$500,000 grant fuels UMN researchers to explore innovation in healthcare funding to address societal health issues

Contact: Rose Semenov, Carlson School of Management, [email protected]; Lou Ann Olson, Minnesota Hospital Association, [email protected]  

With a plan to explore innovations in how healthcare can better address societal health issues, a research team led by University of Minnesota Carlson School of Management faculty partnered with the Minnesota Hospital Association to earn a nearly $500,000 grant from the Robert Wood Johnson Foundation’s Systems for Action research program.

Carlson School Professor Pinar Karaca-Mandic, Ph.D., is leading the three-year project alongside Dr. Rahul Koranne, President and CEO of the Minnesota Hospital Association. 

“Our goal is to research and create a financial tool that would allow Medicaid Managed Care Organizations (MCOs) to develop long-term, sustainable funding to focus on Social Influencers of Health that impact individual and community wellbeing, like housing and food insecurities,” said Karaca-Mandic, the C. Arthur Williams Jr. Professor in Healthcare Risk Management.

The tool under study is called a “social bond.” It would operate like a savings bond, however, the funds raised would make a health equity impact. The research team hypothesizes that a social bond would allow multiple MCOs to pool investments and fund programs that can help impact Social Influencers of Health. After developing the structure of the social bond, the team will run simulations to determine the financial return and effect on health equity and offer ideas toward potential implementation.

In the current state, a given MCO may not see the full cost-savings benefit from investing in social health programs because those health improvements occur over a long period of time. For example, hospitalizations for a patient with diabetes facing food insecurity may be reduced if their health plan provides access to a program offering healthy food. This intervention translates to reduced medical costs for the health plan over time. However, the patient’s coverage may switch to a different MCO during that time, which means the original provider would not get the long-term cost-savings benefit.

“The end result is that incentives are lower than optimal for a single health plan, a single hospital or health system, or a single community to invest in projects focused on addressing social health issues,” said Karaca-Mandic, also the academic director of the Carlson School’s Medical Industry Leadership Institute (MILI). “If they start pooling together, they could see a return on their investment altogether and work collaboratively on addressing the social needs impacting health.”

“Finding innovations in how all healthcare stakeholders can work together to sustainably impact Social Influencers of Health for our patients is an investment that benefits everyone,” said Dr. Koranne. “This generous grant from the Robert Wood Johnson Foundation’s Systems for Action program will enable our research team to explore innovations in healthcare finance and delivery.”

Carlson School Assistant Professor of Finance Richard Thakor, Managing Director of the Carlson School’s David S. Kidwell Funds Enterprise Susanna Gibbons and Assistant Professor David Haynes of the University’s Institute for Health Informatics round out the experts on the team. Additional support is provided by the Minnesota Department of Human Services, Minnesota Department of Health, Minnesota Council of Health Plans, Piper Sandler, PrimeWest Health, Amherst H. Wilder Foundation, Second Harvest Heartland, and StratisHealth. 

Working with local partners will be key for the researchers as they investigate the potential for social bonds.
“Multi-stakeholder partnerships like this one are key to innovating a healthcare system that serves all of our communities for the future,” said Koranne. “Hospitals and health systems are working tirelessly on the ground every day to provide the care our patients and communities need. We are honored to be joining our partners at the Carlson School of Management in the quest for new knowledge and potential innovations to improve care.”

“I think that aligning the ideas with the communities that will most likely benefit from the research, and working with the businesses that will most likely be in a position to make the change, is the way I would like to see research going forward coming from academia,” said Karaca-Mandic.

This grant was funded through a Systems for Action Call for Proposals to implement solutions for meaningful cross-sector collaboration to address a wrong-pocket problem. This issue occurs when there is an imbalance of power, information and financial resources among stakeholders; implementation costs are drawn largely from one set of pockets while benefits flow into another; and costs and benefits are not distributed evenly across participating organizations and systems.

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About Systems for Action
Systems for Action is a national research program of the Robert Wood Johnson Foundation that aims to discover and apply new evidence about ways of aligning delivery and financing systems across the medical, public health, and social services sectors that support a Culture of Health. The views expressed here do not necessarily reflect the views of the Foundation.

About Minnesota Hospital Association
The Minnesota Hospital Association represents Minnesota hospitals and health systems, which provide quality care for their patients and meet the needs of their communities.

About the Carlson School of Management
Located on the University of Minnesota Twin Cities campus, the Carlson School of Management exemplifies a commitment to excellence through a focus on experiential learning and international education, and by maintaining strong ties with the Minneapolis/Saint Paul business community. Through its undergraduate and graduate programs, the Carlson School offers access to world-renowned faculty members and an alumni network of 55,000 people. Learn more at carlsonschool.umn.edu.