Stuart M. Butler is a senior fellow in Economic Studies at Brookings. Prior to joining Brookings, Butler spent 35 years at The Heritage Foundation, as Director of the Center for Policy Innovation and earlier as Vice-President for Domestic and Economic Policy Studies. He is a member of the editorial board of Health Affairs, an advisory board member of the National Academy of Medicine’s Culture of Health Program, and a board member of Mary’s Center, a group of community health clinics. Most recently, he has played a prominent role in the debate over healthcare reform and addressing social determinants of health. He has also been working on a wide range of audiences, including the future of higher education, economic mobility, budget process reform and federal entitlement reform.

Tom Peterson: Thanks for joining the Stakeholder Health Podcast. I’m Tom Peterson. Stakeholder Health is a movement of people in health care systems, along with others, who are learning to cross the sidewalks around their hospitals in order to share in the life of their communities. You’ll find plenty of resources on our website, stakeholderhealth.org. Your hosts are Dora Barilla of Providence St. Joseph Health and Gary Gunderson at Wake Forest Baptist Health. Dora and Gary take turns interviewing leaders you’ll want to hear from. In this episode, Dora talks with Stuart Butler of the Brookings Institute.

Dora Barilla: Hello everyone, and welcome to Next Generation Community Health with Providence Saint Joseph Health. I’m your host, Dora Barilla. And today we’re joined by Stuart Butler, a senior fellow for Economic Studies at the Brookings Institute, and we’ll be talking about financing social determinants of health. Let’s get started first by welcoming Stuart to the show. Thank you for joining us today.

Stuart Butler: Well, thank you. It’s my pleasure. I’m glad to be here.

Barilla: Wonderful. As we talk about social determinants, I think the jury’s out. And collectively as a nation, we can all agree that social determinants have a greater impact on our overall health outcomes than just about any other factor. I know there’s lots of conversations around what we call them. So I thought we’d just level set, in terms of a definition, Stuart, so we can all have a common agreement, at least today in the conversation of what we’re talking about. Social determinants are the conditions in which people are born, grow, work, live and age. That includes economic security, food, housing security and educational opportunities. Is there anything you’d like to add to that level setting or context before we get started?

Butler: Well, I think when you think about social determinants you’re right. That to a large degree they do mean the kind of, if you like, the environmental situation that the person is in, the quality of the community and so forth. But I think also, it’s important to just also add that there’s sometimes very specific services that are important to identify, things like transportation, social welfare services and so forth. And legal issues in some cases, legal support. And I say that because, if you only think of social determinants as the big factors like poverty, economic conditions and so on, there’s only so much we can do about those if you’re a hospital system or something like that.

On the other hand, some of these more specific services, you actually can make a big difference very quickly to individuals and to families. So, I think it’s important just to kind of recognize that it goes from the big picture issues to the smaller ones. I think it’s also important to understand that, while our knowledge of the connection between these factors and health is steadily improving, we’re not there yet on a lot of them. We can’t say with a great deal of precision, sometimes, what the effect is, how much, the degree. Therefore, that hampers us in knowing how much investment to make, where’s the biggest benefit, the biggest bang for the buck and so on? So, it’s a big issue. I mean, I think we’re making a lot of progress, but just in terms of definition and understanding where you can intervene, we’ve still got quite a bit more to do.

Barilla: Yeah, I really appreciate that additional context because that really is so important. Because I think, as everyone is now talking about it, I find much of healthcare wants to intervene, like they would a staph infection. It’s a very different investment, and I think to level set and set the stage for that is important. So, thank you for adding that.

As you said, there is that growing recognition that truly improving the health of our nation is going to require addressing some of these issues. But it’s also going to require some partnerships from a lot of nontraditional partners in a community, and breaking down those silos, especially with health care, public health and social services. And there really isn’t going to be any one entity that can tackle this social condition on its own. Anything you’d like to just add to the partnership element of this work?

Butler: Well, you’re absolutely right. You do need to have the collaboration of a lot of different institutions, including public and private institutions. And my work here at Brookings, we focus a lot on economics here of course. I think looking at these challenges of getting budgets to be coordinated, to get different institutions to work together and deal with the barriers that make that hard to do, is really very important.

