Historically, the work of community-based organizations (CBOs) has been fueled by grants and donations. But that financial model is changing…a lot! Why? Because payer and provider investments are now being added to the mix as CBOs become a bigger part of the healthcare ecosystem.

As we’ve said before, everyone is hyper-focused on social determinants of health (SDOH) and their impact on outcomes. And it’s the CBOs that can provide nutrition, housing, transportation, educational services, and more to improve many health-related-but-not-exactly-medical factors.

[Related reading: Bay State Fits Food into the Continuum of Care]

We’ve seen clear evidence of this financial shift in New York recently.

What’s going on in New York

A network of 30 or so CBOs have come together as the new Healthy Alliance Independent Practice Association (IPA), and they’ve already got their first customer. MVP Health Care, a not-for-profit health plan, is committing $800,000 to Healthy Alliance. For its part, the IPA will deliver a whole bunch of services that address social determinants of health for MVP’s members.

This partnership between a payer and an SDOH-oriented IPA has been called a first in the industry. And the alliance is already hinting that more payers are coming aboard soon. (Healthcare Finance News)

One thing that makes this model work is the IPA’s overarching digital platform that connects CBOs, providers, and the health plan. This technology closes the loop on medical care and community services, so it’s more effective than the traditional referral processes.

Typically, when making a referral for community services, doctors might offer up a smeared photocopy listing “local resources” and hope the patients actually call one of them. Or a care coordinator might make the call on behalf of the patient and then hope the patient actually follows through.

With Healthy Alliance’s platform, doctors can hand off a patient to the IPA network and track the use (or absence) of services in real time. The idea is to make sure no one slips through the cracks. Brilliant.

The benefits that the stakeholders envision include better care/service coordination, accountability among extended care teams, improved outcomes, and a healthier population. For now, the efforts are concentrated in a six-county area in New York, but the long-term impact could be significant. MVP covers 70,000 people across two states, and the IPA’s parent network includes about 2,000 providers and organizations.

Calculating the ROI for this program will be tricky. More services obviously equal more costs, but if those services prevent emergency room visits and hospitalizations, then you’re money ahead. And knowing that 80% to 90% of contributors to healthy outcomes happen outside of direct medical care, we can forecast that addressing SDOH in a more methodical way will prove out its value. (National Academy of Medicine)

[Related reading: CBO Guide to Jump Starting Value-Based Care]

Our Take: By forming an IPA, the CBOs are aligning themselves around delivering maximum value on comprehensive health — the fundamental pivot point for payers of all types. They’re also setting themselves up for new, more reliable revenue and greater sustainability. It’s this kind of innovation that will thrive in the Smart Health Market.