What We Learned About Financial Assistance for Patients with Medical Conditions
Having a chronic illness often means dealing with ongoing physical symptoms and emotional distress. Having a chronic illness in the U.S. means all of those things, plus an additional crushing financial burden. Cancer is one of the most expensive conditions to have in the U.S. — more than 42 percent of the 9.5 million people over 50 years old who were diagnosed with cancer from 2000 to 2012 drained their life's assets within two years. The average cost of a single day in a hospital is $2,200. If you have a rare disease, as 25–30 million Americans do, treatment costs nearly $120,000 a year. To help alleviate some of the financial strain of medical conditions, nonprofits provide financial assistance to patients and their families. This money can go toward expenses like co-insurance, rent, utilities and daycare. We sought to help donors find which nonprofits are doing a good job at getting dollars into the hands of patients at a time of need. We were able to find data on 40 nonprofits across the country, who gave a combined annual $1,356,293,502 to patients.
To evaluate these programs, we first calculated impact by comparing the total dollars of financial assistance given to patients to the total cost of the financial assistance program. In other words, what percentage of every dollar spent to operate the program as a whole actually wound up in the hands of patients?
We then compared each nonprofit's impact to our cost-effectiveness benchmarks for income-boosting interventions. We often think of income-boosting programs as only those that raise the earning potential of beneficiaries by, say, providing training in new skills. But in fact, financial assistance programs also boost income by directly transferring resources from donors to patients. Our standard benchmarks for income-boosting programs are as follows: If programs boost income by 85 percent as much as program costs, they are considered cost-effective (4 stars); 150 percent as much and they are considered highly cost-effective (5 stars). We’ve used these thresholds to evaluate income-boosting programs as diverse as scholarships and veterans disability benefits programs.
The problem we faced here was that these standard benchmarks precluded us from awarding any financial assistance nonprofits 5 stars. Without evidence from the research literature (more on that below), we were limited to estimating the immediate and strictly monetary benefits of these programs. As a result, our estimate of impact only included the cash assistance, while our estimate of cost included both the assistance and any cost to administer it. This means that a program could never boost income by more than 100 percent of its cost. However, we recognize the social importance of these programs, which address the clearly staggering cost of medical care in the U.S. In order to fairly evaluate these nonprofits, we adjusted our benchmarks. Post adjustment, programs that boost income by at least 85 percent as much as total program cost were awarded 5 stars. Programs that boost income by between 70 and 85 percent of total program cost were awarded 4 stars.
Based on data published by the nonprofits, nonprofits earned the following star ratings:
Number of nonprofits
Program boosts income by at least 85% of total program costs
Program boosts income by between 70% and 85% of total program costs
Program boosts income by at less than 70% of total program costs
Nonprofit does not publish impact information
Nonprofit has potential governance or financial health issues
* We are temporarily withholding 2-star ratings to give nonprofits an opportunity to publish data
What we learned
1. The nonprofit sector is a major player in helping patients pay for their care
Our 40 nonprofits shelled out over $1.3 billion in assistance for the chronically ill. There are a lot of nonprofits doing this work, and between direct dollars and in-kind contributions (e.g., wheelchairs), they’re no small part of the healthcare ecosystem. The need for charitable assistance for patients may evolve with shifting political sands, but in the meantime, medical care costs continue to rise and we expect nonprofits will continue to play an important role.
2. All of the largest nonprofits we analyzed (those who give out more than $90M annually) received 5 stars
We can’t say for certain why this is, but there’s good reason to think nonprofits are enjoying the benefits of scale. As an organization gets bigger, the per-patient cost to distribute financial assistance (i.e., over and above the transfer itself) goes down.
3. Most nonprofits report thorough data, but could still be doing more
While it might seem like it would be relatively easy to report clean data for an intervention like this — “here’s how much money we gave out and here’s how much we spent doing it” — the reality is a bit more complex. With an intricate web of of multiple grants across varied intermediaries (e.g., some nonprofits give directly to patients while others give grants to institutions that then find patients in need) and differential reporting across different documents, it’s not always easy to decipher a nonprofit's accounts.
What we still need to learn
1. What is the effect of financial pressure on health?
We don’t actually have causal evidence on how financial strain influences health. Specifically, little is known about its effect on concrete medical outcomes like adherence to treatment instructions (i.e., taking pills on schedule), symptom severity, cortisol levels (or other measures of stress) and pain. There’s some correlational evidence showing a link between financial strain and health, but no rigorous causal evidence that we are aware of.
2. What about stress?
It seems intuitively obvious that the benefits of financial assistance to a chronically ill person would go beyond just the concrete health outcomes discussed above. Patients and their families may feel more hopeful and have better emotional health. Despite their importance, we don’t have a good way of quantifying any of these effects.
Without data on the way that financial burden affects medical outcomes and psychological well-being, our impact estimates are limited to just the value of cash assistance each patient receives.
3. Do patients with severe need benefit differently than those with the same condition but less need?
There’s intuitive reasoning to think that yes, $1,000 dollars means more to someone in poverty than in the middle class. However, we think that the way in which this would manifest is likely through something like stress reduction, which as we’ve noted, we just can’t measure at the moment.