The Growing Healthcare/Housing Investment Pool

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10 min read

A New Source of Mission-Driven Funding 

“As a matter of compassion and doing the best to support the health of patients, caregivers cannot release patients to the conditions that make them sick. Yet the expense of keeping people long past an appropriate stay has forced already-stretched hospital budgets to absorb the costs, not to mention tying up precious bed space. The bottom line: Housing instability is a significant driver of higher health care costs, poor outcomes and poor health overall.”

– Dr. Jay Bhatt, Senior Vice President and Chief Medical Officer, American Hospital Association

We hear a lot of conversation these days about the social determinants of health: healthcare itself; education, personal and family stability, neighborhood and environmental safety and prosperity; and social and community context and commitment. At the intersection of all of these determinants is affordable housing. In its absence, it has been proven, all of the other social costs go up, none more so than healthcare. That is why hospitals and medical institutions are now acting on the realization that investing in stable affordable housing in their own most vulnerable communities is a double-bottom-line positive: It improves the health of their constituent populations, and it can provide a solid and predictable return on investment.

As staff writer Scott Beyer reported in these pages in November 2017, “The institutions build, operate, invest in or subsidize new or remodeled housing, often in the low-income communities near their hospitals. Sometimes they take a for-profit approach, and other times a philanthropic one, providing zero-interest loans or grants.”

In the two years-plus since then, the trend has grown substantially. According to a November 2019 report on goodnewsnetwork.com, “Fourteen of the largest hospitals and health systems in the United States are working to reduce income-based health disparities by investing over $700 million in place-based improvements for stronger and healthier communities.” These organizations, among the largest employers in their respective states, have come together as a part of the Healthcare Anchor Network (HAN). The article goes on to state, “Health systems are uniquely positioned as employers and economic engines in their communities. In addition to providing healthcare, they can leverage institutional resources to help address the economic, racial and environmental resource disparities that impact community health outcomes.”

Altogether, there are 45 healthcare systems in HAN, including such nationally recognized heavyweights as Kaiser Permanente, Cleveland Clinic, Geisinger, Rush, Maimonides Medical Center, Seattle Children’s, Bon Secours Mercy Health, Boston Children’s Hospital and Boston Medical Center.

Urban Institute Study
In August 2019, the Washington, DC-based Urban Institute’s Research to Action Lab released a survey of nonprofit hospitals across the country designed to study considerations and challenges in addressing housing needs of patients in distressed and low-income communities they serve. The authors are Kathryn Reynolds, Evan H. Allen, Martha Fedorowicz and Joycelyn Ovalle.

The study posits that nonprofit hospitals and health systems are well-positioned to invest in affordable housing. In support of some of the survey results and in response to others, the authors make several points: Nonprofit hospitals, which are tax exempt, have an obligation to serve their communities. Under the Affordable Care Act, hospitals are required to conduct a community health needs assessment (CHNA) every three years, and therefore have a built-in mechanism for assessing their communities’ health needs. It is also their mission to do so. Hospitals are continually looking for ways to improve health. Hospitals are anchor institutions in their communities. Affordable housing is a proven asset class with a demonstrated history of predictable returns and a well-developed network of developers and intermediaries. An investment of this type allows health institutions to serve their mission while allowing the hospital to make subsequent investments in future projects with “revolving” dollars.

The report concludes, “Nonprofit hospitals and health systems have a unique opportunity to become key agents in addressing housing needs for their patients and communities, particularly through investment in affordable housing development and rehabilitation. Homelessness and unsafe, unstable or unaffordable housing can significantly contribute to poor physical and mental health; and, more important, housing interventions can be platforms for addressing a host of community health needs.”

“A Cure for Housing”
The impetus is clearly building, and the number of healthcare participants is growing steadily. In Portland, OR, six health organizations have funded local social services agency Central City Concern to build a new clinic and 379 urgently needed units of affordable housing. Partnering in Housing is Health, as the consortium is known, are Adventist Health Portland, CareOregon, Kaiser Permanente Northwest, Legacy Health, Oregon Health & Science University and Providence Health & Services.

In December 2019, the Center for Active Design (CfAD) released Healthcare: A Cure for Housing, featuring case studies and identifying best practices for hospitals to achieve the double bottom line of improving health outcomes and generating profitability needed to expand operations through investment in affordable housing. CfAD is a leading nonprofit employing design to foster healthy and sustainable communities, though their findings apply to for-profit healthcare organizations as well. The study shows that for Medicaid recipients, affordable housing contributes to a 12 percent overall reduction in healthcare expenditures, an 18 percent decrease in emergency department visits and a 20 percent increase in primary care facilities usage.

According to Healthcare Finance, Montefiore Medical Center in New York City realized a 300 percent return on investment in housing its homeless population. In California, Enterprise Community Partners, a nonprofit whose stated mission is to create opportunity for low- and moderate-income people through affordable housing in diverse, thriving communities, has teamed with Kaiser Permanente to create and preserve affordable housing in areas where most housing is beyond the reach of low- to moderate-income residents. Enterprise puts capital financing together with community partners and operates a nonprofit bank to lend at low rates. The top targets for reducing housing costs are the San Francisco Bay Area, followed by Seattle and Honolulu.

