Balanced Area Deprivation Index (bADI): Enhancing Social Determinants of Health Indices to Strengthen Their Association With Healthcare Clinical Outcomes, Utilization, and Costs

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BACKGROUND: With the rapid expansion of value-based care in the US health-care industry, addressing health disparities has become a central focus for stakeholders. Social determinants of health (SDoH) indices serve as critical tools for assessing neighborhood inequities and informing programs aimed at managing patient health and costs. The Area Deprivation Index (ADI), recently endorsed by the US Department of Health & Human Services, is widely used in these efforts. However, the ADI's reliance on housing-related variables, such as median home value, raises concerns about its applicability, particularly in regions with high property values. This reliance may obscure inequalities and poor health outcomes in communities with high living costs, limiting its effectiveness for population health initiatives led by accountable care organizations (ACOs). METHODS: To address these limitations, we developed the balanced ADI (bADI), a novel SDoH index designed to reduce dependency on housing-related variables by standardizing construction factors. We evaluated the bADI's performance through extensive benchmarking using data from millions of Medicare beneficiaries enrolled in fee-for-service and Medicare Advantage (MA) programs. Correlation analyses were conducted to assess the bADI's relationship with clinical outcomes, life expectancy, health care utilization, and costs, and its performance was compared to that of the ADI. RESULTS: The bADI demonstrated stronger correlations with clinical outcomes and life expectancy compared to the ADI. Notably, the bADI exhibited reduced dependence on housing variables in high-cost-of-living regions. Benchmarking results revealed that the bADI outperformed the ADI in predicting health care utilization and costs. While ADI research suggested that both the least and most disadvantaged neighborhoods incur higher annual health care costs, the bADI provided more nuanced insights: The least and most disadvantaged groups experienced higher and lower costs, respectively, relative to other patients. CONCLUSIONS: The bADI's robust associations with health care outcomes highlight its potential to improve cost management and care management strategies aimed at reducing health disparities. By adopting the bADI, ACO programs could implement budget-neutral redistributions of resources, reallocating funding from less disadvantaged areas to the most deprived regions. This approach promises to enhance equity and effectiveness in addressing SDoH within the health care system.

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