Social Determinants of Health Accounting

Social Determinants of Health Accounting: Incorporating Financial Data on Social

Factors into Healthcare Reporting

Introduction

Traditional healthcare accounting and reporting focuses primarily on financial metrics like

costs, revenues, and operational performance indicators. However, there is a growing

recognition that social factors play a major role in determining population health outcomes.

Social determinants of health like income, education, employment, housing, and

environment can have a profound impact on things like disease prevalence, life expectancy,

and quality of life. Yet these social factors are rarely accounted for in healthcare financial

statements and reports. There is an opportunity for health systems and government

agencies to develop new accounting frameworks and reporting approaches that incorporate

meaningful data on social determinants of health. Doing so could provide a more holistic

view of overall population health and highlight the impact of non-medical interventions. This

paper will explore approaches for incorporating financial data on key social factors into

traditional healthcare accounting and reporting in order to better track and optimize overall

population health outcomes.

Defining Social Determinants of Health

Before discussing how social determinants can be incorporated into accounting and

reporting, it is important to define what is meant by social determinants of health. The World

Health Organization defines social determinants of health as "the conditions in which people

are born, grow, work, live, and age, and the wider set of forces and systems shaping the

conditions of daily life." This includes factors like:

- Income and social status - Individuals and communities with higher incomes and social

standing tend to be healthier. Poverty has been shown to negatively impact health.

- Education - Higher levels of education are correlated with better health knowledge,

healthier behaviors, and greater access to healthcare resources.

- Employment and working conditions - Unemployment and insecure employment status can

negatively impact both physical and mental health. Occupational health and safety also play

a role.

- Social support networks - Strong social relationships and community support networks

promote health and buffer life's stresses. Social isolation is a health risk.

- Housing and neighborhood conditions - Issues like affordability, safety, stability, pollution,

and access to services within a neighborhood impact health.

- Access to healthcare services - Timely access to adequate, affordable preventive and

treatment services is important for maintaining and improving health.

- Environment and climate - Environmental exposures like poor air and water quality, toxic

chemicals, lack of greenspace, and impacts of climate change influence health outcomes.

- Transportation options - Access to affordable, safe, reliable transportation options affects

ability to access healthcare, healthy foods, green spaces, and employment opportunities.

These social, economic, and environmental conditions have a powerful influence on overall

population health that often exceeds the impact of medical care alone. Some studies

estimate that social determinants account for up to 80% of the factors influencing health

outcomes. As such, reporting and accounting for these non-clinical influences on health is

important to gain a more holistic view of population well-being.

Accounting Frameworks for Social Determinants of Health

Traditional accounting and reporting focuses narrowly on the direct costs and revenues of a

healthcare organization. Broader population health, outcomes, and the role of social

determinants are generally not factored into standard financial statements. However, new

accounting frameworks could be developed to explicitly track and report metrics related to

social determinants of health:

External Cost Accounting

One approach is to develop accounting models that track the external healthcare costs that

can be traced back to social determinants. For example, an analysis could estimate:

- The costs of treating preventable conditions caused or exacerbated by poverty, like

malnutrition, developmental delays in children, and untreated chronic diseases. These costs

could be tracked and reported over time to gauge impact of social interventions.

- Costs associated with health inequities faced by disadvantaged groups defined by income,

race, ethnicity, neighborhood, etc. Comparisons could highlight financial impacts of

addressing systemic inequalities.

- Downstream medical costs saved or incurred based on housing stability programs, income

support initiatives, education level of the population, air quality regulations, and other social

changes.

This type of external cost accounting allows mapping of healthcare expenditures to

addressable social factors. Metrics could be built into annual reports for health systems,

insurers, and government agencies to demonstrate return on investment in social programs.

Social Impact Accounting

A related approach is social impact accounting, where organizations formally account for

their social, environmental, and economic impacts. Applied to healthcare, this could involve:

- Tracking outcomes and impacts of home visiting, food assistance, job training programs on

things like low birthweight, diabetes rates, mental health, health literacy levels.

- Assigning monetary values to quality of life years gained through investments in early

childhood development, community health workers, environmental remediation strategies,

and other social interventions.

- Reporting on workforce development, job creation, career pipelines, and local economic

activity stimulated through partnership programs addressing social determinants.

By formally accounting for both costs and impacts well beyond clinical services, social

impact accounting creates a comprehensive view of population health outcomes generated.

Metrics can be examined against the investments and progress made toward goals.

Population Health Reporting

Another framework is population health reporting using standardized measures and

dashboards to systematically track progress across key social determinants and health

metrics:

- Community Health Needs Assessments (CHNAs) could be expanded to consistently profile

neighborhood attributes affecting health like poverty, education, unemployment, housing,

transportation, exposure to toxins.

- Health data could be routinely cross-referenced and reported alongside data on social

conditions from sources like the US Census, Bureau of Labor Statistics, Housing Authorities

to identify correlations.

- Core metrics could include indices or scores reflecting overall socioeconomic status,

food/housing security, health equity experienced locally.

- Outcomes tracked may span traditional clinical metrics like disease rates alongside broader

measures of well-being like life expectancy, healthy days lived, high school graduation rates.

With standardized population health dashboards and periodic reports, policymakers,

community organizations and healthcare leaders can systematically evaluate multisectoral

programs and investments across medical and social issues affecting entire geographic

populations.

