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How Kaiser Permanente and Enterprise are investing in affordable housing

In high-priced areas in California, the partnership is working to keep affordable apartments from becoming the next million dollar condos.

Susan Morse, Senior Editor

Kaiser Permanente and Enterprise Community Partners have partnered to create and retain affordable housing in communities in California and elsewhere where home prices are steep.

In San Francisco, for example, the average asking price for a home is reportedly $1.3 million.

Preserving existing affordable housing before a neighborhood becomes gentrified is an important piece of what the nonprofit Enterprise does,  according to Brian Rahmer, vice president of Health and Housing.

WHY THIS MATTERS

Housing is among the most important issues facing health systems in addressing the social determinants of health.

Many health systems are tackling homelessness to improve health outcomes and reduce utilization of the emergency room and readmissions.

After Montifiore in New York City, for example, invested in housing for its homeless population, it realized a 300% return on investment.

Enterprise recently released a study documenting how some consumers are forced to choose between high rent and healthcare.

Another piece is around Bay Area workers having to make the long trek to work because living close to their employers is out of their budget. Some have two- to three-hour commutes, according to John Vu, vice president for Strategy, Community Health at Kaiser Permanente.

"The health system's mission is to improve the health of its members," Vu said. "People are only as healthy as the places they come from. We're in expensive markets. Six of the 10 highest homeless rates are in our footprint."

This includes San Francisco, Seattle and Honolulu.

Rahmer said, "Population health management has forced health systems to focus on high need individuals. The motivations for health systems and payers to get into this space vary quite a bit. It's not just around addressing the needs for high-risk patients. It's a motivation around the mission. Staff has trouble finding housing."

THE PARTNERSHIP

Enterprise works with many health systems, and in January, launched its partnership with Kaiser in the Greater Bay area to develop a housing equity fund to leverage capital for the preservation of affordable housing.

Because there's little land left to build on in these areas, the partnership is working to preserve what's there by making capital available for affordable housing developers that are willing to buy up buildings and keep them.

In the past, the classification of affordable housing units lasted typically 15 years, Rahmer said. When the cycle is up, tenants are displacement as the units are then sold as million dollar condos at the going market rate.

The partnership helped to fund the East Bay Asian Local Development Corporation, which has existed for decades, in keeping a 41-unit apartment complex in East Oakland that is on the edge of a gentrified neighborhood. The corporation agreed to keep it affordable for 20-30 years.

"So far we've closed on six properties across the country," Vu said. "Another 25 are in the wings."

It's too soon to measure the impact on healthcare costs, Vu said.

We hope to grow to $85 and $100 million," Vu said of the equity fund. "We're welcoming other investors. The big hope is to keep people healthy. Our belief is, the healthier people are, the less they use healthcare. This is about the entire community, not necessarily just Kaiser Permanente and its members."

The building in East Oakland is for anyone to use, not just patients or employees of Kaiser.

In the partnership with Enterprise, Kaiser is including health assessments for the developer to take action, planning on a survey of residents and then annual follow-ups to see how things are changing.

What Enterprise brings is the real estate expertise, Vu said.

Enterprise serves the role of putting together the capital financing and community partners. It has a not-for-profit bank to lend at low cost.

"We have 11 market teams," said Rahmer, who formerly spent 15 years on community policy work for major hospitals. "Most of those markets overlap with Kaiser markets to identify what's in the pipeline; how much investment in the loan fund is needed, and then we work with developers to build or preserve housing." 

Enterprise also supports a low interest community loan fund that's useful for developers. Kaiser has invested $50 million, matched by Enterprise's $50 million, that's available in all of Kaiser's markets for any affordable housing developer who can make use of the loan.

"To strengthen systems to respond to homelessness requires good, strong data systems, improvement practices and dynamically addressing inflow and outflow," Vu said. "We're going to measure what kind of intervention is effective for whom. There is a range of situations people are in, and range of interventions."

THE LARGER TREND

Earlier this year, Enterprise released the results of a national survey on the connection between homes and health.

The survey found that more than half of renters had delayed care because they couldn't afford it and 100 percent of medical professionals surveyed said  some of their patients had expressed concern about affordable housing.

Among those who delayed care because of affordability, the most frequently delayed types of treatment included preventive routine check-ups (42 percent), seeking treatment while sick (38 percent) and buying over-the-counter medications (35 percent).

The data show that tradeoffs between housing and healthcare are even more common among severely rent-burdened respondents, who are paying more than 50 percent of their monthly income for housing.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

Focus on Social Determinants of Health

In September, Healthcare Finance News, Healthcare IT News and MobiHealthNews will take a look at the SDOH and how varied health systems, IT companies, Congress and others are addressing it.