In 2020, I had the pleasure of speaking to a healthcare leadership class at the University of Washington Tacoma. The class was studying system transformation, and many of the students were clinicians and social workers intent on improving quality of care. While my Elevate Health colleagues are healthcare professionals, my field is impact investment. It may seem unusual to invite an investment professional into this conversation, but there is good reason for the collaboration: community investment supports better healthcare outcomes.
Here are the reasons why.
1. Healthcare transformation is bigger than healthcare.
National healthcare expenditure was $3.8 trillion in 2019, or about $11,582 per person in the US. Healthcare spans four different types of care, from prevention to rare specialties, and is delivered by physicians within multiple specializations, from allergy and immunology to rehabilitation to radiation oncology. So why should transformation efforts involve more than this already behemoth system?
The reason is whole-person health. Whole-person health acknowledges that 80% of health outcomes are driven by the economic and social conditions in the places where people live, learn, work, and play. These social determinants of health, which include employment, housing, nutrition, and transportation, have a major impact on people’s health and their ability to access healthcare.
Clinical care does not traditionally address social determinants of health. There is no clinical specialization that qualifies a doctor to support a patient in gaining employment. That is the role of an employment advisor. No one from the secondary care workforce can support a family experiencing homelessness to find affordable rental housing. That would be a housing navigator. And while primary care doctors are increasingly likely to ask patients about nutrition and access to healthy food, none of the doctors can give them meals on a weekly basis. That is what local food banks do.
To address all the components of whole-person health, healthcare must engage with the assets and resources available to support individuals. In other words, it requires a thriving and coordinated community.
2. Impact investment supports communities to thrive.
Impact investment, also called social investment, is funding that seeks a measurable financial and social return. It is the financial equivalent to the Fair-Trade movement in ethical consumerism or the B-corporation certification in business: social good is part of the business plan. Impact investing is the latest evolution in a line of responsible investment practices:
- Traditional investing seeks the highest financial return for investors.
- Socially responsible investing conducts a financial screen for profitability but also includes a negative social screen. A negative social screen filters out options that are ethically controversial, usually investments in alcohol, tobacco, gambling, adult entertainment, and firearms.
- Sustainable investing flips the negative screen to a positive one: it ensures that portfolios include investments related to Environment, Social, and corporate Governance (ESG) criteria. For example, investing in Tesla or other electric forms of transportation is considered an ESG investment because electric cars are the environmentally friendly vehicle choice.
- Impact investment moves the positive social screen one step forward: investments must have identifiable and measurable social returns, as well as financial ones.
There has been much ink spilled over whether impact investing requires a trade-off between financial and social returns, but most experts – including the team at Elevate Health and OnePierce – align in the view that investing in positive social outcomes can maintain or even outperform financial returns of traditional investment.
So how can impact investment build healthy communities?
Impact investment can 1) fill gaps in the local service landscape, and 2) build community assets. Service funding includes giving grants to projects, offering small-business loans, or investing in community service providers that deliver clinical or social supports.
Building community assets, on the other hand, creates brick-and-mortar properties or facilities that help a population thrive in the medium or long-term. Below are examples of each type.
Many service providers have short-term funding needs, whereas community assets are built over a longer time span. For example, building new affordable housing units requires capital 5-10 years before families or individuals can move in. But once built (and provided the right covenants are in place to maintain affordability), housing developments are a community asset that can serve multiple generations with the same resource. This longevity leads to sustained, inter-generational impacts on whole-person health.
Service funding is likely to be short-term and designed to impact immediate, acute needs, such as bridging funds to help a behavioral health provider make payroll for its employees. It’s also possible to invest in longer-term impacts through services. A grant for healthy eating and exercise campaigns managed by the public health department or investments in community health workers in the Pathways Community HUB could both fund preventive services that improve future health outcomes.
Investment in both services and more permanent community assets is required to build a thriving community. Impact investment is instrumental because it intentionally defines the social impacts of its funding.