Implementation Challenges

While there is potential value in accounting frameworks that incorporate social determinants

data, meaningful implementation also faces challenges:

Data Limitations and Availability

Not all social determinant metrics are currently collected or reported with the consistency,

granularity and timeliness needed to routinely integrate into healthcare accounting. Efforts

would be needed to improve multi-sector data sharing and reporting standards.

Attribution Challenges

Disentangling the specific impacts of social policies versus clinical or other factors on

population health outcomes using financial data alone can be difficult. Rigorous evaluation

methodologies are needed.

Resource Requirements

Developing the accounting frameworks, collecting necessary data inputs, conducting

required analyses, and reporting on additional metrics demands significant resources in

terms of staffing, technology and time that many organizations may not have.

Financial Incentives

Traditional healthcare accounting focuses narrowly on provider costs and revenues, so

changing norms and incentives may be needed to value accounting for impacts outside

clinical walls. Reimbursement would need to recognize broader determinants.

privacy and confidentiality

Collecting personally identifiable social determinant data could raise privacy concerns if not

handled carefully according to established ethical standards and legal frameworks like

HIPAA. Anonymizing data may help address this challenge.

These challenges are by no means insurmountable, but would require cross-sector

collaboration, long term commitment to integrating data systems and establishing standards,

as well as policy support so resources are devoted to doing the comprehensive accounting

and evaluation required. Overcoming them could yield real health and economic returns

across communities though.

Case Study: The Seattle & King County Framework

Perhaps the most advanced effort to date in formally accounting for social determinants of

health is Seattle and King County's Framework for integrating health care, public health, and

social services. Some key aspects of their approach:

- Regional Health Needs Inventory comprehensively profiles 250+ indicators across clinical

care, health behaviors, social and economic factors, physical environment for each census

track region.

- Population snapshot tool maps community attributes including housing, education,

employment alongside health outcomes at zip code level for planning and priority setting.

- Best Starts for Kids levy raised over $400M through taxes to fund early childhood

education and supports based on evidence that childhood experiences shape adult health

and opportunity. Programs tie funding to outcomes metrics.

- Medicaid transformation project partners healthcare systems with public health and

community groups to screen for social needs and connect patients to food, housing

assistance through accountable communities of health network.

- Regional health improvement plan establishes common goals and jointly measures impact

of efforts across sectors over time on priority health issues prevention to help optimize value

of combined resources.

- Early results indicate health gains and cost savings through programs addressing

housing,jobs transportation and other social drivers of inequity. Life expectancy rising faster

in lower income neighborhoods.

King County's sustained commitment to comprehensive data collection, population

segmentation, integrated planning and collaborative funding mechanisms across healthcare,

public health and social services demonstrate how robust social determinant accounting

frameworks can be operationalized in the real world to drive better population health

outcomes financially. Their model is being studied and replicated nationally.

Recommendations

Based on the opportunity to better optimize population health and resource allocation

through accounting for social determinants in healthcare reporting, and considering

implementation challenges, some recommendations are:

- Develop consensus on standardized measures: Multisector leaders should establish

common indicators and data definitions for collecting, tracking and reporting on key clinical

and social determinants longitudinally across populations.

- Improve cross-system data sharing: Laws and policies could enable ongoing sharing and

linkages of de-identified administrative data across healthcare, public health, social services,

economic sectors to gain a fuller picture of population needs, services utilized, and

outcomes over time.

- Pilot integrated accounting models: Healthcare organizations, insurers, integrated delivery

systems and government agencies should pilot prototype accounting models that monetize

and report on both internal clinical costs and external social/economic impacts to identify

most useful and feasible approaches.

- Incentivize comprehensive population health: Government payers like Medicare and

Medicaid could incentivize coverage of and accountability for addressing patients social

risks, through reimbursement models allocating funding and attributing population health

outcomes based on comprehensive, team-based approaches across medical and social

domains.

- Build evaluation capacity: Resources and guidance should support building robust

evaluation skills and methodologies within healthcare organizations to strengthen the

evidence linking investments in social services to health outcomes that can be demonstrated

through financial and other population health impact reporting approaches.

- Promote multisector partnerships: Healthcare, public health, housing, education, labor and

other agencies must form strong collaborative infrastructure and integrated plans to optimize

programs addressing social drivers of health equity at a community level tied to common

goals, metrics, and mutually reinforcing interventions.

- Continuously improve based on data: Regularly examining population health reports,

community feedback along with clinical and financial results of efforts will support refining

programs, strengthening partnerships, and reallocating resources over time to maximize

value for the community served across health and social sectors.

Conclusion

Social determinants play major roles in population health outcomes. Yet traditional

healthcare accounting and reporting methods rarely factor these important influences. New

approaches that meaningfully incorporate standardized financial and outcome data on social

factors have the potential to provide a more comprehensive view of overall community health

and well-being. With sufficient commitment to cross-sector collaboration, data integration,

and reformed incentives, healthcare organizations can optimize resources through

multisector population health management approaches demonstrably improving lives and

lowering costs. Accounting for the full range of determinants through standardized

population health dashboards would support continuous quality improvement across

integrated medical, public health and social programs working interdependently to maximize

whole community wellness. Much work remains, but frameworks incorporating robust social

determinant metrics hold promise as a tool driving better health through multisector

coordination, planning and financing decisions aligned on community needs.