Hospital Investment in Housing

Apartment building Photo by Miten Patel from Pexels

As the homeless rate in America continues to rise, hospitals have begun investing in social services such as housing. Between 2017-2019, health systems invested $1.6 billion in housing interventions such as rent support, transitional housing, and building new housing for homeless patients.

In JAMA Internal Medicine, Harvard Medical School students Suhas Gondi and Adam L. Beckman with Warren Alpert Foundation Professor of Health Care Policy J. Michael McWilliams, MD, PhD examine the motives behind hospitals investing in housing.

One possibility is that financial motivations are spurring hospitals to invest in housing. In order to remain a non-profit organization, hospitals must meet certain community benefit standards. Providing housing for patients may assist hospitals in qualifying for these benefits and minimize their costs of obtaining tax exemption status. In addition, providing housing for patients who cannot be discharged due to unstable or unsafe housing conditions may free up beds in the hospital, making room for new patients and increasing revenue. Though some argue investing in housing may reduce medical costs for patients in risk-bearing payment models, the evidence suggests that permanently housing patients who are homeless rarely reduces medical costs enough to cover the housing costs.

A more optimistic interpretation is that hospitals may be trying to do the right thing by devoting their surplus to benefit nearby communities. However, this possibility begs the question: do high health care costs, driven in large part by high prices charged by hospitals with market power, contribute more to the homelessness problem than the hospital-led housing initiative helps?

While a role exists for hospitals in supporting homeless communities though collaboration with social service providers, these patients may be better served by a system that relies on elected governments to allocate tax revenue to housing rather than allow hospitals to direct the same resources with little accountability.