Getting Hospitals into the Affordable Housing Game

by Josh Leopold

Open 24 hours a day, 7 days a week, hospitals provide critical health services to millions of Americans each year. What could happen if we capitalize on the capacity of these institutions and leverage their scope in the greater community?

Recently, we shared best practices for engaging citizens in health and housing interventions and the benefits of such partnerships. How can collaboration between hospitals and affordable housing developers be such a powerful tool in bolstering these efforts?

An example of success

In Ohio, Healthy Homes represents a promising model for how hospitals can partner with affordable housing developers to promote community health. The Southern Orchards neighborhood, which surrounds Nationwide Children’s Hospital, was badly hurt by the foreclosure crisis and the recession that followed. To address blight and improve health and well-being in the neighborhood, the hospital partnered with the nonprofit Community Development for All People to launch Healthy Homes as a new affordable housing organization. Through new construction, rehabilitation, and home improvement loans, the partners have reduced vacancy rates in the neighborhood from 30 percent to 6 percent and reduced the proportion of the available housing stock that is substandard by 70 percent.

Healthy Homes is one of several partnerships between hospitals and local social service providers to address social determinants of health (factors such as lack of housing, transportation, and healthy food that drive poor health outcomes and cannot be effectively treated within a hospital). The resources, health expertise, and connections that hospitals bring—combined with the on-the-ground expertise and innovation of community development organizations—can be a powerful partnership that makes noticeable differences in underinvested neighborhoods. But these partnerships remain the exception and not the rule. Many hospitals have been slow to invest their time and money to address housing and other nonclinical services.

Potential for success

Nonprofit hospitals must demonstrate their community benefit to maintain their tax-exempt status, and the reforms under the Affordable Care Act (ACA) make it easier for hospitals to know what their communities need and act on it. Under the ACA, nonprofit hospitals must conduct community health needs assessments (CHNAs) at least every three years and develop a strategy to address the needs identified. The ACA also expanded the types of spending hospitals can claim as a community benefit to include housing, workforce development, and other such community-building activities. This assessment and implementation process could be a valuable tool for hospitals to address social determinants of health, but its impact has been limited.

An internal report by the Internal Revenue Service (IRS) found that less than 5 percent of the $62.5 billion in community benefit spending reported by nonprofit hospitals went to community-health improvement services. The potential here is huge. If hospitals dedicated 3 percent of the money they spend annually on community benefits to housing for the homeless, it would equal the annual spending by the US Department of Housing and Urban Development on homeless programs.

Barriers to success

Although the ACA intended to shift hospitals’ focus to population health in their communities by giving them more information on community health needs and greater financial incentives to improve health outcomes, my colleagues and I found that this intent has not yet caused widespread community-focused collaboration. Our analysis of housing and health care collaborations under the ACA found that hospital networks generally do not have close relationships with community social service providers and do not include them in the planning process for reform initiatives. As a result, social service agencies are generally not included in the network of providers that form under these new payment systems.

Here are a few reasons for the lack of community investment:

  • Hospitals spend enough on charity care for the uninsured and unreimbursable Medicaid costs to maintain their tax-exempt status without investing in community benefits.
  • The IRS did not publicly confirm until December 2015 that expenditures in housing are eligible for inclusion under the community benefit standard.
  • Hospitals focus on the complex and rapidly changing health care landscape and may not be aware of how much housing and other social determinants affect population health.

A recent review of 97 CHNAs from 33 states and the District of Columbia found that social determinants of health ranked fifth in the most commonly addressed priority community health needs, and within the social determinants of health category, housing was the seventh-highest priority. Hospital representatives report that housing needs come up often in the CHNA process, but hospitals don’t know how to approach the issue or don’t take the lead.

The ACA has increased awareness among hospital leadership about the importance of social determinants of health, but that awareness needs to translate into resources or actions. In a recent nationally representative survey of hospitals conducted by Deloitte, 80 percent of respondents said they were committed to “systematically addressing social needs as part of clinical care.” This is no small feat, but hospitals may still be seeking ways to demonstrate that commitment through meaningful investments and partnerships in communities. Hopefully, recent efforts to provide more practical guidance on initiating and sustaining these partnerships, such as a recent Urban Institute guide and a brief by the American Hospital Association, can help generate momentum.