Gabriel Perna | June 30, 2021
In 2019, the Bon Secours health system sold its Baltimore-based hospital to LifeBridge Health.
Without a hospital presence in the city, people probably would have expected the health system, which maintains hospitals and clinics throughout Virginia and South Carolina, to exit Baltimore entirely. Except Bon Secours kept one vital part of its operation within the city: the Community Works program. Through this initiative, Bon Secours has provided resources and services to West Baltimore residents through education, economic development, and housing and community development opportunities.
“We’re still a part of the community. And there is the same hospital in the community, it’s just run by a different organization. It’s almost become cliché to say your zip code has more to do with your outcomes than whether you have access to care. We can have all the clinical pathways and quality improvement metrics, but if the conditions in the neighborhood don’t support good health, you’re going to have a lot of sick people,” says George Kleb, Director, Housing and Community Development at Bon Secours. “I think health systems are looking at things much more holistically now and trying to identify where their investments can be made to affect community health.”
In the nearly 30 years it’s been operational, Bon Secours has developed and maintained 802 units of affordable housing across twelve properties in West Baltimore, with more projects in the pipeline. Health Evolution recently spoke with Kleb about the history of this project, the successes it has seen with ROI, and why other health systems should be making similar investments.
What is the history of the affordable housing program at Bon Secours, the Operation ReachOut coalition and how it came to be that this hospital system has 800 plus units of affordable housing?
In 1993, the West Baltimore hospital cut the ribbon on a new wing. It was about a $30 million investment in an outpatient focused facility that required a lot of time and effort to make sure that the services within that building would be responsive to the health care needs of the people living in the community. For example, it had a large renal dialysis unit, ambulatory surgery, and cardiac care services. Just a whole lot of things that were based on the health care needs of the community. If you know how health care was administered back then and how the business model worked, you know the justification for the capital was a system based on volumes and acuity. The more volume and acuity you have, the more you are reimbursed. We cut the ribbon in 1993, but instead of volumes going up, they went down.
When our leadership drilled down into what the causes were, it wasn’t that the facility was missing the mark by offering the wrong services. It had to with the conditions in the neighborhood. The conditions were twofold. Number one there was a dramatic increase in the pace of property abandonment in the neighborhood surrounding the hospital. We went from about 20 percent vacancy in the blocks leading up to the hospital to two thirds in a period of about six or seven years. Our part of Baltimore had become more vacant gradually over the years, but it really accelerated after the tax reforms of 1986 because the tax advantages for absentee landlords went away and there was a depressed rental market. Rental properties were not very expensive and you couldn’t get a tax advantage. So, for absentee landlords, when their tenants moved out, they weren’t replaced. The second factor was the crack epidemic and phenomena of these open-air drug markets, two of which were very close to the hospital.
The organization reached out to the city and asked for support in redeveloping housing and offering heightened drug enforcement. The city came back and said, “We’re basically overwhelmed, we’re looking to redevelop other parts of the city. You’ll have to get another partner. Not that we won’t support you, but you’re going to have to get another partner or do it yourself if you want to redevelop real estate around the hospital.” What the executive team and board decided to do was to launch something called Operation Reachout…acquiring vacant housing in the three-block stretch next to the hospital. They also acquired an old Catholic school that had been abandoned for about 20 years. In 1995, we announced that we’re going to redevelop the housing on West Baltimore Street and that we were going to do something at the site of the old school to support families. We said that those two commitments were the only unilateral decisions we’re going to make and everything else was going to be done in partnership with the community.
We partnered with a division of Enterprise Community Partners for development and then we convened a group of folks to help us decide what to do at the old school. We came up with the idea that we want to do something for families with very young children and got some funding for a family support center. We tore down the old school and built the family support center in the spring of 1997.
And how did you get to 802 affordable housing units in West Baltimore?
Early on in the relationship with Enterprise, they were the development consultant and helping us take the risk and bear the load. The understanding was always that they would help us to build our capacity. From the very beginning, the idea was that we would figure out a way to grow this, because the part of Baltimore that we served as a hospital is one of the most underserved areas for affordable housing. There was no shortage of need and there was opportunity because no one else was offering these kinds of development services in housing. We were filling a gap that needed to be filled.
