Building on Tradition, Catholic Hospitals Invest in Community to Improve Health
By Liz Duffrin
Opening a children’s museum seems an unlikely endeavor for a health care system. So does establishing a trendy restaurant district. But these are just two of the innovative strategies financed in recent years by Catholic health systems seeking to spur economic development and improve well-being in the low-income communities they serve.
Research finds that medical care plays a limited role in good health and that other factors like strong social networks, employment, high-quality housing, education, and access to healthy food are far more influential. A growing awareness of these “social determinants of health” is one reason the Affordable Care Act required nonprofit hospitals to focus on preventing disease, not just treating it. As a result, more hospitals are searching for ways to improve quality of life in the communities they serve. Catholic health systems can show the way.
Driven by their mission to serve the poor and underprivileged, Catholic health systems have been investing for decades in affordable housing, local businesses, and other economic development projects in low-income neighborhoods.
If you move a family from housing that has asbestos or is in a bad area to an area that is green and [safe], that is ultimately going to improve the family’s health.
“If you move a family from housing that has asbestos or is in a bad area to an area that is green and [safe], that is ultimately going to improve the family’s health,” said Pablo Bravo, vice president of community health for San Francisco–based Dignity Health, who oversees its $100 million community development loan fund.
More hospitals are realizing that such investments can improve not only health but also their own bottom lines, reported the Democracy Collaborative, a national nonprofit, which has put together a “toolkit series” for hospitals and health systems seeking investment and economic development ideas to improve the health and well-being of underserved communities.
On that front, some Catholic health systems, like Dignity Health and Bon Secours Health System, headquartered near Baltimore, are getting creative. In 2007 Dignity, the nation’s fifth largest nonprofit hospital system with hospitals and care centers in California, Arizona, and Nevada, loaned $1.5 million to open the Children’s Museum of Phoenix, spurring new development in an under-resourced section of the city.
And in 2011 Bon Secours, a midsized health care system operating in six East Coast states, launched a microfinance project to support local entrepreneurs that transformed an abandoned section of Richmond, Virginia, into the city’s food epicenter.
The idea for the project grew out of a community-wide planning process, said Dougal Hewitt, former senior mission officer for Bon Secours Richmond Health System. A local community development financial institution (CDFI) managed the project.
“There’s a strategic advantage to understanding the community,” noted Hewitt, who carried a similar community planning approach to Chicago in his new role as chief mission officer of Presence Health. “When you have effective community engagement, you can do so much more so much faster.”
Most hospitals have long operated largely in isolation from their communities. Catholic hospitals, at their founding, were deeply integrated.
Orders of women committed to serving impoverished communities built hospitals and schools because they observed those needs, Bravo noted. “[While] they were dealing with disease or education, they were still providing food for the poor,” he said. “They were incredible women.”
In a precursor to community loan funds, they often placed their retirement money in financial institutions that invested in their low-income neighborhoods.
Orders of women committed to serving impoverished communities built hospitals and schools because they observed those needs.
Over the past several decades, hospitals have reduced operating costs by consolidating as health systems. For individual orders of Catholic nuns, joining to create health systems made large-scale community investments possible, explained Bravo, whose $100 million loan fund represents 5 percent of Dignity’s endowment.
Investing in community development financial institutions is the most common way that Catholic health systems support low-income communities, according to Bravo. These nonprofit institutions use their financial expertise to combine public and private funds to finance ventures such as affordable housing, community health centers, grocery stores, neighborhood centers, and small businesses, all in neighborhoods where other lenders won’t go.
In addition to Bon Secours and Dignity, other Catholic health systems making these types of investments include Ascension Health, Catholic Health Initiatives, St. Joseph Health System, and Trinity Health.
Investing in community development financial institutions (CDFIs) is the most common way that Catholic health systems support low-income communities.
Dignity invests 23 percent of its community investment allocation in such institutions, but, importantly, maintains control of the rest. That setup allows it to invest specifically in nonprofits that address the social determinants of health in the low-income communities it serves — from affordable housing and business development to health centers, the environment, and arts and education. Dignity currently invests in 82 nonprofits with loans ranging from $50,000 to $5 million at below-market interest rates from 0 to 5 percent.
The Children’s Museum of Phoenix is one of Bravo’s favorite investments. He quickly saw its potential to improve health — through economic development, job creation, early childhood programs, and a place for children to play indoors during the scorching Arizona summers. But the extent of its impact on a downtrodden section of the city surprised him.
“Once you get started on something, it’s amazing what the ripple effect is,” he said. “It’s incredible.”
From Mud and Straw
The museum began in 1998 as a traveling exhibit with 100 bales of straw that children at an outdoor festival turned into an adobe house using trowels, wheelbarrows, and plenty of mud, said museum CEO Kate Wells, who helped haul the straw.
