Preventative medicine is nothing new for healthcare systems, so what about housing stability as a preventative measure?
Diagnosing a community in need
For many uninsured Americans, their first interaction with the healthcare system is a visit to the emergency room at a large medical center. Often located in dense urban areas, these medical centers and the surrounding health systems play a dual role: they are one of the city’s safety net hospitals, and they provide some of the most demanding and complicated clinical care. But with the number of available emergency room places and inpatient beds increasingly dwarfed by the number of uninsured, healthcare operators are faced with implementing measures like potential penalties for those who are readmitted within 30 days of discharge, calling for a smart solution to decrease numbers across the board.
“Many of our health system clients are simultaneously grappling with capacity challenges at their flagship medical centers while working hard to improve overall community health,” shares Avison Young U.S. Healthcare Practice Lead Jacob Crawford. “Through our work in this space, we’ve become strong believers in the possibility that real estate – particularly affordable housing located near established healthcare properties – can be both part of a solution on the community health front and create greater financial and economic outlook for our healthcare systems as well. It’s a win-win for all, ensuring needs of all are better met and served for the long-term.”
"Many of our health system clients are simultaneously grappling with capacity challenges at their flagship medical centers while working hard to improve overall community health"
Health systems are now looking for ways to decrease high readmittance rates by tackling root causes like housing instability. Housing instability is a significant factor in emergency room utilization according to many community needs assessments undertaken around large academic medical centers. The studies show that those with unstable housing arrangements are more difficult to discharge because they often don’t have a safe place to go – a key requirement for a successful discharge. Alongside a genuine desire to provide better care for our communities, these factors are driving a move by many health system operators to make significant investments into affordable housing in key locations with the view to improve outcomes and long-term health prospects of the communities they serve.
One notable example of this is Kaiser Permanente, which established a $200 million Thriving Communities Fund in 2018 to help address housing insecurity and homelessness in the communities it serves. Kaiser noted that the fund has been used in 30 communities with significant results including ending homelessness in three of the communities.
Boston Medical Center (BMC) has taken a similar tact, investing $6.5 million over a five-year period to help combat affordable housing challenges in the city of Boston. Like Kaiser Permanente and other health systems committing to address affordable housing, BMC is “investing in a diverse group of community partnerships in neighborhoods where many of [their] patients already live.”
Several other large non-profits have also taken note, making significant capital investments in affordable housing across their communities. Bon Secours Mercy Health has made investments in Cincinnati and Baltimore, for instance. CommonSpirit Health has invested approximately 45% of it’s Community Investment Program dollars into affordable housing. Earlier this year, University of Pittsburgh Medical Center (UPMC) announced an $11 million loan pool to preserve affordable housing in Pittsburgh. And Nationwide Children’s has helped fund Healthy Homes, which has positively impacted more than 700 homes.
Finding social value beyond initial health system investments
As regulatory changes and a shifting and aging U.S. population drive long-term interest in medical real estate, investors can consider additional place-based investments in various sectors to enhance the overall value of their assets, such as investments toward affordable housing for improved long-term outcomes and less hospital stays for the most vulnerable. By no means can health systems alone fully address and solve these issues in their communities, but it could be a great place to start – certainly worth keeping an eye on within the growing healthcare real estate sector.