Academic medical center University Hospital in Newark, New Jersey, is partnering with the state government and housing developers to build affordable housing for residents and patients.
The new program, called the Hospital Partnership Subsidy Program, joins a growing trend of health systems making dips into providing lower-income residents with affordable housing.
The program will match financial contributions from hospitals from both developers and the state, and in this case, will end up providing 78 rental apartments to lower-income people. Some of the units will be classified as supportive housing and will include access to medical services. To date, St. Joseph’s Health and RWJBarnabas Health are also joining the partnership.
The new units will be placed on top of a ground-floor outpatient clinic and hospital office space run by University Hospital. The majority the $41.4 million project funds will come from the New Jersey Housing and Mortgage Finance Agency, with $3 million from the hospital.
“Supportive housing has never been a more critical component to the equation of healthcare than it is today, and we are pleased to join with our state and local partners to develop this project in the heart of Newark,” said Shereef Elnahal, University Hospital’s president and CEO. “This also brings our campus closer to meeting the obligations of the Newark Agreements, created in the wake of a different period of racial tension and re-dedicating this hospital to its community.”
Other health systems are investing in already-existing affordable housing. Earlier this year Toledo, Ohio-based health system ProMedica entered into a multi-year, multi-city partnership using funds from its impact fund, an initiative to tackle social determinants of health in area communities. The project will in part pay for removing lead paint, tackling mold and exterminating pests.
Other hospital systems, however, are moving away from owning affordable housing completely. Not-for-profit South Dakota-based Sanford Health sold 42 affordable housing buildings after they were acquired through its merger with the Evangelical Lutheran Good Samaritan Society in 2019. The portfolio includes over 1,700 units and cost $17.1 million to run, but only brought in $15.3 million in operating revenue in 2020. Sanford’s financial statement shows its affordable housing business generated $15.3 million in operating revenue.
“To be successful at affordable housing, you need scale,” Eric Vanden Hull, vice president of finance for the Good Samaritan Society, told Modern Healthcare in February. “Seventeen hundred units may sound like a lot of units, but compared to some of these bigger ones, it’s pretty small. We just didn’t have the unit scale.”
Former HHS Secretary Alex Azar previously floated the idea that CMS could reimburse health providers who provide housing to patients. Congress would have to change law to allow CMS to pay providers, so some analysts at the time said HHS could work directly with the U.S. Housing and Urban Development Department. The idea, however, didn’t gain much traction.