Just Economy Conference – May 14, 2021
Historical disinvestment in social determinants of health have prevented low-income communities from having fair opportunities for economic, physical and emotional health. The CDC has identified key factors that contribute to increased health risk, including toxic stress from discrimination; inequitable access to healthcare and utilization; occupational hazards of being an essential worker; educational, income and wealth gaps; and inequities in housing.
That is why health systems are addressing issues that have not traditionally been considered medically relevant, like housing, early childhood education and access to healthy foods. They are doing so in partnership with CDFIs, the financial ecosystem dedicated to serving low-income communities. While this is a significant improvement in recognizing the interconnectedness of community health and community finance, many systemic challenges remain.
In this session, we discuss how health systems and CDFIs are natural partners in addressing social determinants of health. We will interrogate the systemic bias that has characterized both mainstream finance and healthcare, and provide examples of efforts to build the broader ecosystem beyond discrete projects to improve community health.
Speakers:
- Leslie Lenzo, Chief Investment Officer, Advocate Aurora Health
- Jeremy Moore, Director, Community Health Programs & Shared Services, Spectrum Health Healthier Communities
- Yi Wei, VP, Impact Capital, IFF
- Alex Wiggins, Chief Investment Officer, Rush University Medical Center
- Darlene Hightower, Vice President, Community Health Equity, Rush University Medical Center
- Matt Roth, President, Core Business Solutions, IFF
Transcript
NCRC video transcripts are produced by a third-party transcription service and may contain errors. They are lightly edited for style and clarity.
Wei 00:02
Hi, good morning everyone. My name is Yi Wei. And I serve as the VP of impact capital at ISS a CDFIs serving nonprofits across the Midwest. I’m honored to facilitate a conversation among a really dynamic group of practitioners grid actively figuring out how to deploy capital in service of community health. I have with me today, Darlene Hightower, VP of Community Health Equity at Rush University Medical Center, Leslie Lenzo, Chief Investment Officer of advocate Aurora health, Jeremy Moore, Director of Community Health Programs and shared services at Spectrum Health and Matt Roth, president of core business solutions that I thought. So if I were to introduce you, in your full glory, we would stay here the entire time, because you’re all very accomplished impressive people. But instead, I’m gonna ask you to help our audience get to know you better. In the spirit of building resilience, could you share one thing that kept you going? And it’s the difficult times of last year? Jeremy, can I start with you?
Moore 01:07
Yeah, sure. Hi, everybody, thanks for having me. Something that energizes me a lot and kind of gets me through the difficulties of last year is really just kind of addressing new challenges. And one of the issues that we’ve seen, kind of play out, I was a fellow with the Robert Wood Johnson Foundation, through their culture of health leaders program, and one of the projects that I was working on was around. It’s called the listen project was building global solidarity of issues of justice across the globe, during this time where the US is particularly vulnerable. The US has traditionally been kind of subject to us exceptionalism, where maybe we don’t listen and learn enough from kind of the justice and suffering issues that we’ve seen in other countries like Rwanda, Chile, or Northern Ireland, where they’ve had to change their entire systems based on things that have happened. And so I’ve actually been involved in this project where actually, in a couple Fridays, we’re going to be hosting a police officer from Northern Ireland virtually, to talk about the police reform, this happened as a result of the good, the Good Friday Agreement in the troubles leading up to that, and it’s actually pretty invigorating to hear kind of how other countries have learned from the things that maybe we should learn from here in the US. So that’s, that’s been one way just in trying to engage some of those things that maybe I couldn’t have done before in the old environment. That’s company resilient.
Wei 02:38
Great, that’s so interesting, thanks for sharing that there are also some interesting ties between the US community finance movement and the microfinance movement abroad. So we have lots to learn. Darlene, can I go to units?
Hightower 02:53
Sure. So at the beginning of the pandemic, we kicked off something we call the community command center at Rush. And for the first time, it brought together multiple departments across Rush that are working with communities so everything from behavioral health to folks and Alzheimers, to our social workers to our career pipeline program, and we all were able to work together so that rush would have a coordinated response. With the community when it came to COVID-19, and yesterday, we were reflecting on our year of that activity and just working with that group and thinking about ways to partner differently, that would really have a big impact on the community. Those folks, my team and everybody on the community command center have really helped me stay focused on what’s important. And it’s just it’s really been a positive experience of silver, a silver lining, from everything that’s going on in the past year.
