What You Need to Know About Hospital Roles in Community Investment

As anchor institutions, hospitals and health systems are well-positioned to invest resources in creating healthier communities—a few are already leading the way. Their valuable lessons can help others rethink the role hospitals can play in improving health beyond their walls.

Hospitals have a long tradition of serving as anchor institutions within their communities—not only by providing health care, but by hiring local workers and contractors, buying locally, and building new clinical facilities.

But you probably wouldn’t think of hospitals as financial investors in their local communities. Nor might you consider them experts in managing community revitalization efforts. And yet, why not?

Hospitals as Anchor Institutions for Community Investment

Hospitals and health systems have unique assets that go far beyond their clinical offerings. These include deep community connections and relationships, the ability to make loans, expertise in real estate, finance, and project management, and significant property holdings. All of these can collectively be leveraged to benefit both the community at large and hospitals themselves.

In a report published by the Robert Wood Johnson Foundation, researchers Robin Hacke of the Center for Community Investment at the Lincoln Institute of Land Policy and Katie Grace Deane of the Harvard Initiative for Responsible Investment, explore new possibilities for the role of hospitals and health systems as community anchor institutions. Anchor institutions are large organizations with the potential to make communities healthier by leveraging their stature and resources. For instance, they could attract and leverage investment capital to help meet needs for affordable housing and child care, grocery stores, and safe places to exercise. The paper found that this anchor institution approach has largely untapped potential—yet a few places are already making strides in envisioning the role of hospitals in a new way.

Bringing Opportunity to Low-Income Neighborhoods

Dignity Health, the nation’s fifth-largest health system with 39 hospitals in California, Nevada, and Arizona, as well as other facilities in 21 states, invests in nonprofit community organizations to benefit low-income families, women and children, and people with mental or physical disabilities. These investments reflect Dignity’s commitment to “making a positive impact on the social determinants of health, particularly on the health of those economically disadvantaged communities served by Dignity Health hospitals.”

Dignity provides loans and lines of credit at or below market rate to nonprofit borrowers to help them improve their communities. The health system also contributes to loan funds like the Living Cities Catalyst Fund, which pools private capital to increase employment, income and wealth building opportunities for low-income people. Dignity also supports community development financial institutions so that they can make small business and affordable housing loans that spark job growth and expand opportunities in low-income neighborhoods.

Since 1990, the Dignity Health Community Investment Program has made $164 million worth of loans in support of 55 small business and healthy food projects, as well as affordable housing, assisted living facilities for seniors, and homeless shelters.

None of these investments is about clinical services, but they are all about improving health.

A Win-Win for Communities and Hospitals: Social and Financial Returns on Investment.

Done strategically, these kinds of community investments can also benefit hospitals: through financial returns on investment from successful projects, through bottom-line returns on investment from improved community health, and through non-financial benefits like having a healthier workforce, less crime in the community, and enhanced community relations. Ultimately, these improvements raise property values as well.

When anchor institutions such as hospitals and health systems partner with the community, they empower the community in a way that would not have been possible without outside financial expertise and capital. In communities that have the ability to attract and leverage investment capital, this kind of partnership can be critical.

In Camden: A Path to Revitalization

Take Camden, N.J., one of the nation’s most impoverished cities. Cooper University Hospital, operated by the Cooper Foundation, is mainly located in a neighborhood of Camden suffering from high levels of disinvestment and poverty. While Cooper University Hospital’s campus expansions have boosted the neighborhood, more broadly, the Cooper Foundation has led a variety of community revitalization efforts. These include property renovation, park design and maintenance, improving safety within community, and a new neighborhood school.

“We are an urban hospital in the heart of Camden,” said Susan Bass Levin, president and CEO of the Cooper Foundation, in correspondence with the paper’s researchers. “The future of our hospital is linked to the future of Camden.”

The Foundation put this premise into action when they acquired and renovated properties in the 10-square block area around the campus, and sold them to local residents who underwent financial training. They saw a greater “bang for the buck” in this approach since they were able to recycle the proceeds from these home sales into other community investment efforts.

The new report by Hacke and Deane provides other examples of how hospitals and health systems around the country have expanded their thinking about community investment. The report shows how these systems are working with local partners to improve community health and well-being in ways that are less about health care and more about where people live, learn, work, and play. And when we make these kinds of upstream investments so communities can thrive—everybody wins.

Read the full report on how hospitals and health systems are investing in healthier communities and achieving both social and financial returns.