The conversation surrounding inflation’s impact on health care has traditionally centered on how price increases to medication, equipment and medical supplies will squeeze margins for payers and providers, ultimately driving up premiums and consumer costs. The most recent Consumer Price Index (CPI) report revealed the average cost of essential goods and services increased 8.5% over the past 12 months and that the medical care commodities index rose by 3.7% year-over-year. Despite the pace of economy-wide inflation reaching a rate not seen in nearly four decades, many inferred July’s CPI as evidence the healthcare industry had not yet been affected by inflation to the same degree as other sectors.
While we mustn’t lose sight of the long-term ramifications associated with fluctuations in the medical care commodities index, the immediate consequences of economy-wide inflation on both health and health outcomes are much greater than the ongoing discussion indicates. It is imperative for the industry to shift its focus away from traditional measures to understand and identify opportunities to address the compounding effects the rising costs of food, shelter, transportation and other essential goods and services are having our nation’s most vulnerable communities.
The industry’s singular, linear view
The healthcare industry has long taken a singular, linear view when it comes to inflation’s impact on member and patient populations. In its simplest form, the belief is sustained periods of inflation creates a competition for wallet share between commodities and care. When a person has less money in their pocket and prices continue to rise, they must decide where they spend it and identify opportunities to extend their resources in other areas. This linear view also applies to payers and providers, as the cost of therapeutics and clinical services will ultimately determine what is available for a consumer.
An example of this is if a person needs to choose between putting gas in their car or refilling their monthly prescription. If the person decides to purchase gas to provide transportation for themselves or their family, they will be unable to afford the copay at their pharmacy. The most common outcome of this scenario is a person rationing their medications or skipping doses to extend an existing supply until they can pay for the prescription. The short- and long-term consequences are much more complex than a person making decisions based on fewer dollars in their pocket. The inherent problem with the linear point of view is that it results in real and perceived bias because it fails to account for the socioeconomic factors that drive approximately 80% of all health outcomes.
Compounding consequences on social risk, community health and health outcomes
The current state of inflation not only effects what’s in a person’s wallet, but it also potentiates the adverse effects that social risk has on our communities. When a person has reduced funds, some of the tools and resources that enable them to manage their health journey may no longer be available. For example, the rising costs of car ownership and public transportation may preclude an individual with diabetes from traveling to the pharmacy, doctor’s office or grocery story. This inflation-driven transportation barrier is now preventing access to insulin, endocrinologists and healthy foods needed to maintain appropriate blood sugar levels. This can trigger a costly chain of worrisome clinical events and quite possibly a bad outcome.
Decreased spending power compounds the impact of social risk particularly by surfacing other associated deficiencies in areas such as health literacy, digital access and social isolation. A person with diminished levels of health literacy may not have the capacity to appropriately ration their medications or spend their money in a way that best serves their overall health. Digital solutions, such as online marketplaces, telehealth appointments and grocery delivery, can alleviate many challenges associated with transportation barriers and food deserts but the inability to access reliable internet can render them useless. A strong social network can mitigate several inflation-related challenges, yet these same obstacles can be exacerbated by a personal who lacks social connections. Without the right social determinants of health support, people struggle to successfully manage their health and health care.
Alleviating the burden of sustained inflation
There are solutions to many of these persistent challenges and opportunities to alleviate the burden of sustained inflation on our most vulnerable populations. Each is unique in its fundamental construct, but all strive to accomplish the same goal. The difficulty lies in implementing a strategic approach that remediates this multifactorial impact at scale. The key to accomplishing this is leveraging a four-step process that informs and develops a successful social determinants of health intervention program with a specific focus on inflationary pressures.
This approach hinges on the ability for an organization to look beyond clinical and claims data and seek out information that is relative to the locations and lifestyles of the populations they are looking to support. The first step in this process is identifying the communities with the greatest social risk where inflation has an outsized effect. This is closely followed by quantifying the multiplicity of impacts this risk and inflation have on those populations, and prioritizing intervention actions. After developing and deploying precision intervention programs that meet the specific needs of those at risk, it is critical to measure the outcomes of these initiatives to distill feedback and iterate it back into the solution.
Research shows that nearly 90% of Americans have inflation-related anxiety. The amount of concern surrounding the social determinants of health continues to grow each month nationwide along with the rate of price increases across all industry sectors. The effects of these social drivers were not broadly discussed prior to the pandemic, but their influence on the health outcomes of vulnerable populations made them too important to ignore. Once the healthcare sector recognizes the true impact of inflation, payers, providers and life science organizations can identify and implement ways to address it among their patient and member populations.
Photo: Jikaboom, Getty Images
