Health and Well-Being: An In-Depth Look
What We Know
There is a well-documented correlation between poor health and poor family finances — with the causation believed to go in both directions.
- Educational achievement is correlated with longer lifespans, improved adult health outcomes, and health-promoting behaviors.
- Good health also promotes student achievement — better physical health and health behaviors are associated with higher scores on standardized tests.
- Good health is a cornerstone of family and child well-being in its own right. The World Health Organization’s definition of health as “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity” embraces this view. A well-functioning health care system that supports the health and well-being of vulnerable parents and children is necessary for all families to thrive.
Impact investors, and foundations in particular, have traditionally invested in the real estate to support the building or enhancement of community health centers. However, there is a growing diversity in health-related investments. Thirteen survey respondents indicated a focus on health and primarily invest in access to health services, facilities financing, and food and nutrition.
As the number of insured consumers grows, the economics of the health field are changing. There is a shift toward considering the links between non-medical services and effects on health.
- Kresge and federally qualified health centers
- Revolution Foods has proven that kids can be fed healthy food at a reasonable price. Founded by two moms, Revolution Foods has found a way to generate a profit on the “spread” between the cost of its food, which is healthy, organic, and regionally sourced, and the amount paid by the government to subsidize public school food programs. By creating jobs for local workers in regionally placed manufacturing and distribution facilities, Revolution Foods has used its impact investments to gain a foothold in the education space. It is now expanding its business to consumer products in stores to help kids eat healthy food at home as well.
- CarePayment and affordability
Lessons Learned from Investments
While recent health care reform has moved policy in the right direction, there is broad consensus that further extensive changes are necessary to improve access to and the quality of care, prevent disease, promote health, and reduce costs. Through grantmaking, other philanthropic initiatives, and now impact investing, health funders are actively addressing these challenges.
The two key challenges for health centers are limited access to financing for facilities expansion or improvements and reduced, uncertain, and/or delayed revenues from state government contractors and traditional grant sources. For conventional lenders, health centers are often difficult to finance, given the centers’ limited and complex revenue sources and the perceived financial risks associated with the disproportionate share of low-income and uninsured people they serve. Therefore health care investors like Kresge have stepped in to fill a huge gap through the use of CDFIs. Other examples include two national intermediaries — Capital Link and NCB Capital Impact. Capital Link, a nonprofit headquartered in Boston, is raising a program-related investment (PRI) fund to finance the expansion of federally qualified health centers, so they can meet their growing patient load. NCB Capital Impact, headquartered in Arlington, Virginia, lends to health centers as well as other community development projects.
Like CarePayment, groups are stepping in to provide safety net financing. The Colorado Health Foundation launched a $3 million loan fund in 2010 to help its safety net grantees offset delayed Medicaid payments from local government. Grantees with a stable management structure, a diverse income stream, and strong operating ratios can apply for loans between $50,000 and $300,000.
The Ford Foundation’s investments and the ongoing commitment of the Robert Wood Johnson Foundation are part of a long history of investments in health and well-being. The Ford Foundation’s first PRIs 40 years ago were loans to launch nonprofit health plans: $600,000 for the Harvard Community Health Plan and $1.2 million for the New Haven Community Health Plan. The aim was to explore whether creating ways for low- to moderate-income people to prepay for health care could encourage prevention and lower overall health care costs. In 1991, the Robert Wood Johnson Foundation awarded a $5.5 million, 25-year PRI loan to establish the Community Health Facilities Fund and lent another $2.8 million in 1995. These PRIs leveraged $100 million in financing for 32 projects, helping meet an estimated $2 billion in financing needs for community-based mental health centers, including housing for adults in group homes.
Opportunities for Impact Investing in Health
At the heart of philanthropic innovation is the aim to increase impact – to more effectively solve society’s problems, enrich community life, and ensure equity. Health care funders are making impact investments at the same time that health care policy makers, practitioners, and advocates are advancing their fields through practice, programs, and policy. The collective approaches seek to deliver better and more cost-effective health care for all.
To achieve this mission, health care funders focus on a number of areas:
- Reducing disparities in access and quality of care. As with education, health care if often inaccessible for the most marginalized; when accessed, the quality often reflects the limited resources, time, and capacity of the health care providers. Investing in access, especially for the 30 million newly insured through the Affordable Care Act, as the Kresge Foundation is doing, is a critical first step to improving the health outcomes of low-income individuals.
- Managing the costs of care. U.S. health care costs reached $2.5 trillion, or 17.6 percent of gross domestic product (GDP), in 2009. They are on a trajectory to exceed $4.3 trillion, or 20.3 percent of GDP, by 2018. These unsustainable levels are gutting state budgets, prompting small businesses to reduce or discontinue health coverage (or limit hiring), and causing more than 60 percent of all household bankruptcies. Therefore health care investors must continue to invest in programs, practices, and policies that decrease the cost of care and provide incentives – through value-based insurance design – to individuals to partner with health care systems to improve their own conditions. They must also double down on prevention models that focus on action before a problem arises in order to preclude it, rather than treating or alleviating its consequences, which are more costly and time-consuming.
- Invest in health systems. Only 10 to 15 percent of preventable mortality is attributable to medical care. “A person’s health and likelihood of becoming sick and dying prematurely are greatly influenced by powerful social factors such as education and income and the quality of neighborhood environments.” Moving beyond hard assets like housing, impact investors need to engage health funders to focus on quality of housing to minimize illnesses such as asthma, access to jobs to relieve stress, and availability of healthy foods in communities. These ancillary investments will clearly have a direct impact on the health of community residents.