it easier for health care institutions to support housing goals without interfacing and contracting with individual member organizations. If networks are going to play a crucial role in realizing the promise of addressing social determinants, we need ask, beyond limited pilot programs, who will fund network-level activities? We also need to examine which organizations have access to and can participate in these networks. If CBOs need to contribute additional time and resources to join a network, and are then expected to invest their own money, are we ensuring that there is equitable representation of organizations who can participate?
Networks add value as a means to effectively implement health care/CBO partnerships at scale, but they don’t inherently reduce costs.
Know and cover the full costs of improved outcomes: Community-based organizations are notoriously underfunded. According to NFF’s State of the Sector Survey, 57% of organizations across the country indicated that securing funding for full costs is a top operational/financial challenge for them. Many CBOs receive reimbursements from government for providing critical services like housing. However, these rates rarely cover the full costs it takes to deliver results. These full costs include the ongoing expenses of day-to-day operations, as well as periodic or one-time investment needs inherent to any healthy organization. (A housing provider will need to account for non-program but still essential expenses such as building maintenance, fundraising staff, time spent collaborating on strategies to reduce long-term homelessness, and more.)
Many CBOs, in addition to their core businesses, undertake a variety of fundraising or ancillary ventures to attempt to close the revenue gap.
Philanthropic money, while critical, often doesn’t scale in tandem with an increase in clients, and usually brings its own restrictions and requirements. Just as with reimbursements from governments, many grants also restrict non-program or “overhead” spending. But it is that overhead that will allow CBOs to prepare to operate in new ways, as outcomes-oriented partners in community health. If health care, government, philanthropy or other payor institutions will only pay “direct expenses”, they are neglecting the CBOs full cost of delivering the service and contributing to underinvestment in both the nonprofit and the intervention.
Sometimes the health care institutions themselves may be nonprofits with limited ability to cover the full costs of CBOs’ services. Minnesota’s Metropolitan Alliance of Connected Communities helps its members adapt to the data and IT demands of health care contracts. It has a pilot partnership with the nonprofit Allina Health System. While shared values and community health goals set a strong foundation, neither partner can absorb the costs of vast technology updates and the training CBOs require now in order to capitalize on health care contracts in the future.
A recent study by researchers at New York University’s Grossman School of Medicine and Columbia University found that direct financial investments in social determinants of health by U.S. health systems from January 2017 to November 2019 were relatively limited. They identified 57 (9.1 percent) of 626 health systems as having made specific commitments, such as formal partnerships with CBOs beyond simple screenings or referrals.
As this number surely grows with the move toward values-based payments, all stakeholders—including health care institutions, CBOs, network leaders, governments, and philanthropic foundations—need to understand the full costs of working together and achieving positive outcomes. The rewards of partnership are promising, but not free.
The CBOs featured in this article are part of Nonprofit Finance Fund’s Advancing Resilience and Community Health (ARCH) project, which helps build successful partnerships between health care institutions and CBOs.