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Insights InHealth


How Social Determinants of Health Advance Value-Based Care

Updated: Sep 26, 2023

"I often say, 'Race and place matter a lot for health outcomes in our country.'” – Dr. Marcella Nunez-Smith, Chair of President Joe Biden's COVID-19 Health Equity Task Force


Over the past few years, key stakeholders in the healthcare industry have increasingly acknowledged the central role that factors outside of the direct delivery care play in driving health outcomes. These factors have been categorized under the umbrella term “Social Determinants of Health” (SDoH). In brief and as summarized by the Department of Health and Human Services, SDoH are “the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.”

Healthcare providers and payors are seeking to incorporate SDoH into strategies for delivering and paying for health services. In particular, these groups recognize that value-based care (VBC) initiatives cannot fully deliver on their promise to improve care at lower cost without taking into account the SDoH in the underlying populations being served.

This Insight InHealth provides an introduction to SDoH, including their impact on health outcomes and how they will drive future payment for healthcare services. It continues with a survey of current attempts at measuring SDoH, with an emphasis on addressing shortcomings of current data. Using this background, we articulate the nexus between SDoH and VBC through our SCORE framework. Finally, we conclude with a powerful example of SDoH data in action using our ValueSCORE™ tool to demonstrate the benefit of this information to providers and payors.

SDoH – What They Are and Why They Matter

While there is widespread recognition of the importance of SDoH, a clear definition is necessary to ensure the concept is deployed in a meaningful manner. In our work, we have found that SDoH are context-dependent upon the target audience seeking to utilize the concept. Throughout this Insight InHealth, we will focus on definitions pertinent to patients, payors, and providers of healthcare services.

Defining SDoH

There are many ways to define SDoH; for example, you can consult the linked definitions promulgated by the Department of Health and Human Services (HHS), the Centers for Disease Control and Prevention (CDC), Henry J Kaiser Family Foundation (KFF), and the World Health Organization (WHO). In general, the definitions all evaluate variables that: (1) are independent of actual care delivery, and (2) pertain to the conditions specific to the geography in which a person is located. Below we present two different graphics prepared by HHS and KFF, respectively, which outline the categories (in the case of HHS) and categories plus sample metrics (in the case of KFF) associated with SDoH.

Department of Health and Human Services

Henry J Kaiser Family Foundation

Role of SDoH in Health Outcomes

The largest factor contributing to the focus on SDoH within the healthcare industry is the documentation establishing the degree to which they drive health outcomes. Academic studies have shown that socioeconomic factors and health behaviors can contribute as much as 80% to health outcomes, with actual medical care and the physical environment comprising the remainder. Aside from academic analyses, physicians themselves rate SDoH as having a significant impact on health outcomes. For example, a recent survey of 165 oncologists found that 93% agreed that SDoH had a significant impact on their patients' health outcomes (financial security/lack of insurance and access to transportation were the two primary drivers).

In addition to the role that SDoH have on health outcomes on an individual basis, there is growing recognition that disparities in health outcomes are concentrated in underserved communities, including racial/ethnic minorities, people with disabilities, and those living in rural areas. In January 2021, the Centers for Medicare and Medicaid Services (CMS) issued a report detailing progress in furthering its goal of promoting health equity among beneficiaries. In this report, CMS aptly summarized the ongoing challenges of effectuating health equity, saying that healthcare organizations “…struggle with knowing where to begin to address the driving forces of these disparities and how they can systematically change communities’ and individuals’ social determinants of health and their health trajectory.”

Historically Overlooked in Establishing Payment

Notwithstanding the growing recognition that SDoH play a key (if not the key) role in health outcomes, payors have been slow to develop methods for adjusting reimbursement for health services based on these factors. Nevertheless, in recent years, payors have taken some significant steps to risk-adjust payments based on SDoH. For example, beginning for fiscal year 2019 CMS started partially adjusting its assessment of hospital performance in Medicare’s Hospital Readmission Reduction Program based on the proportion of Medicare patients that are dually-eligible for Medicaid coverage (as a proxy for the underlying SDoH-risk of patients treated at a given facility).