I mean, when you look at collaboration across sectors, you do face a lot of obstacles. One I will call cultural. By that, I really mean that different sectors do have a different culture to them. When you have people working in the social welfare area or in a school system, the way they look at the world and look at these issues is often very different from, say a large hospital or a health plan, trying to make a difference in those areas. So, that’s important. It’s also important to recognize that there can be lots of constraints because of the rules associated with payments, again, in every sector. So it may make sense on the ground. You may actually have institutions in a community saying, “Yes, we should work together and let’s use our money a little differently.” And there’s often very distinct statutory and regulatory barriers to doing that.

Often is data gaps, that we need to share information about people and families and sometimes there are legal restrictions on that. Sometimes there’s challenges of getting data shared for a variety of reasons.

And then there’s a sort of a more fundamental issue I think in this area, which is what economists often call the “wrong pockets problem.” Which means that sometimes you get the biggest impact if one institution in a particular sector really does the lion’s share of the investment, and yet the benefit may actually accrue mainly to another sector. So for example, if you look at housing and the elderly, I think we know very well that if there was a much greater investment in looking at making units, apartments, housing safer for the elderly, you would avoid a lot of falls and other complications and so on. But then you’ve got to persuade the housing authority, very often, if it’s, say in the public sector to invest. Well, that housing sector doesn’t benefit from reductions in Medicare costs if you reduce falls. So it’s a wrong pocket, in the sense of you want one pocket to foot the bill, but the other pocket in another sector is actually getting the savings. And that’s a tough thing to get to work when you see that difference, that wrong pocket issue.

Barilla: I think that’s a really important perspective. And as we look to more collaborations in communities, I think really having a strong understanding of that is going to be helpful. I’ve done lots of collaborations around health improvement. One of the things that I’ve found is, really having a shared outcome that everybody is looking at because I think the … or joining in and really collaborating on, because I think you’re so right, that everyone does have their own unique perspective and outcomes that they’re trying to achieve. And I’ve forever been, I think, befuddled by the inducement and challenges working in healthcare, especially around social determinants for the majority of my career. And that’s really challenging, but it’s very real. How do we address that? And so-

Butler: Yes. I was going to say, as you know, you always have this challenge of justifying to, say the chief financial officer of a hospital or a plan, why invest in these other areas like housing and so forth. Especially if the net effect of that is to actually reduce the demand for medical services. I mean, if you’re running a hospital and the CFO was asked, “Well, shouldn’t we invest in all these other things to have fewer people come to our hospital?” Well, often the CFO will say, “That doesn’t work for me from a financial point of view.” So, there are pretty fundamental issues that have got to be addressed in this area if you’re going to get collaboration. Collaboration is something everybody says, in principle, they want to do. But if you have incentive systems and payment systems and budgetary things that run counter to that, it’s very hard to sustain those collaborations over time.

Barilla: Absolutely. I think you have already mentioned the wrong pocket problems in investing in social determinants of health. Also, the challenges often are siloed budgets and everybody being incentivized to achieve something differently. As we move forward in advancing this conversation, is there any light at the end of the tunnel or where do we really turn next to start looking at some of the budgeting challenges?

Butler: Well, I think there is some light at the end of the tunnel and I don’t think it’s a train coming the other way. It’s because I think there’s a lot of real experimentation in looking at ways to deal with these issues. Everything from the way in which information is generated and shared and the protocols associated with that, to looking at really fundamentally different models, really business models if you like, at a community level to address these issues like the wrong pockets problem and experimentation taking place.

I’ve really worked in this area of social determinants for really the last five years, since I’ve been at Brookings. I would say even over that period, the degree of experimentation of analysis and so on, of attempts to look at returns on investment and how you would model it to experiment with different approaches, that’s been increasing sharply during that period. And I think it’s going to continue very much in the future.

So, I actually do think there’s a lot of light. I mean, we won’t necessarily always get it right when we try something. But the fact is, I think it is so now ingrained in people’s minds, no matter what sector they’re in, and certainly within the health sector, that you’ve got to figure out ways of experimenting in this area. You’ve got to figure out ways of structuring incentives for people, for managers and employees and so forth, to do the right thing and to try these things. I think there’s a lot of acceptance of this. So, I do think that we should be very hopeful that we’re going to make some significant advances in this area. But again, that’s not to minimize the challenges.

