Population Health Resources and Policy

Population Health Financing: Beyond Grants

My professional coming of age took place the late 1960s, in one of the original Office of Economic Opportunity (OEO) neighborhood health centers in the South Bronx. Because the health centers were a part of the larger federal antipoverty strategy, they were founded on a broad view of health (we would call it a population health framework even though that terminology didn’t exist then). Health care innovation was the core, with community health workers, health care teams, and the understanding that the residents who didn’t use the clinic contributed to overall neighborhood heath as much as those who did.

But the OEO funding paid for much more than health care, including job training, legal advocacy, school health programs, neighborhood built environments – what we now see as the multiple determinants of health. But one of the main lessons of my entire career was the following: when the grant goes away, the programs or innovations which it supported dwindle too. Don’t get me wrong: federal and foundation grants are essential for innovation to occur, and I have served productively on both the giving and receiving ends of this equation. But initial funding almost always ends at some point (through change of political priorities or foundation leadership and priorities), and additional funds must be sought for sustainability or going to scale.

I also ran a large urban hospital for four years. Among many other major lessons, I came to appreciate the beauty of funding formulas and streams that just keep on delivering resources every day or week or month. A good example are the Medicare payments supporting medical resident education; these “extra” payments are built into Medicare funding formulas and provide ongoing, regular support for this important activity. Of course, they certainly come under political scrutiny occasionally and have to be justified and defended, but by and large they are embedded as well-established fiscal supports like mortgage interest deductions or agricultural subsidies.

Despite more than a decade of helpful and creative public and private grants, I remain extremely concerned about our slow progress in addressing health inequities by geography, by race and by economic status. These injustices are sapping our national productivity and quality of life. We need to go beyond grants to identify sustainable resource flows that are up to the magnitude of the challenge.

I have been suggesting using some of the savings realized from eliminating ineffective and wasteful health care dollars, such as a share of ACO shared savings or IRS Community Benefit reform – but these may not be entirely workable or sufficient. We need to take a close and creative look at how to maximize efficiencies and possibly consolidate multi-sector revenue streams from education, business, and community development agencies toward achieving common health goals.

Voluntary efforts are not adequate if we are serious about this task. Let’s commit ourselves over the next decade to finding these more robust, dependable mechanisms and documenting real progress in the areas that will have the greatest impact on population health.

Resources for Population Health Improvement: What About the Savings from Waste in Health Care?

The release of the national County Health Rankings demonstrates how large the gaps are across our communities in both health outcomes and the factors producing health. Particularly in the lowest ranking counties in any state, there are significant resource constraints in all the factors producing health. These include health care access, disease prevention and health promotion programs and policies, early childhood and health literacy efforts, jobs and economic development, air and water quality, and the built environment. Where might the resources come from to make improvements toward better health—particularly for our most under-resourced communities?

One place to look is at the waste in our health care system. For years organizations as prominent as the Institute of Medicine have been observing that 25% to 33% of all of our health care expenditures may be wasted because they are ineffective in improving health. Dr. Elliott Fisher and colleagues at Dartmouth have been calling attention to the approximately threefold regional variation in per capita Medicare expenditures from $5300 to $16,300 without differences in health care quality and health outcomes (1). They have also recently observed inflation adjusted Medicare growth rates varying from 2.3% in Atlanta and Pittsburg to 5.3% in Dallas over the period 1992-2006. The Dartmouth group indicates that reducing the spending rate from the national average of 3.5% to the 2.3% experienced by San Francisco would save Medicare $1.3 trillion by 2023.

Looking at it another way, total health expenditures in 2009 were projected to be $2.5 trillion. If 25% of that could be saved, that would amount to $625 billion per year. Providing health insurance to everyone would require an estimated $100 billion per year. That would leave more than $500 billion for smoking cessation, exercise and nutrition efforts, education enhancements, job creation, and creating safer communities. To put this in context, total national expenditures in 2005-2006 for all K-12 education in the entire country was $461 billion.

However, achieving these savings is challenging. Republicans and Democrats alike are skeptical that cost-containing provisions of the Obama Health Insurance Reform law will be strong enough to reduce expenditures substantially. Even in places that have low health expenditures and good outcomes, cultures of cost effective practice have been developing for decades; they cannot develop overnight. A current proposal is to develop Accountable Care Organizations, in which financial incentives would be provided for developing efficient practices. Discussions have begun around the concept of shared savings, in which savings are divided between the providers who produce them and insurers. Vermont has already been using savings to hire staff for community clinical prevention while leaders in Minnesota have raised the possibility of using part of the savings to create Accountable Health Communities.