While an important measure of SDoH, risk stratification based on the proportion of dually-eligible patients is a modest means of changing payments.For example, in a detailed 2017 report produced by the National Academies of Sciences, Engineering, and Medicine, in addition to the proportion of dually-eligible patients, nine other metrics were identified as available for immediate use by Medicare for the purpose of adjusting payment. Government payors are not the only insurance organizations making inroads into incorporating SDoH in furthering health outcomes. A recent article published by America’s Health Insurance Plans details a long list of investments made by insurance companies concerning SDoH among their beneficiaries.

Why Healthcare Organizations Should Care About SDoH

Simply stated, healthcare organizations must make SDoH a central element of their care delivery or reimbursement plans in order to deliver on the promise of value-based care. Below we have summarized three major reasons in support of this statement.

  • Providers of healthcare services will see their reimbursement impacted by SDoH. In addition to the examples highlighted above, Medicare continues to develop innovative programs that make SDoH a major component of payment formulas. For a deep dive into one such program, refer to our article on the ACO REACH model published by CMS in February of 2022.

  • SDoH-based initiatives represent the low-hanging fruit available to bend the healthcare cost curve. Both payors and providers have increasingly run into diminishing marginal returns in existing models of care. As recent academic literature has documented, innovations in medical treatment can only go so far in improving health outcomes over a population. Furthermore, the costs of healthcare are highly concentrated—5% of the population represents nearly 50% of all healthcare spending—and this observation of concentration has remained consistent over time. SDoH metrics can arm providers and payors with the information necessary to intervene early within this population to reduce expenses.

  • Government entities and non-profit organizations are making health equity a central organizational objective. SDoH provide a quantitative tool to track progress in furthering health equity and give healthcare providers a means to assess the underlying risk of populations under their care. As Medicare increasingly requires providers to develop plans to improve health equity, healthcare organizations will need to leverage data related to SDoH to demonstrate progress towards this goal.

Measuring SDoH

Noting the importance of SDoH, we would like to draw attention to the existing frameworks for measurement of this construct and highlight their shortcomings.

Existing Frameworks

Currently, there are a large number of organizations that research into and seek to deploy SDoH. We highlighted a number of these entities in our section, Defining SDoH. From a high-level, the existing frameworks commonly include the following elements in measuring SDoH:

  • Economic stability

  • Social context

  • Living environment

  • Education

  • Access to healthcare

As can be observed from the categories above, no single organization currently has purview over all metrics pertaining to the domains above. For example, while the Census Bureau regularly collects and reports data related to social context and living environment, it does not regularly report data related to access to healthcare. Accordingly, various stakeholders have invested material resources into the development of better SDoH datasets and tools. As an example, President Biden’s fiscal year 2022 Discretionary Budget Request included $153 million for the CDC’s SDoH program “…to support States and Territories in improving health equity and data collection.”

Absent a centralized repository of data regarding SDoH, government agencies have made an effort to highlight useful data sources. Though somewhat dated, a very comprehensive list of such data sources can be found in Appendix 5 to a 2017 report by HHS’s National Committee on Vital and Health Statistics. Additionally, HHS’s Agency for Healthcare Research and Quality has produced a more contemporary website listing a more abbreviated list of helpful data sources.

Shortcomings of Current Data

In our research, we observed that most frameworks fell into one of two categories: (1) a laundry list of social factors that could potentially impact health outcomes without clear mapping to existing data sources; or (2) aggregations of existing data (typically from a single raw data source) that are micro-targeted to a single domain of SDoH. In fairness, the challenges associated with measuring SDoH are currently large given that no single data source maintains a consolidated repository of these data points. Furthermore, the raw data sources rely on different geographical definitions or frequency of data capture, making comparisons across place and time challenging, not to mention time-consuming.

As an example of the challenges of developing a holistic dataset, we draw attention to the disparate and inconsistent data related to crime. The Federal Bureau of Investigation operates the Uniform Crime Reporting program, which seeks to aggregate and report data on crime. Unfortunately, different states utilize different systems for reporting on crime, and the level of geographic reporting is not standardized (e.g., ZIP Code or census tract level data is not available for most jurisdictions without the need for substantial interpolation of various datasets).

The shortcomings of existing datasets mean that, in order to successfully integrate SDoH into value-based care initiatives, healthcare organizations and their partners will have to collate, clean, and combine information from a large number of sources.

