The complex effects of inflation on health and health outcomes - MedCity News

The conversation surrounding the impact of inflation on health care has traditionally focused on how rising prices for drugs, equipment and medical supplies will reduce margins for payers and providers, ultimately driving up premiums and consumer spending. The the latest Consumer Price Index (CPI) report. revealed that the average price of basic goods and services increased by 8.5% over the past 12 months and that the health care goods index rose by 3.7% year-on-year. Despite the economy-wide rate of inflation reaching a level not seen in nearly four decades, many have taken July’s CPI as evidence that the health care industry has not yet been hit by inflation to the same extent as other sectors.

While we should not lose sight of the long-term implications associated with fluctuations in the health care commodity index, the immediate effects of economy-wide inflation on health and health outcomes are much greater than the ongoing discussion suggests. It is imperative that the industry shift its focus away from traditional measures to understand and identify opportunities to address the combined effects of the rising costs of food, shelter, transportation and other essential goods and services that affect our nation’s most vulnerable communities.

The unique linear view of the industry

The healthcare industry has long taken a single, linear view when it comes to the impact of inflation on member and patient populations. In its simplest form, the belief that sustained periods of inflation create competition for share of the wallet between goods and care. When a person has less money in his pocket and prices continue to rise, he must decide where to spend it and identify opportunities to expand his resources in other areas. This linear view also applies to payers and providers, as the cost of therapeutic and clinical services will ultimately determine what is available to the consumer.

An example of this is if a person has to choose between filling their car with gas or refilling their monthly prescription. If the person decides to buy gas to provide transportation for themselves or their family, they will not be able to afford the co-payment at their pharmacy. The most common way out of this scenario is for a person to stagger their medication or skip doses to extend the existing supply until they can pay the prescription. The short-term 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 perspective is that it leads to real and perceived biases because it fails to account for the socioeconomic factors that drive approximately 80% of all health outcomes.

Compounding the consequences on social risk, community health and health outcomes

The current state of inflation not only affects what’s in a person’s wallet, but also amplifies the adverse effects that social risk has on our communities. When a person has reduced funds, some of the tools and resources that allow them to manage their health journey may no longer be available. For example, the rising costs of owning a car and public transportation can prevent a person with diabetes from traveling to the pharmacy, doctor’s office, or grocery store. This inflation-induced transportation barrier now impedes access to the insulin, endocrinologists, and healthy foods needed to maintain appropriate blood sugar levels. This can trigger a costly chain of worrisome clinical events and very likely a poor outcome.

Reduced purchasing power compounds the impact of social risk, particularly by bringing to the surface other related deficiencies in areas such as health literacy, digital access and social exclusion. A person with reduced levels of health literacy may not have the capacity to properly dispense 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 related to transportation barriers and food shortages, but the inability to access reliable internet can render them useless. A strong social network can mitigate several challenges related to inflation, but these same obstacles can be exacerbated by a person who lacks social connections. Without the right social determinants of health support, people struggle to successfully manage their health and health care.

Easing the burden of persistent inflation

There are solutions to many of these persistent challenges and opportunities to ease the burden of persistent inflation on our most vulnerable populations. Each is unique in its basic construction, but all strive to achieve the same goal. The difficulty lies in implementing a strategic approach that addresses this multifactorial impact at scale. The key to achieving this is using 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 depends on an organization’s ability to look beyond clinical and claims data and seek information that is relevant to the locations and lifestyles of the populations they want to support. The first step in this process is to identify the communities with the greatest social risk, where inflation has an excessive effect. This is followed by quantifying the multiple impacts that this risk and inflation have on these populations and prioritizing intervention actions. After developing and implementing precise intervention programs that meet the specific needs of those at risk, it is critical to measure the results of these initiatives to distill feedback and iterate back into the solution.

Research shows that almost 90% of Americans are worried about inflation. The amount of concern surrounding the social determinants of health continues to grow each month across the country along with the rate of price increases across all industry sectors. The effects of these social drivers were not widely discussed before the pandemic, but their impact on the health outcomes of vulnerable populations made them too important to ignore. Once the healthcare sector realizes the true impact of inflation, payers, providers and life science organizations can identify and implement ways to address it among their patients and members.

Photo: Jikaboom, Getty Images

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