According to a study from Duke University's Fuqua School of Business, a nonprofit hospital's average return on an equities investment in recent years has been about 11.3 percent. A study by researchers at Harvard Medical School found a hospital's return on investment in the health of low-income populations in its region can be as high as 3,600 percent.
The Harvard study calculated the ROI of The Family Van, a mobile health clinic that travels to disadvantaged neighborhoods in Boston to deliver healthcare. Researchers compared the cost of operating the van with the cost of emergency department visits and the treatment of chronic conditions prevented by the mobile clinic.
The researchers concluded that The Family Van's expenses were $565,700 in 2008, but it returned more than $20.3 million in value, for an ROI of 36-to-1.
During fiscal year 2009, only about 5 percent of hospitals' community benefit expenditures were directed toward community health initiatives undertaken by the hospital directly, according to a study in the New England Journal of Medicine — which could very well represent a missed opportunity.
Providing care to underserved communities is an obvious mission and function of many healthcare organizations. And under the Patient Protection and Affordable Care Act, it is required for all nonprofit hospitals to conduct a community health needs assessment every three years. These strategies also likely result in a decrease in unnecessary ED visits or a decline in avoidable chronic conditions, both of which can significantly impact a hospital's bottom line.
Jeff Helton, PhD, an assistant professor of healthcare management at the Metropolitan State University of Denver, sees the clear financial advantage of providing this type of care. "When someone has a chronic condition like diabetes, hypertension or asthma and it gets out of control, the common place of treatment for that illness is the hospital ED," he says. "Because the hospital ED has to be operated 24/7/365 and has to maintain high levels of technology to meet emergency needs, they are a very expensive place to provide care."
"Treating uninsured or underinsured patients [in the ED] hurts the bottom line by increasing unpaid costs," he adds, and actively treating these patients makes clear financial sense.
Community benefit programs at Banner Health
Banner Health, based in Phoenix, has created an extensive program to keep Phoenix-area kids healthy, in school and out of the ED. Banner Children's School-Based Health Centers, launched in 1994, provide free healthcare to uninsured children throughout the region through clinics inside schools that serve the largest population of low-income students.
In school space licensed as a Banner outpatient treatment center and staffed by Banner nurse practitioners, the clinics offer a range of pediatric services. Banner also has a mobile health unit that travels to four additional communities.
"The clinics offer sports physicals, camp physicals along with acute and episodic care for these kiddos, basically anything they would get in a primary care office," explains Megan Christopherson, Banner Children's child health and wellness senior manager and the program's director. Clinic visits are "completely free to the population we're serving," she says, and children needing more advanced care can see specialists for $5 through an agreement with Banner Children's specialists.
Over the past school year, the clinics treated about 2,000 children. "Our biggest goal is to keep kids healthy and in school — and our mission's stayed the same throughout the years," says Ms. Christopherson. "We invite any uninsured child to come in for care."
In addition to providing much-needed care to the children in the area, the program has financial advantages for the hospital. "It definitely benefits the hospital," says Ms. Christopherson. "Part of the plan was to help keep kids out of the ED who don't need to be there."
And it's worked. "We have a survey for patients and their families [in the clinics], and one of the questions is, 'Where would you have gone if not for Banner's School-Based Health Centers?' For about nine out of 10 families, it's the ED," says Ms. Christopherson.
Community benefit programs at Lahey Health
At Lahey Health, a multihospital system based in Burlington, Mass., community benefit programs revolve heavily around cooperation with community stakeholders.
Peter Short, MD, serves as CMO of Beverly (Mass.) Hospital and Addison Gilbert Hospital in Gloucester, Mass. — two hospitals within Lahey Health. He says Beverly and Addison Gilbert provide a combined $5 million every year in free, uncompensated care to their surrounding communities, and this program has been built through a three-phase process.
First, hospital officials compile quantitative and qualitative data on their primary service area. Quantitative data includes demographic information like age and gender, social determinants of health like crime and employment, health status information like rates of chronic disease and finally access to care. Qualitative data includes interviews with local stakeholders, Dr. Short says. For example, Beverly and Addison Gilbert providers meet with town mayors, YMCAs, social service providers, school administrators and other community members to hear about the biggest health issues to those who see them most.
