Social Determinants of Health: Not Just a Buzzword, It Impacts the Bottom Line

Social Determinants of Health: Not Just a Buzzword, It Impacts the Bottom Line


Social determinants of health (SdoH) are finally getting their focus in the healthcare industry. While some healthcare providers have had SDoH at the core of their strategies, others are just beginning to focus on it, considering the post-pandemic ecosystem. It may seem like another buzzword, but there are concerted national investments made to shift our healthcare ecosystem towards integrating SDoH. Health equity barriers are being examined, as well as how they impact care delivery from hospitals, value-based care (VBC), payers, and even life science and pharmaceuticals.

Over the last few years, there have been key investments made to usher SDoH into a core function of tackling healthcare costs and outcomes: CMS framework for health equity to address health disparities in every program and across every community.

Using five priority areas, CMS will use this framework to design, implement, and operationalize policies and programs to support health for all people who are disadvantaged or underserved, and provide the care and support that their enrollees need.

57 health systems across the country have invested $2.5B of spending for SDoH and health equity programs. The investments are focused on employment, education, food security, social community, and transportation.

ACO Reach participants will test an innovative payment approach to better support care delivery and coordination for patients in underserved communities. The program will require that all participants develop and implement a robust health equity plan that will measurably reduce health disparities within their beneficiary populations.


Even as digital health companies, healthcare thought leaders, and conference agendas are regularly speaking to the need to shift our mindset and care strategies to include SDoH, we still see a slow adoption amongst many stakeholders in the industry. The impact on overall population health and wellness is the common talking point amongst healthcare organizations leaders, but there is still the challenge of driving quicker adoption of actionable SDoH strategies; specifically, balancing tight financial challenges facing the industry against investing in SDoH. What is the financial ROI for investing in SDoH and health equity?


In our latest blog, Quality Reviews outlines the key areas where SDoH and health equity can improve the financial health of an organization in both the short and long term, while addressing clinical and population health outcomes.

Higher Average Cost Per Patient Associated with SDoH

Financial strength for providers and payers has always been a weak spot when providing high quality care to patients and members. Healthcare organizations are emerging from a pandemic saddled with financial losses, and the evidence of those losses is being broadcast across different news outlets. Managing the overall cost of patients has taken priority for providers and payers who seek to reduce the impact of decreased revenue since 2020. Addressing SDoH barriers will directly reduce average cost per patient.

In June 2021, the Journal of the American Medical Association published an article outlining that social determinants of health are associated with increased Medicare spending per beneficiary. The study looked at over 3,000 counties across the U.S. and examined Medicare fee-for-service (FFS) spending data which included all services for Medicare Parts A and B. The article uncovered that across the 33 million Medicare FFS beneficiaries, in the counties that had the highest Medicare spending, there was a higher rate of SDOH challenges in the residents compared to the counties with the lowest spending.

These counties also saw a higher prevalence of chronic illness and cancer, which drive healthcare costs for providers and payers. Investing in these communities by increasing access to primary care, health literacy, wellness programs, and community care coordination will begin to properly introduce preventative measures to reduce rising risk that leads to increased healthcare costs per Medicare beneficiary.


The Hospital Readmission program has been in place for over 10 years, and the penalty is not the only financial impact that can be faced from a readmission. Readmission increases costs, as does an emergency department visit. As standards of clinical practice for congestive heart failure, COPD, pneumonia, and acute myocardial infarction have been established across the country, current drivers for revisits are now linked more to SDoH and health equity challenges.

Readmissions may be reduced up to 20% by addressing when the SDoH elements are integrated to clinical routines. Care plans and clinical pathways, designed to initiate at a care site and continuing across the care continuum, must include risk assessments and real time feedback options to be able to identify and escalate SDoH challenges quickly, before a readmission. Providers and payers must expand their investments into feedback mechanisms that go beyond ratings and “yes/no” questions. This feedback data needs to then be included into data analytics and risk prioritization calculations.

Access and No-Shows

No-shows and limited access to primary care or specialists has short-term impact on the bottom line, as well as a long-term financial impact felt by providers and payers. Patient health may decrease when necessary appointments are missed, which can lead to higher overall cost per patient.

Assessing a population’s unique, local SDoH and health equity challenges, can introduce several preventative measures and interventions that can be integrated into healthcare organizations’ access strategy. Many of the issues linked to no-shows are tied to:

  • Housing
  • Transportation
  • Social Support
  • Education
  • Economic Stability
  • Community and Neighborhood Environment

Providers and payers need to increase the number of channels of engagement that address each of the unique SDoH challenges that impact their patient segments.

Value Based Care Agreements

Value-based care is steadily growing. Whether it is managing bundle payments or full capitated risk, value-based care agreements marry financial and clinical outcomes. The key challenge within these provider-payer agreements is the difficulty to micromanage a patient or member’s care with longitudinal engagement. This difficulty becomes increasingly challenging when SDoH barriers are involved.

MSSP ACOs, Medicare Advantage, and ACO REACH participants need to manage patients across different care settings and ensure care pathway adherence across the continuum. Elements of care pathway adherence impacted by SDoH and health equity can include but are not limited to:

  • Medication adherence
  • Therapy
  • Dietary plans
  • Follow-up appointments
  • Wellness checks

Organizations can focus on empowering care navigation and care coordination teams by developing community health networks and integrating SDoH and health equity assessment tools in their Transitions of Care guidelines

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