This piece appears in the Winter 2018 edition of Shelterforce magazine. Subscribe here.
Health care leaders in the United States face a complex set of time-sensitive challenges. The scope and scale of change for their respective organizations is unprecedented, and the pressures of daily demands and uncertainty have produced high staff turnover rates.
The best leaders possess the courage to step into unfamiliar territory, the creative energy to work with colleagues to design inspiring strategies, and the humility and smarts to acknowledge and adjust a strategy that is not producing desired results. These leaders are increasingly expanding their focus beyond the management of acute care “body shops” to serving as stewards of civic-engaged health systems. This involves building internal capacity to address the health needs of specific populations and leveraging clinical expertise and broader political and economic power to improve health through strategic partnerships with a diverse group of external stakeholders.
Community developers are important partners in this endeavor.
Place and Health
There is no mystery in identifying the location of health inequities in America. The highest prevalence and severity of a wide range of health-related problems, particularly chronic diseases such as asthma, diabetes, and cardiovascular disease, is concentrated in low-income urban and rural communities. In urban communities in particular, there are neighborhoods where the percentage of residents who live under the Federal Poverty Level is 40 percent, 50 percent, and higher. As it turns out, poverty is an excellent proxy for health inequities. People seek treatment for asthma, diabetes, and cardiovascular disease twice as often in these neighborhoods as they do in more affluent communities.
In the 1930s, most of these urban neighborhoods were designated as “undesirable” by the Federal Housing Administration, which refused to insure mortgages for the millions of African Americans who were fleeing Jim Crow policies in the South. Other racial and ethnic minorities experienced similar discriminatory practices by financial institutions. Despite the passage of the Fair Housing Act in 1968, more subtle patterns of discrimination have persisted, and efforts to accumulate and share wealth across generations have been limited in these neighborhoods. Of equal importance, the flight of commercial capital out of many of these communities during earlier historical periods has not been substantially reversed. One metric communicates this economic inequity well—the median African-American family has one-thirteenth the capital wealth of the median white family.
Many of our urban areas have experienced a substantial economic turnaround in recent years. Boarded-up city centers have been revitalized by commercial development, and an increasing number of low-income neighborhoods have been transformed into high-income residential, retail, and entertainment hubs. Some of these neighborhoods were formerly redlined communities, but most of the low-income residents have been displaced and do not have the opportunity to experience the benefits of this economic transformation. Those displaced have few options: find an even less desirable place in remaining low-income neighborhoods, secure an option that is ever further from their place of employment, or become homeless.
These dynamics, which the community development field works to alleviate, have health consequences. It has been documented that low-income people confront a level of daily stress that far surpasses what the average person experiences. This toxic stress, called “allostatic load” in clinical parlance, has clear negative physiological impacts in areas such as cardiovascular function and glucose tolerance, aside from a broader deleterious impact upon well-being. Broadly, the effects of non-medical care factors on health are called social determinants of health.
Our fee-for-service system of financing is unsustainable.
Our fee-for-service-based system of financing has historically insulated hospitals and health systems from the negative impacts of these social realities. As long as people were willing to pay for the services provided by health care providers, hospitals and health systems continued to grow, purchase more equipment and pharmaceuticals, and contract with more specialists. As costs continued to spiral upward and rates of chronic diseases such as diabetes increased, it became clear that these trends are financially unsustainable. Profitability in other sectors has gradually eroded due to the accelerating costs of health care.
These dynamics present the U.S. health care system with an immense opportunity to come to terms with the connection between rising health care costs and structural inequities in our society. Health care leaders have come to terms with the reality that as a society, we’re spending more and more resources to treat the health effects of people working in jobs that do not pay livable wages, spending the majority of their income to pay exploding rental rates in gentrifying neighborhoods or living in substandard housing, sending their children to failing schools, and dealing with limited access to affordable healthy foods.
In his seminal book Poverty and the Myths of Health Reform, Richard Cooper challenges the proposition that health care cost escalation is supply driven. That proposition suggests that high concentrations of specialists are associated with higher rates of referrals for related procedures. While this dynamic is undoubtedly a factor, Cooper posits that looking at referrals across large geographic areas masks the fact that utilization patterns are much higher in smaller geographic units (e.g., census tracts) where poverty is concentrated. Similarly, hospitals that rely on county-level data for community health needs assessments are more likely to overlook the fact that prevalence and severity of a wide range of health problems is much higher in specific census tracts. Usually, these census tracts are the same geographic areas where financial institutions are expected to allocate Community Reinvestment Act resources.
It should be clear that hospitals and health systems cannot solve complex and persistent societal challenges on their own. They can, however, play a key role in helping to mobilize, better align, and focus combined resources in a way that has the potential to bring about meaningful and positive change in our communities. Much of the groundwork has been laid by some health systems that have taken the lead in partnering with community development stakeholders. They are also beginning to raise their voices in the public policy arena.
The time has come to move these partnerships from small-scale transactions to a full-scale transformation, both in our institutions and in the communities they serve.
A Change in Mindset
As health systems take into consideration the social determinants of health, it has become clear that broader strategies are needed to reduce the demand for high-cost treatment of preventable conditions. Many health care systems are informing those strategies through the integration of data collected as part of community health needs assessments, which are required of tax-exempt hospitals. Others are going the next step to mobilize the assets of community stakeholders through partnerships that provide wraparound services and build social support systems.
Research shows that 80 to 90 percent of hospitals’ community benefit expenditures remain in the form of charity care or unreimbursed costs for Medicaid populations. Most of these expenditures are for high-cost medical treatment that could have been prevented through timely access to primary care and preventive services, or through changes to the Medicaid recipient’s underlying environment and other social determinants of health. While more resources are being allocated to prevention, more effort is needed to integrate community benefit programming with population-level strategies.