One of the consequences these investments are trying to prevent is the dilemma of having to decide between paying for housing or healthcare. Enterprise stated that in a national survey, more than half of those paying over 50 percent of their monthly income for rent said they had delayed or forgone health services and/or medications because they couldn’t afford them, and 100 percent of medical professionals said some of their patients had expressed concern about being able to afford adequate housing.

Brian Rahmer, Enterprise’s vice president of health and housing, points out that the steep housing costs affect not only patients, but also staff members, which directly affects the efficient running of a health facility.

A New Medical Model
Dr. Thea James is vice president of mission, associate chief medical officer, associate professor of emergency medicine and director of the Violence Intervention Advocacy Program at Boston Medical Center, the city’s safety net hospital and the largest Level-1 trauma center in New England. She is also a supervising medical officer on the Boston Disaster Medical Assistance Team under the Department of Health and Human Services and nationally known and admired for what she calls operationalizing the social determinants of health.

“Emergency medicine offers unique insight into human life and the human condition,” she says. “What I’ve learned over the years and now teach is to listen to what the patients are saying, to acknowledge what you’ve heard and what matters to them. They have all manner of things going on in their lives. It’s hard for some of us to imagine, but a patient can have cancer or diabetes and that’s not the biggest problem in his or her life. What I’m talking about is changing the medical model from symptoms to root causes. What we found was that doctors are always chasing disease, while patients are chasing life. The two will never align until we stop the vicious cycle of us chasing different things. Now, all of our clinic patients are screened for determinants of health, so we can mitigate [the negative factors].”

At or near the top of the life side as a social determinant of health, James agrees, is housing. “Zip codes determine health outcomes more than genetic codes. When people don’t have any place to live, how can they prioritize health? If you’re diabetic and don’t have a refrigerator to store your insulin, you’re going to have bad results. If you’re on diuretics and don’t have a regular place to go to the bathroom, you’re not going to take your medications. Those are what we refer to as downstream effects.” They all contribute to health outcomes and the number of emergency department visits.

“These people [we serve] have personal agency, but there are all these structural barriers to employing it effectively. In the 1930s, President Roosevelt pushed the idea of wealth building through home ownership. But that decade also created redlining for minorities, so you didn’t have a pathway to wealth building. Then, our system of public housing missed an opportunity to create it as a transient state, with ways to get out of it. Instead, people remained stuck in the poverty trap.”

James sees affordable housing as a solution to that kind of public housing, and believes hospitals have an integral role to play. “In Massachusetts, when a hospital builds on or builds a new building, five percent of the cost must be devoted to the community. We were the first hospital ever to ask to use it for housing projects,” she says.

The Bay State Banner wrote, “(Thea James) was a driving force behind Boston Medical Center’s unprecedented investment of $6.5 million in affordable housing initiatives.”

“We invested in the state’s Healthy Neighborhood Equity Fund,” James explains. “It matched our values. It’s a private equity fund that only puts money into affordable housing, employment, green walking space, transit and healthy, affordable food. We built 323 units of mixed-income housing in Boston. Seventy percent of the laborers came from the community. People said they wanted a grocery store, so we gave Good Foods Grocery a no-interest loan so they could expand into the neighborhood. We also created the Innovative Stable Housing Initiative to find streams of solutions to housing instability. Brigham and Women’s and Boston Children’s Hospital went in on it with us, and Beth Israel Deaconess Medical Center is coming on, too. And for the first time, last year, the Boston hospitals conducted their Community Health Needs Assessment [CHNA] together.”

Not only does James advocate changing the medical model, she also wants a paradigm shift in both healthcare and housing. “The greatest challenge is getting people to shift their mindset. For us as a safety net hospital, it’s about shifting from charity to equity. That means aiming upstream at the root causes of poor health and eliminating the gap. We want to change the trajectory of a person’s life and what is possible for him or her to achieve so that they don’t need charity. Early in my career as I saw what comes through the door, I realized that given any opportunity, people will not choose suffering, so there had to be a reason this keeps happening. I started asking questions to figure out how they got to this point. The challenge need not be insurmountable.”

A Vested Interest
Stacey Barbas, senior program officer with the Kresge Foundation Health Program, which helped fund the CfAD publication, is well aware of the challenges James describes. She declares, “The affordable housing crisis is complex, and in order to solve [it], we must expand investment from diverse stakeholders. Given the connection between health and housing, the healthcare sector has a vested interest in increasing access to quality, affordable housing within the communities they serve.”

Story Contacts:
Stacey Barbas, sbarbas@kresge.org
Thea James, M.D., thea.james@bmc.org
Kathryn Reynolds, kreynolds@urban.org