Saving Money and Improving Health

“… the vast majority of government health spending in the United States is for individual illness care and treatment for disease; a far smaller and inadequate proportion is provided, ineffectively, to support governmental public health’s efforts to improve population health. The current financing system for health in the United States is profoundly misaligned.”
—National Academy of Sciences¹

1. Funding for public health today is cobbled together at federal, state and local levels with a diverse and ephemeral stream of program-oriented dollars attached to expectations and deliverables that form, in one way of looking at it, a __________________. (Fill-in-the-blank)
   A. Patchwork quilt
   B. Game of Jenga
   C. Rubik’s cube
   D. Multidimensional galaxy with a few unpredictable black holes thrown in for good adventure
   E. Any of the above

The answer, of course, is any of the above. Indeed, an entertaining part of researching public health financing is finding fresh synonyms and similes to fill in that blank.

This public health web-exclusive series charts many of the classic areas touched by public health, as well as some more cutting-edge ones. In some cases, it suggests actuarial approaches to estimating costs or returns on investment. But:

• What about the system that supports this work and pushes it forward with more than just good will?
• What about the public health infrastructure that has most recently, in particular, become so fragile?
• How do we make an effective value proposition for population health in ways that positively affect public health infrastructure over the long term?

Public health investments are typically a long game. Returns on those investments may not be realized for decades or generations. Fiscal instability threatens critical public health infrastructure in many places across the United States today. One very current, cogent need of the public health system is to harness the skills and talents of actuaries to help make the necessary data-based and numbers-focused decisions that, prior to now, have not been articulated widely or effectively enough to establish a well-funded system.

If, as an actuary, you choose to become more engaged with ways to achieve the health care triple aim of reduced health care costs, improved quality of care and better population health outcomes, you will need at least a brief understanding of the nation’s public health system. Here are a few practice-based reflections about that system, a guide to further investigation and a plea for your help.

U.S. Public Health System Background

The U.S. public health system is organized with both common and nuanced elements from state to state and community to community. “The nation’s 2,862 local health departments (LHDs) are the primary means for assuring public health services for all populations”² Understanding clearly what any one of those systems includes and connecting the common programs, services and defined management structures across those systems is challenging—but not as challenging as deciphering the funding mechanisms. “Because state and local governments account for 86 percent of total governmental public health spending in the United States, and because state and local governments depend heavily on income and property taxes as sources of revenue, governmental public health spending tracks closely with underlying disparities in household income and housing wealth across states and communities.”³

Many agencies today sensibly seek funding diversity in order to increase funding stability. There can be some magic in the diversity of funding and flexibility in local response to the need for public health. The challenge is in working the timeline and flexibility of funding along with the diversity, while sustaining the underlying pieces to make it all continue to work effectively. This includes the workforce, infrastructure, training and technology. Too often, the funding streams in public health are responsive (yet tardy) to emerging disease or are intended for disease-burden or program-specific areas, and are based on reimbursement models rather than real-time need for salary support or supplies. Disease- or program-specific funding is short-lived, including many stipulations for spending in dictated categories with redundant audits by topic area or funding source rather than by agency.

The public health workforce continues to be an essential piece of the puzzle and certainly a source of much of the magic in making public health happen. What draws us to work on something? What motivates us to contribute time, resources, intellect and creativity? … to take the risks needed to improve an individual’s health outcome or community health need?

Very few people who work in public health say it charts back to a tangible incentive.⁴ As we focus so many of our health system decisions today on cost, benefit and return on investment in the short term, caring about people and community is not an answer that stands alone; it’s a part of the formula for how, through policies and budget priorities, we choose to invest community by community or state by state. Working for the greater good and improving community health no longer seem to be enough on their own merit.

The Mission of Public Health

Across the health professions, we often hear the phrase, “no margin, no mission,” and certainly, we all understand it. Business practices, quality improvement approaches and added efficiencies to the ways we deliver public health are the norm. In governmental public health, the mission drives the need for margin, not the other way around. This is one of many examples where hospital systems and governmental public health departments sometimes struggle with how to operationalize collaborative efforts. And still, thankfully, critical partnerships to serve community health outcomes are happening more and more in places large and small. The notion of “bending a cost curve” resonates with some leaders of hospital systems as well.

