Healthify Blog

The Critical Role of SDoH Data in Value-Based Contracts

case manager analytics dashboard

How SDoH data can support the transition to value-based care

The transition to value-based purchasing is becoming a reality for payers and providers. In 2018, Health Care Payment Learning & Action Network (LAN) reported that 34 percent of healthcare payments made in 2017 were tied to an alternative payment model - shared savings, shared risk, bundled payments, or bundled population-based payments. These innovative payment structures aim to integrate the social determinants of health (SDoH), which can account for up to 60% of our health.

Healthcare organizations increasingly understand the urgency of implementing alternative payment models that incorporate SDoH to drive down costs and improve health outcomes, and researchers report that the transition to alternative payment models is on a steady rise. Total U.S. healthcare payments tied to alternative payment models increased from 23% two years ago.

But still, some healthcare organizations are hesitant to fully transition to value-based purchasing contracts that incorporate financial risk—particularly, organizations that aren’t accustomed to doing so. To adequately manage risk, organizations need robust data that goes beyond claims data and enhanced data integrations that provide a complete view of patient or member health journeys. Additionally, to achieve long-term success, value-based payment models must include quality metrics.

Collecting and Sharing Holistic Data

Under value-based purchasing models, reimbursements hinge on improving health outcomes and keeping costs down. Gathering, analyzing, and reporting actionable SDoH data can help organizations create thoughtful programs to address patient needs.

For many healthcare organizations, the collection of data is a siloed process. Ensuring that EHR systems are interoperable can help amalgamate patient data and bridge gaps in communication. Under alternative payment models, providers take on financial responsibility for care episodes or patient populations and to do so, providers across the care continuum should be able to use their EHR system to develop a single, personalized care plan. Greater visibility into patient data, including SDoH data, can help providers avoid repeating tests and provide appropriate care - thereby, reducing the costs associated with care and potentially improving patient outcomes.

For other organizations, like payers, the collection of SDoH data remains a retroactive process. Many payers are using analytics tools to identify members with chronic illnesses or frequent emergency department visits and then connecting that data to social, economic, behavioral, and other datasets. But by retroactively identifying social needs for members or patients, payers are still experiencing, at least initially, sunk costs. Payer organizations could benefit from gathering SDoH from members before they become high cost. Proactively gathering data can help payers better understand their members’ needs and can also share this data with providers within their networks.

Quantifying Success

Healthcare organizations should formally identify key performance metrics to ensure that they’re on track to meeting value-based goals. By identifying KPIs, healthcare organizations can quantify their performance across care quality and cost management metrics, and regularly review their progress. KPIs also enable healthcare organizations to show staff their progress and motivate change, if needed.

Continuously monitoring progress can also help organizations understand the impact they have on target patient/member populations. By regularly checking on KPIs, healthcare organizations can reassess their strategies and implement changes in time for reimbursements or to avoid penalties. Executives can also use KPIs to show success and negotiate the terms of value-based purchasing contracts.


SDoH plays a significant role in the success of value-based contracts. As healthcare costs continue to rise, organizations must recognize the efficiency associated with understanding the needs of their populations, beyond clinical data, and the importance of gathering and reporting the data across the care continuum.

To learn more about adopting value-based contracts to address unmet social needs, check out our latest white paper, Incentivizing Collaboration Between Healthcare Organizations & Community-Based Organizations. This white paper explores the impact of alternative payment models and how they can foster collaborative solutions between healthcare organizations (HCOs) and community-based organizations (CBOs).


Topics: social determinants of health