Hospitals and the Housing Business

Healthcare Systems are Embracing the Partnerships to Create Affordable Housing for Their Lowest-Income Patients

What do hospitals do when they can’t legally and morally discharge patients who have nowhere else to go? Many hospital systems across the country are finding that one excellent solution to this problem is to develop affordable and supportive housing themselves or partner in the development.

An October 4, 2019 Kaiser Health News article, “Why Hospitals Are Getting Into The Housing Business” examines the issue of how one hospital, Denver Health, treats long-term patients who have no homes of their own and no family to take them in. Patients entered this safety net hospital for medical treatment but then their long-term stays range from 8 weeks to 1,558 days because there was literally no place for them to go.

These unnecessary, long-term stays have multiple effects on a hospital system – hospitals often lose money on the long term stays and full beds on hospital floors can leave very ill patients stuck in emergency departments clogging up that piece of the healthcare system.

Hospital leadership in Colorado and across the country finding that one money saving solution is to get into the business of developing affordable housing themselves. Recently, federally policy has changed, and as of 2015, hospitals can claim housing investments as charitable spending required under their tax-free status.

But whether hospitals are drawn to affordable housing as a solution to moving out hard to place patients because of improving their bottom line or because it falls under a charitable mission, affordable housing saves money and improves lives and the local community.

Hospital systems may have land or even existing buildings that could be used to create affordable housing for the various low-income populations that they serve. Partnerships can be formed with local public housing authorities and housing linked to services can be developed in prime locations.  Housing creates healthy communities.

Hospitals can partner with service providers to prioritize frequent users of emergency departments for housing vouchers linked to services to keep former patients housed. Housing is healthcare.  Having a home of one’s own can be the “prescription” many frequent emergency department users need.  The stability of ones own home can help someone who was formerly chronically homeless to manage their chronic health conditions with regular doctor visits and something as simple as having a safe place to store medications.

“This is an experiment of sorts,” said Peg Burnette, the hospital’s (Denver Health) chief financial officer. “We might be able to help better their lives, as well as help the financials of the hospital and help free up capacity for the patients that need to come to see us for acute care.”

NJCounts 2019 found that 1,537 individuals, or 17% of the total number of indivdiuals counted, indicating that they had a disability stated that they had a chronic health condition. The total number of indivdiuals experiencing homelessness on the night of January 22, 2019 was 8,864 indivdiuals. The population of individuals experiencing homelessness with chronic health conditions would most certainly benefit from stable and affordable housing with support services.

Within the chronically homeless population counted through NJCounts 2019, the percentage of individuals reporting that they had a chronic health condition was even higher, 31%, or 455 out of 1,462 people.

Chronically Homeless persons are among the most vulnerable homeless groups and supportive services and case management may be required in order to help some stay in the housing they need.

Chronically Homeless households, as defined by the U.S. Dept. of Housing and Urban Development (HUD), are persons with a long-term disabling condition, who have been continually homeless for a year or more, or at least four times in the past three years where the length of time in those episodes add up to a year or more. Those experiencing chronic homelessness may be part of the same population cycling through emergency departments and hospitals. 

The Kaiser Health News article states:

“It costs Denver Health $2,700 a night to keep someone in the hospital. Patients who are prime candidates for the transitional units stay on average 73 days, for a total cost to the hospital of nearly $200,000. The hospital estimates it would cost a fraction of that, about $10,000, to house a patient for a year instead.”

“The hospital really is like the most expensive form of housing,” (Dr. Sarah) Stella (a Denver Health Physician) said.

The New Jersey Housing and Mortgage Finance Agency (NJHMFA) is working directly with hospitals to develop more supportive housing throughout New Jersey.  Click here to read about NJHMFA’s Hospital Partnership Subsidy Program. 

Without the hospitals’ contributions, this program would not be feasible. When asked about whether hospitals are interested in taking part of the cost burden of these projects, NJHMFA’s Executive Director Charles Richman said that hospital leaders and executives have embraced the initiative, understanding the important role that hospitals play across New Jersey communities.