Later this year, we will release the fourth edition of our annual Trends Shaping the Health Economy Report, in which we analyze the health economy through the lens of demand, supply and yield. In a review of a draft of this year’s report, one industry expert noted this:
“The health system isn’t a freestanding black box where you put money in one end of the box and ‘health’ comes out the other end. It is a fraying piece of the interconnected societal infrastructure of a failing society.”
Such an assessment reinforces the importance of quantifying the elements of the U.S. health economy that are clearly wasteful or at least arguably nonproductive.
It is axiomatic that “30% of U.S. healthcare spending is waste,” a thesis seemingly rooted in the premise that the “outputs” of the U.S. healthcare system are less than the “inputs.” Notably, almost no one who cites the axiom knows its origin: a 1991 study that compared the administrative costs in 1987 of the multi-payer U.S. healthcare system with those of the single-payer Canadian healthcare system.1 Arguing that the administrative cost of the Canadian healthcare system is a relevant benchmark for anything in the U.S. health economy is ridiculous. In turn, perhaps, stakeholders are often incapable of discerning and/or unwilling to deride the numerous ridiculous elements of the U.S. healthcare system.
One of the most specious outputs of the U.S. health economy is social determinants of health (“SDOH”). SDOH are “conditions in the environments where people are born, live, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks” that can be “grouped into 5 [sic] domains.”2
Over the past seven years, dozens of customers and prospects have asked if our data included SDOH. My response is always the same: “Yes. How will you use them?” I rarely get an answer to that question, and no customer or prospect has ever licensed the data, calling into question the utility of SDOH.
How does the industry measure or “score” SDOH? What should be done with the “scores”? More importantly, what happens to the SDOH data being collected randomly, and where does that data “live” other than in “dumb” databases?
Richard “Buz” Cooper, M.D., argued forcefully in Poverty and the Myths of Health Care Reform that poverty is the key driver of the exorbitant cost of the U.S. healthcare system. Poverty is also the key predictor of SDOH. Show me the percentage of people living below the Federal Poverty Level (“FPL”) in any market in America, and I will predict the SDOH – and the health status – for that market.
Said differently, poverty is an input; SDOH is an output. The Centers for Disease Control and Prevention agrees:
“For example, poverty is highly correlated with poorer health outcomes and higher risk of premature death.”3
For avoidance of doubt, America’s challenge is not a lack of investment in providing insurance coverage for the poor. Total Medicaid spending in the United States was $805.7B in 2022, and 92M Americans were enrolled in Medicaid in December 2022.4,5 Acknowledging that the actual Medicaid spending per enrollee is variable, the average Medicaid spending per enrollee was $8,757, which is higher than the per capita health spending of any other “high-income nation.”6
Even so, Census Bureau data reveal there are thousands of Census tracts in America whose residents are desperately poor.7 Comparing this data to the CDC/ATSDR Social Vulnerability Index, one of the few "scoring" systems for SDOH, reinforces the relationship between poverty and SDOH. Despite incorporating a range of socioeconomic and demographic factors to identify communities at heightened risk, the social vulnerability of a Census tract displays a meaningful positive correlation with its percentage of the population living below the poverty line. Why waste time and money gathering and synthesizing hundreds of data points when you can get the same answer with only one?
Having healthcare providers collect SDOH in an electronic medical record (EMR) recalls the Seinfeld episode “The Alternate Side,” in which Jerry explains to the car rental agent the difference between “taking” a reservation and “holding” it. Collecting SDOH and not utilizing it is a complete waste of time and money; talking about SDOH is a pretense of caring about impoverished and underserved populations.
Serious people should ask why the Federal government promotes healthcare waste by focusing on gathering data that is already well-established. At least when the NTSB collects pieces of an airplane after it crashes, they are trying to understand what led to the tragic event.
Instead of asking healthcare providers to collect haphazardly data that is rarely seen again, the Federal government could require certified health IT vendors to auto-populate the likelihood of adverse SDOH into EMRs as part of patient registration. Leveraging the HUD-USPS ZIP Code Crosswalk API, two competent software engineers could combine nine-digit ZIP codes with FPL data in less than two weeks, which would allow anyone to index the prevalence of adverse SDOH at the Census tract level.8
Even so, an index cannot provide a person with food or shelter or transportation or education or good health. Serious people should seriously examine the failure of so many Federal and state initiatives to reduce poverty and poor health. James, the half-brother of Jesus, wrote these words:
22 But be doers of the word, and not hearers only, deceiving yourselves. 23 For if anyone is a hearer of the word and not a doer, he is like a man who looks intently at his natural face in a mirror. 24 For he looks at himself and goes away and at once forgets what he was like. 25 But the one who looks into the perfect law, the law of liberty, and perseveres, being no hearer who forgets but a doer who acts, he will be blessed in his doing.9
To the extent that the U.S. healthcare system “is a fraying piece of the interconnected societal infrastructure of a failing society,” it is largely attributable to unserious people deceiving themselves that talking about a problem is the same as solving it. What are you doing about the poverty in your market?