Hospitals and health systems explore community development partnerships to save lives and cut costs.
by Natalie Orenstein and Barbara Ray
Pre-diabetic patients are used to receiving the same instructions from their doctors. Lose weight. Exercise more. Eat better.
Yet patients leave doctors’ offices and hospitals with those orders, only to return to communities where they struggle to follow through on those plans. In some low-income neighborhoods, for example, the only places to buy food are liquor stores and fast food joints. Evening exercise after work may be too risky because the streets are dark or unsafe.
“It is essentially impossible for our more vulnerable members to fulfill our behavioral prescriptions,” said Tyler Norris, vice president of Total Health Partnerships at Kaiser Permanente, “when in fact their environment conspires against them making a healthy behavior change.”
Hospitals and medical providers are increasingly addressing the nonclinical conditions that make communities unhealthy and burden health care systems. There is a growing focus on the “social determinants of health” — factors such as education, income, housing affordability and stability, public safety, and access to healthy food, green space, and transportation, all of which influence a population’s well-being. The Affordable Care Act and other policies have made addressing those factors a priority by giving hospitals and health care providers incentives to do so and penalizing them if they do not.
As a result, hospitals and health systems are developing ways to invest in the communities they serve, with a goal of improving the health of residents and reducing the costs of health care. Here is an initial look at their efforts, the first in our series on partnerships between health care and community development.
Motivation and Mandates
Compared with most nations, Americans spend more on health care but get less in return. Recent reports find that the U.S. spends more per person — nearly $10,000 each year — than 12 other high-income nations, yet has the lowest life expectancy among them. Chronic illness is more prevalent here as well.
One reason for this dismal performance is that the system makes money by charging for each service separately — from an MRI to a surgery. This “fee for service” model tilts incentives toward greater spending (and thus benefits from more sick people).
Hospitals also spend disproportionately on the highest-need patients, whose conditions are often preventable, especially when those conditions are inextricably tied to poverty and the myriad issues that accompany life on the margins.
At Kaiser Permanente, for example, just 1 percent of the system’s patient population drives 23 percent of its preventable costs, said Norris during the Network Commons, an online discussion hosted by the Build Healthy Places Network — and those 1 percent are largely low-income, high-need patients. This is why hospitals are increasingly focused on making people healthier before they ever need a doctor, and that means tackling the conditions under which people live.
“Place matters,” Norris said. Hospitals and health systems have “got to be in the ZIP code improvement business.”
Hospitals and health systems have “got to be in the ZIP code improvement business.”
Yet this is new territory for hospitals and those in the health care sector, and they are reaching out to housing developers and community development experts for support.
When it comes to hospital investments in health, “The biggest change I’ve seen,” Mary Pittman, CEO and president of the Public Health Institute, said at the Network Commons, “is partnerships across sectors.”
Connecting Hospitals and Community Development
Rutland County, on the western side of the Green Mountains in Vermont, is one of the state’s poorest regions. The housing stock, much of it built before World War II, is aging. Residents are frequently sent to the local hospital, Rutland Regional Medical Center (RRMC), for respiratory issues or falls. Asthma is pervasive.
“Where there’s poverty, there’s poor health,” said Ludy Biddle, executive director of NeighborWorks of Western Vermont (NWWV). A nonprofit and community development financial institution (CDFI), NWWV provides loans, financial education, and renovations to homebuyers and owners in the region.
The organization has been in the business of rehabilitating dilapidated homes for three decades. Now, a new partnership with RRMC will start to address the question of how to make where someone lives a health care intervention.
“The hospital recognized that this was something they always wanted to do, but didn’t know how to do it,” Biddle said.
The hospital provided $75,000 to NWWV for the pilot year of the partnership. With that investment, the CDFI will provide grant money to homeowners or landlords for half the cost of home repair and a loan for the other half. Representatives from NWWV will visit the homes with nurses from the medical center to determine needed repairs that can prevent falls or asthma attacks, for example.
Over the coming year, the hospital will track the health outcomes and anticipated cost savings from fewer hospitalizations and doctor visits. If the project is successful, RRMC plans to make a case to Medicaid for covering home repairs.