Wei 03:55
Yeah, I’ve heard lots about how COVID really accelerated the drives to interoperability between the health systems because we just had to collaborate. It’s great to see that play out in the Human Resources side, too. Leslie, can I ask you the same question?
Lenzo 04:10
Or no, my strategy for resilience through all of this is much simpler than darlings and Jeremy’s. When we started the work from home, you know, I simply needed a way to stay active. So I’ve done peloton yoga every morning since March 14 of 2020. And I found that, you know, just getting that physical activity every morning clears the mind energizes you to then attack your day. And particularly as you know, we hear so much about the mental health challenges during this COVID period. I think it’s just those little strategies that we need to find to help us have the resilience to get through this.
Moore 04:50
For you, I could use some of that myself, I think I gained five pounds.
Lenzo 04:54
It’s never too late to start Jeremy.
Wei 04:58
I saw Darlene and myself nodding vigorously, I developed the same habit. And I hope to continue it after reentry. And finally, last but not least, Matt
Roth 05:08
Good morning, everyone. It’s really a pleasure to be with everyone today. And with my co-panelists, thanks for sitting alongside me. We really appreciate this. So I’m going to cheat a little bit and say both a personal and a professional in things that have kept me going. So on the personal front, my older son graduated in June and was supposed to move to DC. And then of course didn’t and so just having had him home for an extra you know, you don’t get that time back. And so having dinner every night bike rides, watching baseball games, it’s great to have had that as a release valve. It’s also been awesome to be part of a team. You know, what if we’re not a small business lender, we focus on nonprofits. But when PPP came out, we pivoted and worked with a colleague organization and the team and the hours everyone put in sitting with leaders of nonprofits really trying to access that money, love frantically trying to access that money, and working through their payroll forms. And at all hours of the night and weekends. Like it was just tremendous how hard everyone worked, and just be able to be part of that effort is really sustained.
Wei 06:25
Yeah, thank you for sharing that, Matt. In a way, I feel like we went through a war and COVID was the battle we all united against. So thank you for helping your audience get to know you a bit better. And let’s dive right into some of the content. So in full disclosure to our audience, all the panelists and their institutions are investors of IFM. So we have that uniting experience. And over the last year, we’ve seen some patterns of how health systems have approached improving community health and bringing capital into that plan. So I’m going to share a visual right now to help frame this up. So this spectrum really shows from you know, the left-hand side direct service delivery that a lot of health system partners do in terms of programs that offer very specific services and health care, early childhood education, healthy food, and moving towards the right-hand side, some of the ecosystem building work that we all know is to be very important, but we often have a lot less control over. So I’m going to ask each of the speakers to give an example of where their organization is delivering Community Health along the spectrum. Leslie, can I start with you? Can you give an example of how advocate Rural Health is implementing your community health strategy? Sure.
Lenzo 07:55
And so we’re squarely in the middle of your continuum there. We do have a Community Investment Program that where we’re deploying capital through CDF eyes, and then we’re also members of communities such as the health anchor network. For us, you know, we’re fairly new to this activity. This is something we really started you know, in late 2019. So a lot of our activity thus far has been really foundational. So It’s been around things like establishing our Community Investment Committee, which is a collaboration between finance our community benefit team and our operations team, developing an investment policy statement to help guide our framework of how we want it to invest in the community. And then we have started to make some of our first investments here. We’ve now approved for investments through CDF eyes and hope to continue that good work as we move forward here.
Wei 08:50
Great. And Darlene, where do you see Rush University.
Hightower 08:56
So we are on the further right end of the spectrum, Rush launched the website, united in 2017, in partnership with several other health institutions in Chicago. But this work started with Rush’s focus on at an anchor mission strategies overall higher local purchase local to social impact, investing locally, and volunteering locally. So that started in 2016. But what we realized is, we could not do that work alone if we’re really trying to change the landscape of the communities on the west side that we serve. And so West Side united attempts to do just that by bringing in five other hospitals, community based organizations and government to invest in Westside communities. And so, through that partnership, we’ve been able to work with CDF eyes, like I FF, to specifically focus on Westside projects. And to date, we’ve invested about $8.1 million collectively through Westside united.