The Nexus Between SDoH and VBC

Even after assembling the necessary resources related to SDoH, healthcare organizations must develop mechanisms to meaningfully deploy the data. Value-based care initiatives, like those that tie healthcare payment to improved quality, are optimal targets for integration of SDoH. In this section, we introduce a novel framework that combines SDoH into well-established measures of value-based care.

The SCORE Framework

To provide clarity into the nexus between SDoH and value-based care, InHealth Advisors developed the SCORE framework as part of our ValueSCORE™ tool. This framework is summarized in the diagram below.

The SCORE framework relies upon data reporting the performance of healthcare organizations across measures of patient safety, cost of care, clinical outcomes, and patient/provider engagement. For hospitals, the ValueSCORE™ evaluates nearly 70 SCOE measures. For illustration purposes, a few examples of these safety, cost, outcome, and engagement (SCOE) measures are presented in the table below:





  • Infection rates

  • Timely & effective care

  • Adverse events

  • Occupancy rates

  • Administrative costs per discharge

  • Medicare spending per beneficiary

  • Mortality rates

  • Readmission rates

  • Communication

  • Likelihood to recommend

  • Responsiveness

As illustrated in detail below, we have observed an inverse correlation between the risks associated with SDoH in a given marketplace and performance across the SCOE quality measures referenced above. As a result, existing value-based care programs, like CMS’s Hospital Value-Based Purchasing program, tend to reward facilities for being located in low-risk communities. This inversion only exacerbates the existing inequities in the US healthcare system.

How Risk Associated with SDoH Influences Value

Fortunately, SDoH data serves as an optimal tool to correct for the challenge of rewarding value in underserved communities. The “risk” domain within InHealth Advisors’ SCORE framework is used to adjust the SCOE quality measures; it consists of 15 data points derived from government data sources at the ZIP Code level across the following SDoH categories:

The SDoH within the “risk” domain are mapped to the geographies specific to each hospital; then, using a proprietary algorithm developed by InHealth Advisors, the SCOE measures are adjusted to allow for an apples-to-apples comparison between the facilities in markets with varying social risks. In summary, the ValueSCORE™ evaluates nearly 70 SCOE quality measures and then adjusts for facility-level risks associated with SDoH to arrive at a standardized rating system for hospitals. Our 15 SDoH measures serve as a risk index to adjust the quality metrics in order to arrive at a market-agnostic measure of value, according to the following formula:

To demonstrate the utility of the SCORE framework within our ValueSCORE™, InHealth Advisors reviewed the distribution of our aggregate scores for each hospital from the ValueSCORE™ compared to final star rating of hospitals. A visual summary of this comparison is presented in the figures below. The vertical axis of each figure presents the overall hospital ranking related to SDoH; the higher the number, the lower the degree of risk associated with SDoH (e.g., hospitals located in affluent areas with healthy patients that engage in low-risk behaviors will have higher scores than those of opposite characteristics). The horizontal axis of the first figure details the distribution of Medicare star ratings of the hospitals, while the second figure reports the ValueSCORE™ quintile of the hospitals (e.g., the higher the quintile, the better the level of performance).

As shown in the first figure, the facilities earning the highest star rating (5) tend to be located in markets with lower risks associated with SDoH (those with a high SDoH score). The green line in this figure shows the mean trendline associated with Medicare star ratings and SDoH. Because facilities with higher star ratings earn more in Medicare reimbursement, the trend in the first figure above highlights the fact that existing reimbursement systems may inadvertently penalize facilities located in communities with high exposure to risks associated with SDoH. Conversely, the second figure demonstrates that the ValueSCORE™, which has risk-adjusted quality metrics to correct for differences in SDoH, yields performance scores that are not correlated with risks associated with SDoH.


It is clear from the latest literature and priorities of leadership within healthcare organizations that SDoH will take a center stage in the value-based care revolution. Because many frameworks and measures of SDoH exist, stakeholders will need to exercise caution in applying the metrics that are appropriate for their work and allow for meaningful comparisons over time and geographies. Given these observations, InHealth Advisors developed the SCORE framework for our ValueSCORE™ tool to help organizations adjust their quality measures for pertinent SDoH in their marketplaces. A deep dive into the outcomes associated with the ValueSCORE™ shows that it corrects for the inequities of existing measures like the Medicare star rating system. This provides evidence that healthcare organizations can proactively address the need to incorporate SDoH in furthering the implementation of value-based care initiatives.

How SDOH Advance VBC
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