Moving in this direction requires a change in mindset, from a compliance mentality of “checking the boxes” to a quality improvement orientation that focuses on analysis, continuous refinement, and achievement of targeted outcomes. It also requires a willingness to redesign care, enhance data systems, and assume financial risks to reduce the demand for high-cost medical care. Analysis of utilization patterns for defined populations must be complemented with the use of geographic information systems that help to identify social, economic, and physical environmental factors that may contribute to poor health outcomes.
These challenges are complicated by a federal environment that is, at best, uncertain. Recent federal actions such as the elimination of the individual mandate and the ending of premium subsidies have considerable potential to reduce coverage for low- and moderate-income populations and increase premiums for both individuals and employers who provide group coverage. At the same time, there is broad recognition among health care leaders that our fee-for-service system of financing is unsustainable, and we need to be on a definitive path to shift incentives from a volume-driven goal to fill beds and conduct procedures to a more positive pursuit to keep people healthy and out of our acute care medical facilities.
A small but growing number of health systems have moved beyond care coordination and charitable health services to partner with the community development sector. Areas of focus include, but are not limited to, affordable housing, healthy food financing, small-business development, child care centers, higher education, and community health clinic development. Inspired by Catholic nuns in administrative leadership, health systems such as Dignity Health, Bon Secours, and Trinity Health have directed portions of their investment portfolios in these areas for decades. A growing number of smaller health systems are providing leadership in this arena, including ProMedica, University of Vermont Medical Center, Nationwide Children’s, and Stamford Health.
These health care sector investors often provide low-interest loans during the pre-development phase of a real estate development process, supplying much needed front-end capital to support plan development, property improvements, and financial stability as partners pursue larger-scale community reinvestment-related projects. To date, the experience for hospitals and health systems has been positive; defaults are rare, and there’s little argument that the completed development projects broadly improve health and well-being for those who directly benefit.
The University of Vermont Medical Center offers a recent example of movement in this direction with an investment in the transformation of a local motel into apartments for people who had been experiencing chronic homelessness or unstable housing. The project was supported by an analysis that found a similar project saved the state $1 million from reduced emergency room use and inpatient admissions.
While these are positive developments in the evolution of hospitals into civic-engaged health improvement systems, movement beyond relatively small-scale real estate transactions has been limited. There is little evidence that these investments in health will lead to redesigned health care practices. For most health care systems, these investments are simply viewed as positive contributions that reflect a broader commitment to serve communities.
In general, dialogue among hospitals and health systems reflects a growing knowledge and appreciation of the impact of the social determinants of health. Most health institutions, however, lack the bandwidth and internal capacity to integrate community benefits with their core medical mission or move beyond small-scale, transactional approaches to community development.
For hospitals and health systems, the path forward requires attention to internal integration, capacity building, and strategic engagement of external stakeholders.
It also requires attention to policy development, both in the form of institutional policies that formalize accountability, expectations, and practices, and in the form of education and advocacy in the local and regional public policy arena. Elected officials need to hear from hospitals and health system leaders about expenditures on housing, education, transportation, food systems, and other issues relevant to the health and well-being of populations. As some of the largest employers in communities, and the ones that are beginning to assume financial risk for the health of populations, health care institutions are well-positioned to speak with authority. A growing number of health systems are stepping into the public arena on these issues, and encouragement is needed to mobilize others.
Another important step to be taken by health systems in moving to scale is to overcome historical patterns of territorial behavior. While we can and should expect robust competition over cost and quality of care, producing measurable outcomes in our low-income communities will require strategic alignment of resources across organizations, particularly in urban areas where there are multiple competing hospitals serving overlapping geographic areas. The development of a single affordable housing complex or the introduction of a grocery store are not sufficient to drive large-scale revitalization, especially not the type of comprehensive strategy that will keep large numbers of low-income residents in their respective communities.
Low-income people confront a level of daily stress that far surpasses what the average person experiences. This toxic stress . . . has clear negative physiological impacts in areas such as cardiovascular function and glucose tolerance, aside from a broader deleterious impact upon well-being.
Collaboration in the allocation of community benefit resources and alignment and scaling of community investment dollars across competing hospitals and health systems offers immense potential to move us beyond “one-off” transactions to comprehensive strategies that produce measurable outcomes.
There is increasing dialogue among health systems about a more comprehensive model of engagement, one that fully deploys all aspects of these large, complex organizations for positive outcomes. It represents a more holistic model of doing good, looking beyond community benefit and investment to emphasize local hiring, local procurement and small-business development, and scaling back medical waste and water usage to reduce their carbon footprint. The Democracy Collaborative has helped to popularize this approach through a number of excellent publications in recent years.
Action is also needed in the community development field to support the acceleration and scaling of these kinds of efforts. All too often, assets set aside by health systems for community investment are under-allocated due to an array of unanticipated complexities. Most health systems lack the internal capacity to move development projects from idea to action on their own, and need assistance from their community development partners.
Local community development stakeholders may also lack the resources and capacity to accelerate the assessment, local engagement, and analytic process needed to move some of these larger projects along. Targeted support from philanthropy, health systems, and the public sector are needed to accelerate these processes, to liberate the capital that health systems have already targeted for community investment and create the demand for additional resources.
There is immense potential to advance this important work in the coming months and years. We look to our leaders in health care and community development to chart a path forward that helps us realize our potential to support everyone’s health and well-being. The examples shared in this issue will go a long way toward providing a road map, both for our health systems and their partners in the community development arena.