Wei 10:04
Yeah, Westside united, was really an early leader in bringing multiple players into the scene in Chicago and rush had a huge part in that leadership. And Jeremy, where do you see Spectrum Health?
Moore 10:14
Yeah, it’s interesting, I think we have work that goes kind of across the entirety of the continuum from programs and all the way up to even work that I think ultimately is trying to connect with transformative kind of public policy. Although probably most of our investment work sits in maybe that’s supporting the community development space and building communities of practice. One example, though, is around our value-based work, the social impact bond that we’ve launched back in 2016, although it feels like it had been in the works forever. So maybe, maybe going back to 2014. And I FF is right in the middle of this work, actually, this work, that’s actually the only social impact bond in Michigan, is active in releases around racialized maternal and infant health outcomes in lowering infant mortality. 20 years ago, there’s a report that came out in Grand Rapids that said, black infant mortality was five times ago, occasion rate. This is problematically in pretty typical issue in most mid-sized to large urban settings. And so there was work that was happening, community health worker focused in-home visitation work that looked at access to care and other social determinants of health factors, that we had a lot of evidence that was actually moving the needle on this issue. But the problem was, it wasn’t scale. And so the state offered long story short, the state offered an RFP that we ultimately engaged with Harvard and created a financial model that paid on population health level outcomes. And so we developed a financial model that actually was based on Medicaid data on the precedent on the premise of savings to Medicaid. But we also had to create a capital structure in this capital structure and all sorts of different forms of capital, to be able to ultimately get to that evaluative point, you know, two or three years down the road for each cohort, where we start seeing revenue coming in. So it’s a complicated project. But not only does it create investment, but ultimately what we’re hoping six or seven years into the project, that it translates into different public policy, that ultimately it might be something that where there’s a Medicaid waiver involved, or there’s reimbursement that comes for community health workers, or you know, some other way to scale this word. So it kind of goes along the entirety of the spectrum, with the idea that hope to impact public policy, but it probably sits more in the middle.
Wei 13:00
Yeah, thank you for that example, for our listeners who are not familiar with social impact bonds, they’re a Pay for Success vehicle where the investor gets paid back only if the outcomes are delivered. So that’s what Jeremy is referring to in terms of the value-based effort and where ISS fits in there is We are the fiscal manager. So because we are very familiar with complex capital stacks, we play a partner that hacking can manage that complicated process, and work with all the different players involved.
Moore 13:35
And we greatly appreciate your role in that.
Wei 13:40
So, interestingly, we see the spectrum of activities of high control to low control for our health partners. And we didn’t really plan this but um, we have an analogue at ISF that we use to talk about our work. So Matt, can I ask you to tell us a little bit more about ISF and how we see our role in the finance ecosystem?