We saw it as ‘This is Bon Secours, and this is what we’re called to do because it’s a need in the community that the [Bon Secours] Sisters and the institution were heavily invested in.” We ended up developing six senior housing facilities, some row homes and family buildings, and we got a reputation as being a solid developer and good at community engagement. We work hard on a relationship with the community. It’s not just about putting housing in place. Through Community Works, we also have workforce development, early head start and youth programs, an urban farm and financial services. We’re developing an old library into a youth-oriented community resource center. We also do open spaces and parks. It’s much broader than just the housing, even though the housing is the most prominent because of the dollars invested and the fact we have 802 units across numerous locations.
George Kleb, Bon Secours
What are some of the challenges of building a housing program?
Capacity. This isn’t a sideline project. You have to have people focused on and dedicated to these tasks. It’s a whole other discipline. Financing, development, and management operations is different for housing than it is for running a hospital. There are some transferable skills but operating a hospital is a 24-hour a day, seven days a week, 365 days a year job. So having the capacity is number one.
Secondly, financing is competitive and what I mean by that is most of what we’ve developed is through the low-income housing tax credits, which is the number one mechanism to develop affordable housing. Those tax credits are administered by the state and the states have competitive rounds. In Maryland, it’s a competitive round that happens once or twice a year. So, what you’re doing is putting together a development proposal and then submitting it. Then the state scores and ranks the proposals. If you make the cut, you get the tax credits. If not, you have two choices: Abandon the project or come back next time. There are three times as many applicants as those who get the credits.
Another one of the big challenges is that as impactful as housing can be, it’s only one major factor. It’s not the only one. For health care organizations, it would be really tough to just concentrate on housing when there’s all these other social needs. The impact can be limited if you’re just doing housing. That’s why we’ve built a lot of different services.
It’s also a challenge to sustain it over time. You have to put together a business model that’s going to be able to be sustained. Some of it qualifies as community benefit but I think you have to decide as an institution that you’re all in and commit over time.
Lastly, when you’ve developed 802 units over 25 years, it goes beyond new development operations, and it gets into preservation. Every one of these buildings has a physical plant that needs to be maintained. They all have roofs, they all have heating and cooling systems, and we have to look for ways to refinance that periodically. That’s not unique to health care organizations, that’s anybody who operates affordable housing.
Speaking of financing, business models and preservation, how does this generate ROI for Bon Secours? You wrote a paper for Health Affairs on a social return on investment. What does that mean?
The idea behind the paper was we have these units in service, and we have a service coordination team that works for the health system. Their primary responsibility is making sure that residents of our houses have access to the services that we provide in the housing…a range of services that they need to have a good quality of life. This can be everything from prenatal care to in-home care for seniors that we’re trying to help put in place.
We wanted to analyze how much did people get out of being a resident of our housing, and can that be quantified into dollars? What we found is that yes it can. Intuitively, we knew this. We knew that if you’re in a stable housing situation, and you’ve got a team that’s there to provide you with services when you need them and help you identify and access those services, you’re going to get some value out of it. And you wouldn’t have gotten it if you were just living down the street in a row house by yourself.
Why is it important for organizations like Bon Secours to make these kinds of investments in the community—even, in your case, where you don’t own the local hospital anymore?
Through the Affordable Care Act, not-for-profit hospitals have been doing community health needs assessments every three years. When you do a community health needs assessment and housing keeps popping up, you’re actually required to either address it in some way or justify why you’re not. That’s part of the implementation. Even if you’re not oriented towards providing housing or any of these programs, if you’re just looking at it as a barrier to access the care, you’re going to want somebody taking care of that. And you’re likely to find there aren’t enough resources in your community for that. The proportional investment in housing at the federal, state and local levels has not been adequate. There is a nationwide housing affordability crisis.
Everywhere, rents have gotten really high and if wages and income are relatively stagnant, that’s going to create a problem. People are forced to make choices between paying the rent or getting health care services. Not to mention that people can’t organize their lives when their housing is so transient. That’s happening all over the country and it’s becoming a front-of-mind challenge for people involved in health care. What kind of investment is going to be the most effective? In Baltimore, it has to be done more directly. In other markets, you can make investments in financing institutions that are making loans available to affordable housing developers. You have to look at what’s the need and then you have to look at the particular area that you’re trying to serve.