Although the collaboration has just begun, Biddle thinks she knows what to expect. Simple retrofits, in her experience, have wide-reaching health effects. Insulation in the ceiling or around pipes helps tackle mold and keeps away rodents. Removing the carpet takes care of mites, and installing automatic responsive lights or replacing bulbs prevents falls, she said.
“To me it’s so obvious,” Biddle said. NWWV is lucky to work with a hospital that “is already enlightened and determined to be on the forefront of that transition from treating the ill to preventing the illnesses.”
RRMC is not the only one considering the social determinants of health. Trinity Health, a Michigan-based Catholic system operating 93 hospitals in 22 states, is joining with approximately 20 CDFIs to transform the health of both residents and communities.
In Detroit, for example, Trinity Health partnered with the IFF, the largest CDFI in the Midwest, and Covenant Community Care to transform an underused free clinic into a federally qualified health center (FQHC). The Mercy Primary Care Center is part of a “healthy village” model on Detroit’s east side. An FQHC serves underserved populations on a sliding payment scale. Trinity Health’s “Healthy Villages” are centers with barbershops, dentists, senior services, day care providers, and other wrap-around services for the local community. Trinity Health along with IFF and Covenant are also working to replicate the healthy village model on the west side of Detroit.
Working with IFF, which had strong expertise in real estate and the needs of the community, “has expanded the ways the hospital can see itself as a transformative healing presence in the community,” said Cathy Rowan, director for socially responsible investments for Trinity Health.
This kind of socially responsible investing is not new for Trinity, though its scope is growing. Its “Community Investing Program” has lent $32 million to CDFIs for affordable housing, day care, community facilities, small business development, and healthy food access. It devotes about 1 percent of its operating investment portfolio to community investing through CDFIs, said Rowan, though “we’re seeking to deploy even more of that” going forward.
Trinity Health’s board of directors “gets it,” said Quentin Moore, director of the Population Health and Disparities Prevention division. They understand the value of investing in the social determinants of health, even if any returns come much farther down the road in the better health of residents. Currently, the returns on Trinity’s socially responsible investments average 2 percent, and every dollar invested can leverage up to $10 in additional investments by bringing in other funders and partners. The board also recognizes the need, Moore said, “to be more strategic and align the efforts more effectively not only because of the recent payment standard changes under the Affordable Care Act, but also for the overall health in communities.”
Trinity Health has allocated an additional $40 million in low-interest loans to CDFIs for health-promoting efforts as part of its $80 million Transforming Communities Initiative, the health system’s most significant attempt to improve public health to date. Through grants and other investments in six target communities in its footprint, Trinity Health is supporting programs to reduce smoking and obesity.
It’s Not Just Hospitals
In perhaps an even greater departure from tradition, health care insurers are investing in community development too.
At the end of 2014, a new apartment building opened its doors in downtown Austin, Texas. Called Capital Studios, the modern glass building has a fitness center and outdoor patio with hanging plants, and is within easy walking distance of public transportation.
Notably, it is affordable to those struggling the most. The efficiency apartments are set aside for those experiencing homelessness and for low-income single adults. It is also financed in large part by a health insurance company. UnitedHealthcare has provided $11.7 million, using Low Income Housing Tax Credits, in partnership with Enterprise Community Investment, a community development finance institution.
Housing, preventive care, and social services are new territory for health insurers.
This is not the insurer’s first foray into community development. UnitedHealthcare, the largest health insurance company in the U.S., has provided more than $240 million in equity for community development projects across the country. In Phoenix, Arizona, the insurer is providing Chicanos Por La Causa, a local community development corporation, access to $20 million in capital at favorable terms. The organization, in turn, will use the money to invest in two apartment complexes in a neighborhood with many high-need users. Through the partnership, UnitedHealthcare has also provided a grant to a Phoenix community center with a food bank that serves diabetic patients.
Housing, preventive care, and social services are new territory for health insurers. Time will tell if these relatively small investments will indeed cut costs in the long-term, and whether they will become standard practice across the communities the insurer serves. In the interim, several hurdles remain.