Roth 14:03
All right, thanks. And it is really interesting, the parallel there. So for those of you not familiar with us at AI FF, we’re headquartered in Chicago, we have seven offices, we are a Midwest, we serve the Midwest, and we are squarely focused on the nonprofit sector. So and we sit at the intersection of finance and facilities. So we provide lending mostly for real estate projects, and equipment for nonprofits working in low-income communities across the Midwest. And so, you know, as a CDF II, we have you know, CDF eyes writ large have really excelled at the first two pieces here on the left side, my left on the highest CDF II control, right, getting money and deploying money. And as we like to say it I FF, like, you know, banks do that too, right. But CDF eyes, our goal is to align capital with justice. We do that, in part, just do that. But really, where we where we most align capital to justice, is by thinking holistically around the ecosystem, and to partner with all the our fellow stakeholders in advancing work in community, whether that’s philanthropy, anchor institutions, like healthcare systems, government, banks, business, corporate civic. And we do that in a number of ways. I’ll just give one tangible example of two of the pieces here, right. So create programs, we have created a program in Detroit called learning spaces, where we work with the leaders of early childhood centers that are looking to increase their capacity. We partner with philanthropy on this and we bring dollars to help them we as well as our development services as a CDF II, we provide deep real estate consulting, we have a 25 person real estate consulting practice that I FF. So we sit with the leaders of the nonprofit, in this case with the AEC providers, and really think through their facility needs and what they need for kids to be successful and thrive. And so we’re doing that in a very deep way, in Detroit through the learning spaces program. More on the right in terms of building organizational capacity. through a partnership with JPMorgan Chase. We launched a few years ago, a program called stronger nonprofits initiative, where we have cohorts of 10 organizations in each cohort organizations that are led by people of color. And we bring capacity building, both on financial management and real estate management and real estate planning, in both classroom settings, and one on one coaching, with extra grant money available for the projects themselves on real estate projects, but it’s the build capacity. You know, one of the outgrowths of systemic racism is that organizations have been deprived of resources to be able to fully thrive and meet the needs of their programmatic objectives. And so part of this effort is to address that and provide that capacity-building effort. So we’ve you this echo system is really intended to acknowledge the fact that you can’t just raise and then deploy money, right, you have to, you have to build up investable pipeline of projects. And to do that, you can do that through program creation, you can do that through capacity building, you can do that with a lot of interaction and engagement with your partners in the ecosystem.
Wei 17:38
Thank you for that. Yeah. And I think that highlights a key point that ISS has really trying to be a leader and articulating that, you know, we are a lender as a CSI, but you can’t just throw money at the problem, you really have to build up the ecosystem for the ecosystem to be able to absorb that capital in a way that facilitates sustainable growth. So that’s a great segue into the core of our conversation, which is the role of capital in supporting community health. So here, we have outlined, you know, the grants that Matt was talking about that support the capacity building work and The in the social impact bond space there is a payer, who pays for the outcome ultimate outcomes if they’re achieved. And in this case in the social impact bond that Jeremy was talking about is the Michigan Department of Health and Human Services. And then on the right-hand side, you have a spectrum of risk capital, ranging from lower risk vehicles to higher risk vehicles. So many health systems who are relatively new to the space, they want a way to work to partner with intermediaries, because just as banks are really important for the commercial space CDFIs are really important to small businesses and nonprofits. So by investing on balance sheet with CDF eyes, they’re able to deploy the capital to many organizations at a time, it’s relatively low risk, because they have recourse to CDF eyes. And it’s a way to dip their toe in in terms of the community development work. And as partners get more comfortable with the community development space, we see them building appetite to move further down the risk spectrum all the way down to directly owning parts of real estate projects and providing pre-development grants. So let’s move into this conversation and ask each of you to talk a bit about how you think about the role of capital. Leslie STI, oh, can I ask how you think about allocating capital to achieve your institution’s community health goals?
Lenzo 19:48
As I had mentioned, you were relatively new to community investing. So we definitely are taking an approach of we want to learn to walk before we run. So our preferred approach at this point is to partner with CDF, eyes, like IAFF and to do so on the lower-risk end of the spectrum. And so the investments that we’ve done to date have been balance sheet investments with recourse to the CDF eyes. In terms of allocating our capital, you know, we’re really looking for two different types of return on our capital, a financial return and a social return. So when we look at the financial return, you know, we understand that we’re making below-market rate loans to the CDF eyes, but we do expect that we’re going to receive a return of our principal, along with a small return on our principal. And the thinking there is that we do need to earn, you know, some return so that we can maintain the purchasing power of our program, so that once we receive capital back, we can then redeploy that into additional community investments going forward, so that we can have a perpetual Community Investment Program. From a social impact standpoint, we have identified several areas of focus that are important to us as a healthcare system. So you know, we look for things like housing, job creation, access to health care, access to food and violence prevention, and are really looking to partner with CDFIs, who also spend a lot of time in those focus areas, as well as CDFIs, who have experience working within the geographic footprint of advocate Aurora health. And what we want to see there is quantifiable metrics that we are having an impact on your those areas of focus. So measuring in terms of number of jobs created, number of housing units created, those are the type of metrics that we’re looking for from a social impact standpoint. And then finally, and this gets back to your mats discussion around the kind of the continuum that I FF has tried to create, you know, we’re also then you know, trying to plug our community benefit folks into all the programming folks at the CDF eyes like IAFF so that when we see you both needs within our geographic footprint, or we see kind of interesting projects that will address the social determinants of health within our footprint. You know, we’re trying to raise those up, really have a conversation about you know, these potentially being projects that we can put into the CDFIs pipeline, so that we can help contribute to that flywheel that Matt was referring to.