Barilla: Absolutely, but it is encouraging, I agree. But it’s also a little challenging for people as well, to really wrap their minds around, especially if they’re new to this. I think patience is, I think an important competency, as we’re going down this path and this journey. You talked about some of that, the light that’s not a train, Stuart. Can you talk about or mention any emerging models, or some specific examples of efforts that are working with cross-sector collaborations, that are working to improve health outcomes?

Butler: Sure. Like I said, I think there’s a lot of things going on. Let me summarize at least some of them, particularly those that focus on having a different incentive system or dealing with these budget issues. You see at the ground level, I think, certainly a number of hospital systems and plans, particularly managed care organizations I would say, that have in many ways a different incentive structure than is true in the fee for service area. Because if a Medicaid managed care organization for example, having a capitated amount for each of its enrollees, they have an incentive to look at the best ways to keep those enrollees healthy. So, you are seeing a lot of experimentation and plans venturing into areas, even job training and social services and so on.

So the managed care structure, I think itself is allowing a lot more to go on. And we’ve seen some changes very recently, legislatively, in the Medicare program for Medicare Advantage to encourage, to allow really, Medicare Advantage plans to devote some of their resources to things like transportation, nutrition and so on, to a much greater degree than they were able to in the past. So, I do think at the plan level we’re seeing a lot of opportunities.

I think, also, when you look at some of the things government is doing, there’s some really interesting things happening all across the country and at different levels. The federal government is, I think, doing a steadily better job at getting some of its agencies to collaborate in this way. If you look particularly at Health & Human Services and the Department of Housing and Urban Development, we see a lot more examples with those two agencies in particular, of looking at the housing health connection, which we know is really very central for lots of families. And there’s a lot of pilots going on, a lot of use of federal waivers from rules, to allow much more flexibility. So I think that’s an interesting area.

I think you’re seeing, at the state and local level, experimentation with different sort of bodies that function as intermediaries between sectors. So more than half the states now, for example, have what’s called Children’s Cabinets. These are set up at the state level, and it brings together agency heads from different agencies of the state, that have an interest in the health and the education and economic improvement of children. They plan together, so they’re looking at budgets together, and often have a children’s budget sometimes in some states. So, that’s a really important kind of way in which the government, if you like, is improving its internal collaboration at all levels.

And then I would say, finally, there’s some really interesting experimentation in very basic kind of business models, how you get different institutions to work together. That’s often using some of the things we know from other areas completely, like the way in which businesses have strategic alliances and work together for a common end and so on, and sort of importing that into this whole area.

In fact, there’s a term that some economists use, which is coopertition. I’m not mispronouncing something. That’s really a blending together of two words, competition and cooperation. And the fact is, that in the business world, you often do see these coming together of competitors because there’s a common benefit in using shared technology for example, and things like that.

We’re beginning to see that in this area too. We’re beginning to see the use of different models drawn from what economists called Game Theory, and coopertition and so on. And looking at how to structure relationships between different entities at the community level, so that everybody … looking at models that encourage everybody to make some investment in something which will benefit all the sectors and the community, rather than seeing themselves as separate institutions.

So there’s a lot of interesting experimentation in that area. And I think this is where we could see really fundamental changes in the way in which we think of business models, to encourage this kind of social determinants of health. I think we’re still stuck, to some degree, in the old models of different institutions have varying distinct roles, and then just sometimes working together or doing it for philanthropic reasons. And this introduction of ideas that say, “No, no, it’s more than that. We can think of business models that make it in the commercial business interest of different institutions to work together,” that’s to my mind, as an economist, that’s the most exciting area of all. But we’re still at the beginning of that.

Barilla: Yeah, that’s a really inspiring narrative as we move forward in a lot of this collaboration. I know at Providence St. Joseph Health, we just recently launched a Housing is Health campaign and working with all of our … We have a seven state footprint. We’ve always addressed housing and stability and those experiencing homelessness, but really are finding that we have to really think about this differently and not just look at the edges of this, but really dive deep into this. As we’ve gone around and talked to our local communities and talked to our community partners, I think it’s … housing and homelessness, I think is probably one of the most apparent efforts that we’re going to have to collaborate. So, I like your coopertition because that’s going to be going to be key.