The traveling museum soon expanded with the donation of a city bus and new exhibits like fantastical musical instruments built from items you could find in a garage, a forest made of hanging foam noodles, bouncing balls the size of weather balloons, and cardboard boxes that children decorated with words spelled with glued-on rice, beans, or jingle bells and then arranged into giant, original poems.
The exhibit traveled “to every festival, every fair in the county, sometimes around the state,” collecting email addresses and supporters in the quest to build a permanent museum, Wells recalled. By 2001 its proponents had generated enough enthusiasm that the city earmarked $10.5 million from a proposed $70 million arts and historic preservation bond to purchase a permanent home for the museum and begin renovations. After the bond passed overwhelmingly, the city bought an abandoned elementary school, a 70,000-square-foot dilapidated building on the edge of downtown that had briefly been put to other uses, intending to house the museum there.
The would-be museum continued raising money, and by 2007, although its supporters had several pledges of a million dollars or more, they had inadequate cash on hand, mounting construction debts, and nowhere near the $23.5 million needed to complete renovations and exhibits. Because the city owned the building, they had no collateral for a loan. “We had cardboard boxes,” quipped Wells. Banks dismissed them.
Fortunately, they also had a champion at Dignity’s St. Joseph Hospital, community giving officer Marisue Garganta, who had sponsored their traveling exhibit. When Bravo was visiting St. Joseph, she stepped into a conference room to speak with him. About to depart for the airport, Bravo told her, “‘I have 30 minutes.’”
“We drove him to the airport,” recalled Deborah Gilpin, then the museum’s CEO and now CEO and president of the Madison Children’s Museum in Wisconsin. “‘Get in the car and we’ll tell you our story.’”
More meetings followed, and soon, spurred by the potential he saw for these investments, Bravo said, he was presenting them with a $1.5 million, five-year loan (later renewed for an additional three years). Unlike a bank loan, it only required one payment at the term’s end rather than monthly installments.
While Bravo acknowledged that the loan was financially risky, there were many factors in the museum’s favor, he explained — the reputation of its CEO, the building it had secured, community support and most of all, its potential to contribute to a healthier neighborhood.
“The potential there was huge,” he said.
The loan provided the needed momentum, Gilpin recalled, allowing them to leverage additional financing and attract more large gifts. In 2008, the museum opened with a three-story climbing structure as its centerpiece and hundreds of hands-on activities designed to strengthen “minds, muscles, and imagination.”
Located at the edge of downtown and one of the city’s roughest neighborhoods, the Children’s Museum of Phoenix works hard to benefit low-income families, providing tens of thousands of free memberships, passes, and field trips to low-income children and families through schools and social service agencies. Museum workers even visit shelters and transitional housing to encourage parents to visit, offering free passes and taxi rides. The museum runs afterschool and summer programs as well as dozens of free early childhood education classes for children and caregivers.
It’s also a source of jobs for its neighbors, including teens and young adults. Wells reported that 55 of her 91 positions are entry level. “We’re supplying a lot of first jobs.”
To what was once a largely vacant and unsafe area, the museum has helped attract new development: a University of Arizona medical school campus, an Arizona State University satellite campus, a charter school serving low-income families, affordable housing, new businesses, and a light-rail stop. All of these new services create a safer and healthier environment for residents, Bravo notes.
Gilpin said the idea to open a children’s museum in Phoenix could easily have remained just that. “There were four or five major roadblocks, any one of which could have stopped the whole project. Dignity was one of the saviors.”
Organizing Church Hill
Across the country, Bon Secours, a smaller health care system, operates a $30 million loan fund representing 2.5 percent of its endowment, nearly all of it invested in CDFIs, according to Edward Gerardo, Bon Secours’ director of community commitment and social investments. (He adds that they plan to double that percentage within four to five years.)
Bon Secours also grants $1.25 million a year for community development projects. In addition, each local health system invests a portion of the revenues it generates each year back into its own communities.
In 2007, Bon Secours tasked each of its local health systems to identify a neighborhood in need and organize residents to plan improvements that Bon Secours would help fund.
“We knew that, particularly in vulnerable communities, people would not get healthy unless the social determinants of their lives changed.”
“We knew that, particularly in vulnerable communities, people would not get healthy unless the social determinants of their lives changed,” Gerardo said. People don’t work to lose weight or control diabetes when they’re anxious about more fundamental issues, he explained, like having enough money and a safe place to live.
Bon Secours Richmond, led by CEO Peter Bernard, zeroed in on the neighborhood around Richmond Community Hospital on the city’s East End, a 100-bed facility co-founded in 1895 by Dr. Sarah Garland Jones, the state’s first African American and first female board-certified physician.
The East End is a collection of small neighborhoods rich in history. The hospital is located in Church Hill just a mile from St. John’s Church, where Patrick Henry famously declared, “Give me liberty or give me death!” A few blocks farther toward the James River is the area known as Shockoe Bottom, a hub of the American slave trade.