Wei 22:37
Yeah, thank you so much for elevating the natural alignment of the work that CDF eyes have done for decades, and the relatively new term social determinants of health that we’re using today. So organizations like ISS have been investing in affordable housing, child care, food for decades, and we just never call it as social determinants of health and it’s great to see this convergence of partnerships around this issue. Another silver lining of COVID that elevated people’s consciousness about that. Darlene I saw you nodding a lot as Leslie was speaking. Can I ask how Rush United thinks about capital in terms of achieving Community Health results?
Hightower 23:26
Sure. So when I think about this work, I want to take a little bit of a step back and talk about the why and give a little more context. So Rush is on the west side of Chicago. And we’re specifically focused on 10 neighborhoods with about 500,000 people. And these neighborhoods are primarily black and brown, we see a lot of disparities and health outcomes around obesity, diabetes rates, economic attainment, quality jobs, the things that make a community unhealthy and the things that make people unhealthy. And so when we’re thinking about the strategies and how we get them moving the needle on those things, that’s where investments in the community becomes so critical, because what we know is that within these Westside neighborhoods, there’s been intentional systematic disinvestment for decades. And so if we’re trying to move the needle on outcomes, we got to start pumping money back in. But then what we also realize is that we’re a healthcare institution, not a bank. And this is not our area of expertise. We’re not a CDF by, we want to do good. But we also want to do well, as Leslie was saying, we want to be able to invest, but then also get a return on that investment. And for us, CDFIs have been the best way to do that, because it’s a, what I call a triple coupon, the community benefits because we’re investing in local projects, small businesses, capital projects and investment, the health institution wins because we get a return on that investment as well. So and then, of course, the community wins, because then you have better spaces that are made rehearse for people to grow and thrive. So for us, focusing on the why we’re in this space, and then being very intentional on the house has been really critical. And through that way of thinking, we’ve been able to bring in additional organizations like the American Medical Association, and the Illinois Medical District, in addition to Lurie Children’s Hospital in Chicago, so just wanted to give a little bit of context to that. And so far, so good, you know, people are excited that we’re putting our money where our mouth is, if we’re really talking about closing healthcare gaps on the west side of Chicago.
Wei 25:48
Yeah, I think one of the things that has been really helpful and refining our thinking about CDFIs roles and supporting Community Health is that, you know, Westside united, you have really said, Let’s invest in the community development finance system. So you invest in a host of CDF eyes in Chicago, so that we can better serve the communities because, you know, the community finance system is part of the community. And by investing directly on our balance sheets, you also contribute to our sustainability in our ability to continue serving these communities. Jeremy spectrum is listed under several of these. Can you speak to the broad toolbox that you guys think about when deploying capital?