3. Community investment contributes to whole-person health in measurable ways.
In healthcare, outcomes are well-documented and measured. Clinical outcomes include reduced Emergency Department visits, reduced length of stay for inpatient visits, reduced readmission rates, increased primary care or wellness visits, improved vaccination rates, and improved HbA1c levels for people with diabetes.
Beyond clinical outcomes, social determinants of health can also be measured and assessed. For example, below is the initial measurement framework used by OnePierce to assess its impacts on increasing supportive and affordable housing units, improving access to behavioral health care, and increasing workforce development opportunities.
These metrics can also be used to identify strengths and challenges for the community. In 2020, one OnePierce grantee reported that 60 families were engaged by their behavioral health program during the reporting period. Of those 60 families, 54 were assessed for services; the remaining 6 families declined services. A 90% assessment rate in this field is considered high. If other providers with similar programs report substantially lower rates, OnePierce is able to arrange an information sharing session between providers to spread best practice. This coordination, which is essential for understanding and helping communities thrive, can only happen when outcomes are measured and reported.
4. Community investment is flexible and responsive to changing healthcare needs.
The past year has forced many health care providers to adapt in order to survive a COVID-19 dominated landscape. Impact investment funds, when structured the right way, can similarly respond by shifting strategies and funding to help address emerging needs.
OnePierce is structured with three different ‘programs’ to create this flexibility and adaptability to our local context. We offer grants, community loans, and health innovation funds. We do not invest equity in providers or ventures, due to an assessment of our local environment, where loans are the more appropriate product. However, other impact investors do use equity quite successfully; in affordable housing, this happens most often through Low Income Housing Tax Credit investments.
Offering a variety of products makes it easier to adapt investments. For example, last year Pierce County stakeholders identified a new financing need around reimbursement-based contracts for federal relief funds. Many human services providers contracted to Pierce County were unable to access the dollars because they did not have the upfront funds to spend on the services or purchases required. Recognizing an urgent, short-term need for capital that would be repaid via secured contract funding, OnePierce partnered with philanthropy to offer up to $2.5 million of zero-interest bridge loans to ensure that providers were able to deliver their contracted services. It would not have been possible to complete this work with our grants pool, which is substantially smaller than the loan funds required. We could, however, adapt our loan funds so that health care and social support providers could continue their critical work.
Grant pools have also supported the pandemic response. OnePierce’s grant program expanded last year when we contracted with Pierce County to manage $1.5M of CARES Act dollars going to behavioral health providers. We were able to support over twenty providers to obtain Personal Protective Equipment, purchase remote working equipment, and support safety and social distancing modifications, as well as paying for overtime and additional staff to meet the behavioral health surge trailing the pandemic. Grants are great for funding these one-off needs and to pilot new approaches and projects.
Offering diverse products can strengthen investment’s responsiveness to new needs. Despite this, few healthcare transformation initiatives utilize grants and loans in their work. This is perhaps because investment and philanthropy aren't viewed as core to healthcare. But efforts to transform healthcare will be more likely to succeed if they bring in sectors beyond health.
Healthcare needs community investment.
Healthcare transformation requires thriving and coordinated community resources, which are strengthened through intentional investment in services and community assets. Impact investors, long accustomed to seeking both financial and definable social returns, are essential to this cause.
Recognizing the importance of investment, many healthcare entities are picking up the baton. In 2018, Kaiser Permanente announced a $200M commitment to address housing instability and homelessness. In 2019, United Healthcare Group announced that it had invested over $400M in affordable housing.
Philanthropic entities are also helping to steer funding towards healthcare outcomes, including through partnerships with the health plans. For example, Los Angeles County’s Just in Reach Pay for Success initiative is an example of an innovative program that uses investment and philanthropy to fund program impacts.
Elevate Health continues to lead in Washington state by bringing lending and impact investment expertise to healthcare transformation. By bringing these pieces together, we can ensure that every person in every community we serve lives a full, healthy, and vibrant life.