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Hospitals As Anchor Institutions: Linking Community Health and Wealth

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David Zuckerman

This post originally appeared on the Commons Health Care Network blog.

Since the passage of the Affordable Care Act, discussions of healthcare policy in national politics and the mainstream media have overwhelmingly focused on the law’s impact on health insurance rather than public health. For example, the 2 percent of the population that will be affected by the individual mandate provision have received an inordinate level of attention. But a separate ACA provision should receive at least as much attention and energy, as it will have a significantly greater impact on the country, and open up new possibilities for how health systems and communities can work together to target pressing economic and health challenges.

I’m referring to Section 9007, a little-known provision which has not caught the public’s attention yet and whose opportunities are only starting to be fully understood by the public health and healthcare communities. In brief, this ACA section requires every not-for-profit hospital to complete a community health needs assessment (CHNA) at least every three years. This means that the nearly 3,000 not-for-profit hospitals in this country now have to address the health needs of more than just those within their walls. (Some of the more than 1,000 state and local government hospitals will also be subject to this requirement.)

For public health and community advocates, this provision is a significant victory, and forces hospitals to seek input from their communities. For most hospital administrators, this provision compels them to rethink the historical focus of the hospital as (merely) an acute-care institution. For organizations such as my own, The Democracy Collaborative, that focus on helping economically marginalized communities, the requirement helps strengthen our argument that hospitals need to embrace an “anchor institution mission” to lift up the impoverished neighborhoods in which many of these institutions reside.

Not-for-profit hospitals are anchor institutions because, once established, they rarely move location. Their mission, their invested capital, and their customer relationships tend to tether them to their communities. When other more mobile capital, like for-profit corporations, abandon communities — an occurrence most dramatic in Rustbelt cities but not unique to them — the remaining nonprofit and public institutions often become the largest employers and economic engines. To give you a sense of the scale here, not-for-profit hospitals as a sector had reported revenues of more than $650 billion and assets of $875 billion as of August 2012. By embracing their anchor mission, hospitals can strategically deploy their financial and human resources to benefit the local economy and build community wealth, specifically in low-income communities.

So how does all this work in practice? There are a variety of community building strategies that hospitals can undertake to begin to move in this direction. Here are just a few examples from health systems across the nation:

In Cleveland, University Hospitals and Cleveland Clinic, along with other partners, have helped finance the Evergreen Cooperatives, a network of employee-owned, “greenest-in-class” businesses that hire from target neighborhoods, providing low-income individuals the opportunity to own part of a business and build wealth. A long-term goal is to create a new type of nonprofit community anchor to connect anchor institutions, local government officials, and employee owners, spurring revitalization in a coordinated and sustainable manner. And Cleveland’s anchors are not just limiting their community development work to support of Evergreen: In 2012, University Hospitals reconfirmed its commitment to address these root causes of poor health in its CHNA, and has dramatically shifted its procurement locally through its $1.2 billion Vision 2010 initiative, with the intent to integrate similar changes into all supply chain purchasing going forward.

Mayo Clinic in Rochester, Minnesota, helped finance the community land trust, First Homes, which aims to permanently preserve affordable housing for community members as well as employees. To date, it has constructed more than 875 units of housing and represents the state’s largest-ever community-based assisted-housing program. In Baltimore, Bon Secours Health System engaged the community as part of a neighborhood revitalization effort in the late 1990s. After learning that housing, trash, and rats were top community priorities, it has developed more than 650 units of affordable housing, and has worked with residents to clean up and convert more than 640 vacant lots into green spaces.

Another example is Gundersen Lutheran in La Crosse, Wisconsin. Often known for its environmental initiatives, Gundersen set a goal to purchase 20 percent of its food locally and was a critical partner in establishing Fifth Season Cooperative, an innovative, multi-stakeholder cooperative that is one of the first of its kind in the nation with six member classes working together: producers, producer groups, food processors, distributors, buyers, and cooperative workers. Fifth Season helps bridge the scale divide by serving as an aggregator between the capacity of local producers and the needs of larger purchasers, while combining the principles of a sustainable economy, local ownership, and building community.

Hospitals can leverage their assets in other ways to maximize impact. Since 1992, Catholic Healthcare West (now Dignity Health), based in San Francisco, California, has provided below market rate loans to nonprofit organizations. As the fifth-largest health system in the nation, it allocated $80 million for loans and $10 million for loan guarantees in fiscal year 2012, helping finance efforts to develop affordable housing, provide job training, assist neighborhood revitalization, offer needed medical services, and build wealth in underserved communities.

Local hiring is another strategy hospitals can adopt to strengthen local communities. Partners HealthCare in Boston, Massachusetts, which includes the two academic medical centers Massachusetts General Hospital and Brigham and Women’s Hospital, created a program that aims to hire and promote entry-level workers from surrounding neighborhoods. As of 2011, more than 400 people had participated in the program.

A final powerful example is St. Joseph Health System of Sonoma County in Northern California. Since 2002, it has actively worked to build community capacity by focusing on community organizing, leadership development, and partnership and coalition building in surrounding neighborhoods.

CHNA requirements provide a promising opening that allows and encourages hospitals to move in this direction, by requiring a more collaborative process for identifying health needs. (And, in an ideal world, they would also mandate a more collaborative process to address those needs.) In combination with the ability to count community building activities (or elements thereof) as part of a hospital’s community benefit, these new requirements provide an important additional reason for adopting an anchor mission. These kinds of anchor strategies also align with a hospital’s core mission to promote health and well being; create economic returns to the institution by reducing the need for uncompensated care; and help strengthen relationships with local government by offsetting the impacts of their tax exemptions with increased revenue from a healthier local economy.

It won’t be easy to fully realize the opportunities created by this new requirement. Many hospitals will do the bare minimum to solicit community input. Others will target the more surface-level health needs or continue to prioritize charity care — in effect, continuing to reapply a band-aid to a gaping wound. But to truly address the staggering health needs facing so many of our communities­ ­­— needs caused by unemployment, poor housing, lack of assets, and environmental hazards — a combination of enlightened hospital executives; buy-in from doctors, nurses, and other employees; and communities sufficiently organized and demanding a seat at the table will be necessary.

On March 5th, The Democracy Collaborative will release a report entitled Hospitals Building Healthier Communities that explores in detail the new community benefit and CHNA requirements, along with other incentives to embrace an anchor mission. In addition, it features five case studies of six health systems and highlights numerous other best practices from across the country, some summarized here. Although a small percentage of the total hospital sector, these examples of hospitals engaging the community and building community wealth to more effectively promote health are inspiring and deserve to be studied and emulated. Our report challenges hospitals to rethink how they deploy their resources, and provides a guide for everyone trying to expand the conversation on how to better address the socioeconomic and environmental causes of poverty and health.