Moore 26:38
Yeah, well, always I want to build on what Darlene said, you know, it’s kind of the bigger picture is a situation where healthcare institutions is really, you know, trying to figure out how in more and more with value-based work, how to make people healthier? Well, historically, they only have control of about 15%, of what actually makes people healthier. And so, you know, what I mean by that is about 15% of your health is determined by whether or not you walk into a doctor’s office. And the rest has to do with where you live. And, you know, and also, yes, your behaviors and maybe genetics, but where you live is a big piece of, of your health. And so, a lot of times, health institutions are put into a situation where they have to figure out how to make people healthy, while trying to figure out how do we actually impact some of these other things that we historically don’t control. And as an example, spectrum, for instance, or chronic disease, diabetes, in particular, I think it’s 56% of our diabetes patients right now are under risk-based contract, which means that we are going to be held responsible for the total health of those individuals, well, maybe not fully having the control that we want over, you know, what actually makes them healthier. And the reason why I say all this stuff is because it creates incentives around why a health system would need to start figuring out how to invest, but also how you evaluate those investments as well. We have to figure out how it is that we fixed kind of those historical wrong pocket problems. We receive some of the benefit while other institutions do, which points to the importance of collaboration, which is a whole different discussion. But to your question around what kind of investments given that scenario Spectrum Health looks at, you know, some of those are traditional investments, you know, Treasury, those are things that Spectrum Health is thinking about right now, we haven’t fully put in, you know, any kind of debt or equity into projects at this point. Most of what we put in has been actually the second thing around community benefit community commitment. And some of this comes in the form of community benefit agreement, we have a community benefit agreement that’s been in place since 97, on spectrum form that requires us to put $6 million plus into the community, our CEO, Tina freeze, Decker just made a pledge last year, an additional 100 million dollars over the next 10 years to pledge, specifically around racial equity. So those are, those are just community benefit agreements. I also think there is an avenue a tool around the Community Health Needs Assessment implementation strategy, that actually leads to additional investment. If you’re not familiar with that, it really is a nonprofit requirement by any nonprofit hospital, to commit to how they’re going to be addressing issues within the community, as defined by three year research that says here are the priority needs in the community, I think that can lead to demand around additional investment as well. I also think, you know, an area that is above and beyond health system is actually insurance companies where I think they have the most incentive to figure out how to address some of these issues and deploy capital in really smart ways. You know, they’re often having to address quality measures in their Medicaid bids with the state and contracting, and they are by themselves not able to address a lot of these quality issues like improving chronic disease in the population, or the things that may require a larger really effective population health projects, to be able to do this work. And so that’s another form of I think of capital that is there if the right financial and economic model is present.
Wei 30:41
Yeah, insurance companies are really interesting. I think you’re absolutely right, and that they have a really aligned incentive to make sure that population health is high quality. And there’s some structural challenges there that we haven’t been wrestling with, you know, at the very tangible level insurance companies, their investment policies require some of their investments to be rated a certain way. And many CDF eyes are not rated in that way. Where as they also require certain other things that, you know, just right now, in terms of institutional setup, we’re not there yet. But I think your broader point about leveraging the broader regulatory framework, and figuring out who cares and who needs to be at the table is the right way to think about that. So we’ve talked a lot about capital and its role in community health. Matt, do you have any synthesizing thoughts for us around the role of CDF eyes and just continuing?
Roth 31:44
I do but I want to go back I appreciate Darlene framing of like grounding us in the Why? Because it anchors all of us, right. So you know, I’ll share one short story because it’s one of my favorite moments of really being moved in. And it was at a ribbon-cutting a food pantry that was a longtime real estate consulting client of our FF and a borrower via FF. And they opened up a brand new, beautiful facility and one of the longtime shoppers at the food pantry went up to the executive director before the ribbon cutting and thanked her because for that hour, he forgot he was poor. And facilities matter. And this work is so impactful. So yeah, you know, we at IAFF in particular, are really thinking holistically about different sources of capital strands of capital and how it can move and advance the working community. So you know, again, I lead as president of core business solutions that I FF I lead the CDF II businesses as a vi FF. So most of the stuff on the lower risk spectrum. My colleague, Kirby burkholder, leads our social impact accelerator which includes our development work and so you know, we we raise capital and need capital for all of that right. All of our work is transformational. We what we like to believe in terms of the nonprofit’s their work is transformational. We were happy to be able to contribute what we can. And so part of this is thinking about other strands of capital, where there’s higher risk tolerance. So we have from one of our health care partners we have taken in what’s listed on this one page as nonrecourse debt. So we created a special purpose vehicle, so that debt can go in, but it’s nonrecourse to IAFF. So it’s higher risk money, but it’s to build out an early childhood center for providers. And it’s gonna be a high-impact early childhood center. And so we’ve also created we’ve taken grant money from philanthropy, and created developed a charter school in Kansas City and identified a high-quality operator to come in and lease that they were not ready to own a facility yet. So we were able to take that project on using philanthropic capital, and have a lease to buy or So ultimately, they will own it. But right now, we were able to step in and fill that need, just like we were able to take government grant money and buy facilities, renovate them, develop grocery stores, and food deserts and find operators for those grocery stores. We own those facilities that are on our balance sheet. And that just takes different strands of capital to advance that work. So whether it’s early childhood K through 12, healthy food, we own over 200 units of housing for persons with disabilities, and combine lots of different strands of capital to make that work. So we’re tremendously appreciative, as I said, we want we need to do all that work. And we’re tremendously appreciative of all of our impact capital investors in IAFF and when we’re appreciative of the different strands of capital that can make that work.