"Each program is a partnership between Beverly and Addison Gilbert and the community, so it's critical that each town have a full understanding of what we found in our assessment and how we can work together to tackle the issues," Dr. Short says. "The major benefit of Beverly and Addison Gilbert's community benefit program is that we have a really solid grasp of what the health status is of each community that we serve. Thanks to our needs assessment, we know what the key health areas are and what the high-risk populations are."
The second phase involves distributing surveys for further data collection. In 2012, Beverly and Addison Gilbert received completed surveys from 1,179 "randomly selected residents in the targeted communities," according to the hospital's community benefit report. Hospitals are able to connect the interviews from phase one to hard data in phase two — and create the right type of health programs in areas that show glaring gaps.
For example, the hospitals found out that although health insurance coverage was high across their communities (95 percent, thanks to Massachusetts' healthcare reform law), only 40 percent of respondents had dental insurance, and 45 percent of low-income residents had no dental care in the past 12 months. Beverly and Addison Gilbert have since made efforts to ramp up dental care in their communities. In addition, they discovered residents in Gloucester, Mass., use the ED for substance abuse and mental health care at a higher rate than the state average. Consequently, Addison Gilbert implemented a high-risk screening and referral program in its ED.
Finally, in the final phase, Beverly and Addison Gilbert disseminate their findings to the community so everyone can be informed of what the health status of the region is — and where those in need can find the right, free care.
"It is critical that hospitals engage the community and work closely with key community stakeholders as much as possible," Dr. Short says. "These relationships are key to understanding and tackling the root of the problem and to understanding the nuances that are present in a specific community. Whether it's lack of transportation, ethnic issues or language barriers, community partners can help a hospital overcome these issues and access these high-risk populations."
Dr. Short adds that the hospitals' programs hopefully alleviate capacity away from the ED and closer to the community members. "Ideally, we like to see the work that we do divert patients, if safe and appropriate, from the ED," Dr. Short says. "But, we recognize that repeat ED visitors need special attention and care, so we try to get to them before they even make it to the ED. Our community benefit program is grounded in lots of good education, early intervention and prevention — all in the community setting."
Improving for long-term sustainability
The community benefit programs at Banner Health and Lahey Health provide obvious value to local residents, but they have become so successful because of their long-term sustainability — a difficult mark to reach considering community benefits programs involve free care and lots of expenses. Executives and team members at both organizations have looked at ways to improve their programs so they don't flame out after a few years.
For example, Ms. Christopherson of Banner Health says the system has conducted rigorous strategic planning to make sure the costs of their School-Based Health Centers don't cripple the finances of the organization while still serving the target population. In 2009, the program was operating 15 clinics throughout the region. During 2010, program officials assessed the program to ensure that the clinics were placed in the most strategic places to maximize community benefit. "Some were within a mile of each other," says Ms. Christopherson, "and it just didn't make sense. We kept the ones that served the highest number of kids in the highest areas of need and reworked the hours to keep them accessible to everyone."
Through this restructuring, a $700,000 per year program became a $200,000 per year program. "We did not cut down on the number of children seen — just on licensing fees and staff salaries," says Ms. Christopherson.
Lahey Health similarly has looked at ways to stay financially solvent. Beverly and Addison Gilbert actively pursue government funding when appropriate. "When we do start a new program, we'll provide the initial funding to get the program off the ground for the first year or so and then will take the pilot results and apply to state and federal grants to continue a line of funding," Dr. Short says.
Perhaps most importantly, a hospital has to conduct the right amount of research — both before starting a community benefit program and still while the program is operating — to see how the program continually creates value. For example, if a benefits program becomes too broad or large, will community members forego more appropriate levels of care like physicians' offices?
"Depending on the conditions seen in a hospital, the program might encompass conditions that do not show up in the ED, thus reducing benefits to the hospital's financial position," Dr. Helton of Metropolitan State University of Denver says. "Also, patients and insurers are getting pretty savvy in looking for ways to save a dollar. A program could be so attractive that consumers are incentivized to use a free preventive program rather than a more appropriate care setting. There is definitely a diminishing marginal return in such a program."
More Articles on Hospitals and Community Investments:
Caring for the Uninsured: How Free Clinics, Hospitals Can Partner to Treat a Community's Most Vulnerable
5 Ways Hospitals Can Partner With Free Clinics
Managing Patient Health Through Nutrition: Q&A With Truman Medical Centers CEO John Bluford