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How Nonprofit Hospital Wealth Can Build Assets for Low-Income Communities

David Zuckerman

Study after study tell us that socioeconomic factors contribute more greatly to overall health than lack of access to healthcare. And few statistics are more powerful than the fact the zip code you live in is a better determinant of your life expectancy than your genetic code. When eight-and-a-half miles can result in a difference in life expectancy of more than 20 years, the local hospital’s quality of care is not at fault. Instead, the culprit is the lack of community wealth in the poorest neighborhoods.

To achieve their mission of promoting health, hospitals would do well to focus not just on providing acute-care services in the low-income communities they serve, but on building wealth in those communities. Policymakers, community organizers, and public health advocates should recognize the tremendous opportunity to leverage nonprofit hospitals’ reported revenues of more than $650 billion and assets of $875 billion (as ofAugust 2012) to transform neighborhoods and build assets for residents.

Hospitals need to think differently about how they promote health, and we need to think differently about what we expect from hospitals.Recent Affordable Care Actrequirements for nonprofit hospitals move us in the right direction: the nearly 3,000nonprofit hospitals nationwide now have to complete a community health needs assessment and work to improve the health of those outside their walls.

Beyond regulatory compliance, nonprofit hospitals also have a vested interest in the economic wellbeing of their surrounding communities. Consider this: in Detroit the largest three private employers are no longer Ford, General Motors, and Chrysler, but instead Henry Ford Health System, Detroit Medical Center, and Wayne State University. That’s because universities and hospitals, once established, rarely move location. Detroit is not alone: in city after city, when mobile capital, like for-profit automobile factories, leaves, the remaining nonprofit and public institutions often become the new economic engines.

Although efforts to harness the economic power of these anchor institutions to help traditionally marginalized communities remain nascent, a growing number of hospitals are developing promising models to address critical social determinants of health, such as poverty, lack of affordable housing, unemployment, and environmental hazards. Here are a few examples:

In Indiana, the Indianapolis-based Community Health Network invested $92,000 in an IDA (individual development account) program in 2006. The accounts, administered by the local community center, enable low-income employees and community residents to receive a match of $3 for every $1 they save up to $300 (for a combined total of $1,200 annually). Participants, who can stay in theprogram up to four years, also learn financial literacy skills and can use the savings to purchase a home, start a business or for continuing education.

In Cleveland, Ohio, University Hospitals and Cleveland Clinic, along with otherpartners, helped finance the Evergreen Cooperatives, a network of employee-owned, “greenest-in-class” businesses that hire from target neighborhoods, providing low-income residents the opportunity to own part of a business and build wealth. These worker-owners can also participate in an employer-assisted housing program through payroll deductions that will further help stabilize the neighborhood, while allowing workers an opportunity to own a home in as little as five years.

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. This wealth building strategy enables each family to build some wealth (rather than none if they had continued to rent) so that the family can eventually “step up” to a more expensive unit in the land trust or purchase a home outside of it. It has constructed more than 875 units of housing and represents the state’s largest-ever community-based housing program.

In Southwest Baltimore, Bon Secours Health System recognized in the late 1990s it needed to address pressing community health needs such as affordable housing, trash and rats. Best known for developing morethan 650 units of affordable housing, the hospital has also worked to improve financial services, and provided free and low-cost income tax services to residents as an affordable alternative to commercial preparers.

A growing number of hospitals have recognized that these types of community interventions are vital to their missions of promoting health. Others find thatneighborhood revitalization efforts also generate economic returns to the institution by reducing the need for uncompensated care, while satisfying federal community benefit requirements and strengthening relationships with local government. But for those of us interested in addressing inequality and poverty, hospitals that embrace an anchor mission also can be a significant resource for building wealth in communities most in need.