“We believed it was a great hospital, but for the hospital to flourish, the neighborhood had to flourish. People had to feel safe.”
Two miles northwest of Church Hill is Jackson Ward, where, following the Civil War, African Americans established a prosperous commercial district once known as the Black Wall Street of America.
But the construction of two six-lane expressways in the 1950s and 1960s tore up homes and businesses, slicing through Jackson Ward, isolating the East End and precipitating its decline. Today the area is the site of four low-rise public housing developments and some of the state’s most concentrated poverty. The once bustling commercial corridors of 25th Street and Nine Mile Road, which intersect at a wide angle near Richmond Community Hospital, by 2010 were largely boarded-up and abandoned.
Many of the hospital’s 100 beds went unused, noted Hewitt. “We believed it was a great hospital, but for the hospital to flourish, the neighborhood had to flourish. People had to feel safe.”
CEO Bernard was already an enthusiastic community organizer. He used a process known as a charrette to design St. Francis Medical Center, a new hospital in a Richmond suburb. Neighborhood groups, city officials, businesses, and residents were invited to share their ideas with architects, who quickly sketched the concepts and sought feedback.
The scale of the needed revitalization in Richmond’s East End demanded even more partners, both to organize a more comprehensive charrette process and to carry out the resulting plan. Hewitt spent months conferring with the Richmond Housing Authority and the City of Richmond and visiting neighborhood groups and church leaders.
The East End Transformation Charrette in May 2010 drew more than 1,000 participants. It kicked off with an opening ceremony in an Art Deco theater and continued with a week-long series of small planning sessions focused on improving neighborhood health. Designers furiously sketched the proposed ideas from 8 am to 8 pm in an open studio.
The plan that emerged included four major capital projects — a full-service grocery store, a community fitness center, a library, and a medical office building — as well as affordable housing.
But large projects would take time, and Hewitt wanted a quick win. “We wanted to build on the excitement that came from the community visioning and harness that energy,” recalled William Snyder, then a Bon Secours consultant and now system vice president for external affairs at Presence Health.
The need for local jobs was a persistent theme among residents at the charrette, and Snyder and Hewitt began to mull the idea of microfinancing, a strategy more commonly used to start small businesses in developing countries.
In the summer of 2011, Bon Secours launched a microfinance program with Virginia LISC called SEED (Supporting East End Entrepreneur Development). Virginia LISC, the local office of the national CDFI, Local Initiatives Support Corporation, manages the program while Bon Secours has provided $50,000 to $100,000 annually in grants for small businesses willing to launch or relocate to Church Hill.
After an initial screening by Virginia LISC, aspiring entrepreneurs pitched their ideas before a panel of city officials. The best ideas earned grants of up to $10,000 (now up to $25,000) and one-on-one business coaching from Virginia LISC and another nonprofit partner.
That first crop of 11 winners included a trash hauling business, a beauty supply store, a hardware store, and a consignment shop. Unexpectedly, many of the winning proposals were for restaurants and bakeries.
“We were riding the wave of a local food movement,” Hewitt recalled. “People were really passionate about food.”
The neighborhood’s 19th century storefronts, many of them former saloons, were perfectly suited for the role. Among the first to open were the Roosevelt, offering nouveau southern fare, and the Proper Pie Company, with sweet and savory New Zealand–style pies.
Over the next years, more restaurants followed, some with SEED grants and some on their own, drawing acclaimed chefs, craft cocktails, artisan sausages, and a USA Today feature proclaiming Church Hill one of the nation’s “10 best up-and-coming neighborhoods.”
The new restaurants provided needed jobs, said Hewitt. “They could hire a lot of the guys in the neighborhood who could not have got work in another setting because of a criminal record.”
To date, Bon Secours has provided $366,000 to SEED to launch a total of 31 businesses, about a third of them restaurants, according to a spokesperson for Bon Secours.
Meanwhile, the East End’s neighborhood plan continues to unfold. Near the hospital, Bon Secours provided financing to help renovate or rebuild a block of affordable homes. Other nonprofit partners built or renovated homes, too, with federal money. The city, a partner in the planning project, has since repaved broken sidewalks and installed a roundabout at 25th and Nine Mile Road to improve traffic flow.
All the improvements helped attract a developer for Church Hill’s first full-service grocery store, which will make fresh produce and other healthy options available in the neighborhood. Next to the anticipated grocery store on 25th Street, a local community college has decided to open a culinary institute to train future chefs and restaurant owners.
By the time Bon Secours completes a community fitness center and medical center in the next few years, the health system and its partners will have invested more than $20 million in the East End, a Bon Secours spokesperson reports.
All of those investments add up to a healthier community, Hewitt noted. And their impact is tangible, he said: “If you take a blighted street filled with empty stores and fill them with restaurants and shops, that means jobs and places to recreate. If you take sidewalks that were broken and now they’re restored, people are able to walk along them. You see a neighborhood restored to wholeness and vitality.”
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