And to really shift, one of my concerns have been over-medicalizing individual social needs versus the model of investing in upstream community interventions, and to switch that mental model and that business model is going to take a lot of work. So, any additional insight on that Stuart, I’d love to hear and I think so would our listeners.

Butler: Sure. As you mentioned at the beginning, that we’re seeing more and more systems, health systems and hospital systems engaging in the housing area, and in some cases with some pretty significant investments in that area.

But you’re also right that, even now, the business case for doing that as opposed to the philanthropic case and looking at very distinct local problems like homelessness, the business case is still sometimes lagging in this area. So yes, there’s got to be a lot of interest, a lot of movement in this, and a lot more activity.

I think also, this issue of medicalization, which often keeps coming up, I think in a way it really misses what should be thought of as really a two-way street in this. Yes. I mean, it’s important for health systems to be involved in these other services. In that sense, I suppose one could say they’re medicalizing, but they’re medicalizing only in the sense, really, that medical institutions are perhaps in the driver’s seat or designing this, but it’s true also in reverse.

We’re seeing lots of other institutions that very much affect the health of individuals. And you’re seeing these other institutions looking at those issues. That’s true of housing authorities. It’s true, absolutely, of school systems. Particularly if you look at some of the charter schools around the country, they’re becoming much more engaged in looking at children’s health and experimenting in that area.

So yes, it’s true that there might be some fears of medicalization, but the reverse is also the case. So I think it’s important to think of it as a real mix, that we’ve got to try to break down the barrier between what we think of as health or medical and what we think of as nonmedical. I think if we think of it that way, then these worries of it can be set aside.

I do think, however, one thing I would say, is that all these ventures involve somebody being the prime mover. It’s very important for that prime mover, say a hospital in a community, to be very sensitive to the fears of other sectors and institutions. You see this a lot when a large hospital system tries to work with community-based organizations or even schools in a community. And the latter, the schools and the community-based organizations often worry about in a sense being over-medicalized, in the sense of an institution providing the lion’s share the money and the largest number of people on whatever the steering committee is and so forth. They worry about the sensitivity and the understanding of those coming from the medical sector, about the conditions in the community and the sensitivities and the culture of the community.

So, I do think that one of the most important things that health systems do have to think about, is actually how to either train or hire people who’ve got a lot broader understanding of the dynamics of communities and the sensitivities and the programs that exist within communities. That’s one of the areas that I think, over the long haul, we still have an enormous amount that we have to do, to in a sense train a group of higher level managers in the subtleties of social determinants of health and the budgeting and the understanding these different sectors, so that they can be very effective and trusted leaders of attempts to cross these sectors and to get them to work together.

Barilla: I think that’s so core to a lot of this work. I know that our Housing is Health is core to our mission and it really is driven by our mission to serve the poor and vulnerable. But you’re so right, in terms of having almost like a new competency in our workforce, in our health systems, that do have that broader public health understanding and understanding of the communities. And really understanding the finances of it, how all of this works too, because I think that’s going to … and having that sensitivity. That’s been a big mission of mine. I always say, “I know I can retire when I have one of our community benefit or community health investment leaders going up to be a chief executive and that’s a new normal.”

Butler: Right. Yes, that’s right. Yeah, that’s absolutely right. And I think we’re slowly beginning to see some educational institutions beginning to recognize the importance of training out people, training people with those broader understanding.

I mean for example, Washington University of St. Louis has a program, actually in their school of social work, where they’ve brought in staff, I mean faculty, with a straight health background. They have joint degrees, master’s degrees in social work and in public health, with this express intention of turning out people who do have this very broad understanding and knowledge of these sectors, so that a hospital system or a school system or even a housing system can hire people like that and have senior managers who are knowledgeable, sensitive, appreciate what can be done because they are have been trained in these different fields.

I think it’s people like that, in the future, who are going to be very important in advancing the whole social determinants agenda because they have this background, as opposed to learning it on the job, which is what, unfortunately, so often has to be the case today. Because you have senior officials in hospitals who just have no background in these other areas.

Barilla: Absolutely. Being a professor of public health, I, I can guarantee or even just … I have a doctorate in public health. It wasn’t a part of the curriculum. And I’m at the end of my career, so my big push is, absolutely, let’s get this in the next generation workforce and expose those that are coming into this field now.