These are only initial ideas and beginning steps; vast resources will be necessary to fully implement the plans described above. Dan Fox, a careful observer of American health politics, has observed that policymakers “most likely would ration spending to improve overall population health in order to avoid rationing health care…there is no reason to expect that a value dividend, if one accrues, would be used for any other purposes than slowing the growth of spending or providing more access to health care (2).” Bentley similarly observes that “as a society we may prefer to provide care to the sickest, most vulnerable patients even though our money could buy greater improvements in life span or quality of life if used for another purpose (3).”

While common sense suggests a systemic streamlining that involves exchange of ineffective resources for those shown to be most (or at least more) effective, political realities are not necessarily rooted in common sense. Paul Starr’s book The Social Transformation of American Medicine sums up 150 years of medical history by saying that “the dream of reason did not take power into account.”

We must hope that approaches to shared savings in health care develop more robustly and gain traction. But they are not the only hope. We have to look for other inefficiencies as well. Governments, philanthropies, and businesses will have to make additional resources available. Promising current examples include the California Endowment’s Building Healthy Communities initiative and the Minnesota’s State Health Improvement Plan (SHIP).

In summary, waste and inefficiency in our health care system are one potential source for investing in the broader determinants of health. A fundamental population health challenge is to identify incentive structures and cross-sectoral allocation models to bring such possibilities into policy and practice.

A future post will expand on these ideas and examine additional sources of funding for fundamental population health improvement.

References:

1. Fisher ES, Bynum JP, Skinner JS. (2009). Slowing the growth of health care costs—lessons from regional variation. The New England Journal of Medicine, 360(9), 849-852.

2. Fox DM. (2010). Realizing and allocating savings from improving health care quality and efficiency. Prev Chronic Dis, 2010;7(5). In press.

3. Bentley TGK, Efros RM, Palar K, Keeler EB. (2008). Waste in the U.S. health care system: A conceptual frameworkThe Milbank Quarterly, 86(4), 629-659.

Where Would You Put the Money?

As regular readers know, I’ve been arguing consistently for the need for a regular, sustainable revenue stream to support population health improvement. However, I’ve not directly addressed the question of how these dollars should be allocated. As one of the authors of the important Evans-Stoddart population field model said in their 2003 AJPH article (Consuming Research, Producing Policy?), “redirecting resources means redirecting someone’s income…most students of population health cannot confidently answer the question…well, where would you put the money?”

Why is this so? Can’t we simply link the huge variation in health outcomes we see across states and communities to financial and non-financial policy investments over time?  Why have we not simply estimated community level, per capita policy and programmatic investment in each health factor area (health behaviors, clinical care, social and economic factors, and the physical environment) to derive a base level of investment needed to achieve health benchmarks?

There has been some limited national and state level research and policy analysis on this question. The Trust for America’s Health (TFAH) estimated in 2008 that that investing $10 per person per year in proven community-based programs to increase physical activity, improve nutrition, and prevent smoking could save the country more than $16 billion annually within five years. In 2009, Kim and Jennings found that at the state level more generous education spending, progressive tax systems, and more lenient welfare program rules help to improve population health. However, the magnitudes of the effects were quite small, most likely because using the state as the unit of analysis masks much of the important variation in both outcomes and investments at more local levels.

We have suggested that since communities have different outcomes and determinants profiles, locally tailored “policy packages” might be an effective and efficient approach. These packages could be driven by the strength and breadth of local investments affecting the multiple determinants of health. Unfortunately, we are not aware of any national or state data sets that could inform development of such investment recommendations. The relevant financial data from the multiple local, state and federal public and private funding sources does not exist or is not standardized in ways to allow policy-relevant comparisons that would be useful to public and private policy makers. But I strongly believe that making real progress in this area will require that we systematize and standardize collection of these data.

In the meantime, we should rely heavily on currently available compass points. The County Health Rankings encourage comparison of health factor areas with national benchmarks. Everyone needs access to healthcare services, and the TFAH guidelines for prevention investments are useful. Many local public health departments are inadequately funded for their critical work. There is a strong evidence base that investing in early childhood and other education programs has efficient long term pay off in terms of health outcomes. And a strong argument can be made for resources to support the work of emerging multisectoral super-integrators that can play a critical role in identifying and harnessing resources.

We must start with what we have, by continuing to rely on existing tools and resources. But we must also move beyond these, to advocate for and insist on development of state-of-the-art surveillance systems to promote evidence-informed investment and stewardship of our limited and extremely valuable population health resources.