The push for the health care system to address prevention and public health has its critics. Some say the movement places too much responsibility on health care providers, whose job is to heal people, not communities. In other words, where does the arc of responsibility begin and end? Health systems “understand how to measure the patient experience — the sense of accountability to the patient is there, absolutely,” said Jim Hester, a former director at the Center for Medicare and Medicaid Services, in a webinar by Dialogue4Health. “But when you move beyond the doctor’s office, that raises eyebrows. In the end, managing costs and patient experience sucks all the air out of the room.”
Others ask whether health care providers should be expected to sink money into, say, local schools or grocery stores when the majority of benefits, and profits, may accrue to others — even to other hospitals. Back in Vermont, for example, RRMC is the only hospital in the area, so it can be fairly certain that it is reaping the benefits of its investments in its community. But what if there are other hospitals in the area that are not investing in community but still reaping the benefits of a healthier population?
Others note that to see sizable savings, the focus must be on the highest-cost users, given that building and investing in housing is expensive. Yet the group of the “sickest” individuals is small relative to those with less acuity. Further, health care savings over time will be greater when investments are, instead, made earlier in life to prevent young at-risk children from becoming medically fragile adults. The current hospital oversight system may also be working against this shift. The Affordable Care Act requires health insurance issuers to spend at least 80 percent of “premium dollars” on medical services or quality improvement. Too much spent on administrative or other fees and the insurer is penalized. Therefore, spending for housing or other non-medical services might penalize them in the end until they can show “measurable results” from the efforts.
Bringing together the community development and health care sectors introduces its own complexities. Sarah Norman, director of healthy homes and communities at NeighborWorks, likens these partnerships to a cross-cultural experience. “It’s more than just health and housing speaking different languages,” she said. “It’s like a foreign exchange student speaking a new language and learning a new culture.”
That is especially true when groups are working together to measure impact or even to decide on a path to improvement. As David Fleming notes in a chapter in “What Counts: Harnessing Data for America’s Communities,” working collectively to develop shared models for effecting change and to measure direct connections between social determinants of health and health outcomes is difficult when the two groups have different incentives, backgrounds, and systems, let alone no standard definitions or measures of the things they want to change.
“The business case is different from impact on health,” Hester told listeners on the Dialogue4Health webinar. “Have we affected behavior or risk of population? That’s something we can know and measure.” But the next step, he said, is more difficult. “What are the financial benefits of reducing those risks? We need more robust measures for learning, accountability, and the business case.”
Also, incentives do not always align perfectly between funding sources and payers. A health provider may need to prevent hospitalizations in the next 30 days, but “community benefit” funding has a much longer vista before seeing results. “You have to pair up incentives to the goals of players,” Norman said. “You need to track each payer and find out their incentives and what strategies fit.” Long-term and diffuse benefits might be more appropriate for community benefit dollars while a “pay for success” option might be better suited for interventions seeking shorter-term benefits.
“There’s been a reassessment of how the health care system can improve outcomes, and the only answer is to look outside the clinic walls.”
Despite the barriers, there are early signs that the paradigm change is yielding returns. A collaboration between the Hennepin Health system, the county public health department, and social service providers in Minneapolis has led to a 9 percent decline in emergency room treatment and a 3 percent increase in much less expensive outpatient visits. Among the 112 people who are Hennepin’s highest-cost users — and placed in supportive housing through the program — emergency room visits fell 55 percent and hospital admissions fell 29 percent. And hospital costs consequently declined 72 percent, the county told the Minneapolis Star Tribune.
Findings like Hennepin’s are encouraging, and hardly surprising, say those already working at the intersection of health and community development. Although a fundamental change to the health and well-being of a community will take time to achieve, experts say hospitals are headed in that direction.
“Fundamentally, deeply, there’s been a reassessment of how the health care system can improve outcomes,” Norman said, “and the only answer is to look outside the clinic walls” and in doing so, create stronger ties between different sectors, from housing to employment to social services.
Kathleen Costanza contributed to this story.
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