Because you mentioned earlier, that a lot of large health systems, including ours, are investing in housing. I think we’ve made some real solid investments, but I continue to ask, “What’s the right investment from a health system?” Because I think that’s important. And really having a clear understanding of how all of this is financed is important. I work with a colleague who always … she oversees all the care management for our Medicaid population. She says, “I always worry about shoving everything into the Medicaid mitt because it’s going to explode.” How do we really begin to look at this so that we can all contribute and all have the sustainable health outcomes?

Butler: Exactly.

Barilla: As you’ve been working in this over the last five years, what’s the most surprising thing that you’ve learned about this whole financing world of social determinants of health?

Butler: Well, I’ve been around long enough not to be easily surprised. I’ve worked on public policy through that field, so that whole time, 40 years here in Washington. So, it’s hard to surprise me. But that said, I would say on the negative side, I would say what surprises me is the challenge that so many people have of thinking differently about business models. It does surprise me that it’s so hard to persuade people to think about a different business model. So, I think that’s one thing that has surprised me.

I think also, on the other side of the coin, what has pleasantly surprised me, is the way in which people outside the strictly health field have been more and more involved in thinking hard and generating ideas and steps to help try to solve these issues. If you look at something like the whole growth of Pay-for-Success models, which as you probably know, I mean are these cases of private investors, big investors like Goldman Sachs and so on, really working, putting together funding systems, funding mechanisms and direct investments based on structuring innovative approaches across sectors. And the return on investment is based on their ability to actually reduce costs or to improve value, and they are the risk takers in this. So, risk taking venture capital is kind of moving into this field, with all kinds of interesting, creative approaches all over the country. That’s very exciting, and it does surprise me in the sense of it’s happening so quickly and in such a variety of ways.

So, that’s been a really pleasant surprise and it’s one of the reasons that as I said earlier, I’m optimistic about the future. Because I think there’s more players coming into this area from outside the conventional players, that can help solve these challenges and really bring a lot of innovation into the way to put together collaborations.

Barilla: Yeah, I’ll have to ditto that. That’s been really exciting for me as well. And I know, as a public health professional, I have thoroughly enjoyed working with economists on this because you think about it very differently, and it is exciting to really help think about the future of our economy and how we’re funding a lot of things. So, it really is an exciting space for all of us.

So as we finish up here, well Stuart, what would be the best piece of advice you could give large health systems or health systems around the country, and communities looking to optimize their investments in social determinants of health?

Butler: Well, it’s hard to give you one specific thing. Let me give you three quick ones. One is, I think it’s really important to be open to listening, first of all to people in the community. They may not have, on the face of it, the sophistication of our senior health managers, but they know a lot about what goes on, what makes a community tick. So, listening to the community and also to people in other fields, as I mentioned, that I think listening to economists and so forth. So listening to people outside the normal group that maybe you normally make decisions with.

I think secondly, looking to other institutions in the community can be really helpful. I think one of the untapped institutions in a lot of communities is actually the universities. Whether you’re looking at people to help with evaluation or handling data or different fields that can bring academic research to help, I think that’s another area to really be open to a lot more.

And then I’d say finally, it’s important to, I think all things being equal, to try as much as one can to build on existing institutions. I think it’s always better to look at a school system or a housing authority and say, “How can we work with you to adapt and maybe add on to the functions that you have in this other sector, this other institution?” I think it’s always better to look at ways of building on existing institutions that already have trust and play a role in the community than trying to invent something new all the time. New things, certainly have their role, and I don’t in any way suggest otherwise. But I think it’s always good to try to look at how to help institutions that exist in the community, to kind of adapt what they do and build on their existing trust and function, rather than think always of creating something new. So, hope those are three helpful pieces of advice, and I hope that it helps health systems that are thinking about this.

Barilla: Absolutely. That is some sound wisdom, Stuart. I really want to thank you, Stuart, for joining us today. And for everyone listening today, I can guarantee you that this will be something that people will really gain a lot of additional wisdom from. This is Dora Barilla from Providence St. Joseph Health. I want to thank you all for being a part of our conversation today. Stay tuned for our next exciting podcast, highlighting another champion for community health. Thank you.