The challenge, again, can be the timeline in seeing the results of community health efforts on a balance sheet. Financial accounting systems in public health are primarily designed to get agencies only through the next fiscal year. Governmental funds are reported using an accounting method called modified accrual accounting, which provides a short-term spending focus. Public health has been in a reimbursed mode for too long. It’s time to think and plan ahead for actual costs related to community health needs.

While some of the struggles around longer-term funding are real, it may be tempting to think that such vulnerability hinders the workforce. Yet, in my 22 years of serving as a member of the public health workforce in North Carolina, I haven’t come across anyone unwilling to venture into another fiscal year with their sleeves rolled up, ready to address whatever comes their way. It’s a rewarding adventure most times.

Often, people come into public health connected to a specific disease-related area of interest, have empathy about human suffering, or a deep-down desire to improve health outcomes for individuals and groups. In some cases, it’s about saving resources—both financial and human (e.g., offering vaccines for children’s programs). In other cases, it’s about improving quality of life or reducing the burden of chronic disease we have witnessed (e.g., diabetes, HIV, heart disease, stroke and cancer prevention programs). Sometimes it’s about movements of social justice and environmental concern (e.g., working on access to care and health equity within a community). Other times it’s about responding to natural and manmade disasters (e.g., preparedness and response). There are those contributing to public health who have a genuine scientific curiosity about epidemiology, which is the study of diseases in populations.

Whatever motivates those who contribute to it, public health at its core is contributing to “fulfilling society’s interest in assuring conditions in which people can be healthy.”⁵ We know intuitively as well as intellectually that, when a population is healthier, there are many long-term benefits including saving money in our health system.

Public Health Systems Research

The formalized public health workforce is largely a governmental workforce at local, state and federal levels in the United States. Understanding this workforce is, in fact, “a subset of a larger endeavor to investigate the public health system, referred to interchangeably as Public Health Systems and Services Research (PHSSR) or Public Health Systems Research (PHSR).”⁶

In a special issue of the journal Health Services Research dedicated to PHSR, Dr. Douglas Scutchfield put forth the following consensus definition of PHSR, arrived at by the Academy Health PHSR Special Interest Group:

• “Public Health Systems Research (PHSR) is a field of study that examines the organization, financing and delivery of public health services within communities and the impact of these services on public health.
• PHSR is a multidisciplinary field of study that recognizes and investigates system level properties and outcomes that result from the dynamic interactions among various components of the public health system and how those interactions affect organizations, communities, environments and population health status.
• The public health system includes governmental public health agencies engaged in providing the 10 essential public health services, along with other public and private sector entities with missions that affect public health.
• The term ‘services’ broadly includes programs, direct services, policies, laws and regulations designed to protect and promote the public’s health and prevent disease and disability at the population level.”⁷

Because the public health infrastructure lacks a consistent, dependable and sustainable stream of funding, operating budgets for local health departments vary tremendously from community to community. In some more rural, underserved areas of our nation, where the needs are greatest and no economies of scale can be realized, the resources for public health are limited. As we change the way health care delivery works from state to state, as we transform Medicaid and how it works, and as we determine which parts of our health care system remain for-profit and which parts remain safety-net oriented, it is imperative we pay attention to the underlying forms of the system. “Sustainability and resiliency [of the public health system and its funding] is not automatic.”⁸

Actuarial Contributions

How can actuaries connect and contribute not only to the parts of public health that draw in public health workers, but also to the whole? We invite you to find out. A few clues:

• Public health is good at mobilizing partners and being a convener or backbone agency for collective impact at the local level.
• We are challenged across the nation to set up a system that feeds critical infrastructure while providing information and incentives to sustain it.
• Public health 3.0 is a movement to focus energy on determinants of health. Emerging models are just now being realized to figure out how public health 3.0 might be funded. Addressing core determinants of health will take some early adopters and analyzers who understand the benefits of long-term investments to lead the way.⁹
• Just because it’s governmental doesn’t mean public health is a system that can’t quickly mobilize and respond. The workforce is well-trained in this way. Public health is less subsidized and more willing to be creative than partners think, so be open to learning those nuances.
• Finally, preventive clinical services and primary care are essential links with public health. In places across the United States, health care and public health are connected; we simply need to ensure that system is sustained for long-term success and improved health outcomes.

Join us. We need your help.

Related Links
Learn more about PHSSR.
Learn more about building resilient public health systems.