Wei 34:59
Yeah, I just want to amplify to the things you talked about, and want to make sure that this first point doesn’t get lost. Because when we think about facilities, we really at ISF believe that high-quality facilities have an impact around high quality, programmatic outcomes. So a lot of the facilities for providers in the social determinants of health space, early childhood centers, grocery stores, health care clinics, they have very space-specific needs, right, it’s not just a regular box that they need, they need space that’s tailored for the type of services we’re providing for the community. And if they don’t have high-quality space, that affects the quality that they’re able to deliver in terms of care and services for the community. So facilities, the lived environment is a very huge part of this. And then the second part that you brought up that is really important is you know, we see a lot of opening activity on the lower and risk side of the spectrum, because I’ve been these partnerships are still relatively new. But as we grow and get to know each other better, the need for different types of capital, and different forms of capital and different risk appetite of capital is there because some capital, you just can’t get some projects, you just can’t get done with regular nonrecourse debt, or not regular recourse debt. It’s just sci-fi. So we’re starting to experiment and pilot these programs with our partners on hopefully next year’s NCRC, we can get into more details about those learnings.
Moore 36:33
So I wonder if I can add to that, that. I think one thing that’s that’s powerful that CDF eyes can do in my experience in the health care realm and in connection to health is some of the market share mitigation. You know, it’s funny, I just had a meeting this morning with essentially a competitor health system across the way in Grand Rapids. And, you know, there, there are things that health systems fight over in the market, you know, like, like products around like he surgeries and things like that. A lot of these things that we’re talking about are not things that are competitive issues, although our system sometimes set them up to be like I mentioned earlier insurance as a form of capital. It’s interesting that CDF eyes, and you can correct me if I’m wrong, because I’m not a CDI expert. But CDFIs really were created to help mitigate some of that in the banking industry, that there’s some ability to create shared value among those things that maybe aren’t competitive issues. I think healthcare is really in the nascent stages of figuring this out. And CDF II model can help with some of that in the insurance world or healthcare world of what are the things that we actually are, you know, the rising tide raises all boats kinds of issues. I think CDFIs can actually help with some of that work.
Roth 37:57
Yeah, absolutely. agree with that, you know, that’s, and as someone who started my career in banking, you know, that private sector, it’s just, it is just more competitive than within the CDFIs space. I’m talking to my CDI colleagues all the time about collaboration. I mentioned one earlier in this conversation with our partnership with CRF to move PPP money. We’re forming partnerships, and we’re In Concert all the time, the goal is always just to get projects financed and into the community. So I appreciate you raising that.
Hightower 38:29
Yeah, I want to circle back to something that you said about the connection between updated facilities and the ability of organizations to like improve their programs improve the work that they do. I think the same is also true for revitalizing communities, like once you see that new building go up, or that building has been fixed, like that has a ripple effect, for other things that can happen in that neighborhood. So it becomes a catalyst for change in these communities. So just wanted to double down on that.
Wei 39:07
Yeah, that I think we see the manifestation of that the inverse of the broken windows theory come to life, when people see that the windows are getting fixed, and the buildings are getting refurbished, there’s hope. And then hope means people are more willing to invest because they see a positive horizon. So we really do believe in that flywheel catalytic effect. So, Jeremy, and Matt, you started talking about partnerships, and what’s needed to move forward, I’d love to move us into closing and see if anyone has any thoughts around what you think is necessary to grow this, we acknowledge this is still nascent, and we’re still figuring out how to work together. But what is needed so that more west sides united emerge, what is needed to crowd some of your peers into this space? And to test out new ways of injecting capital?
Hightower 40:05
Can anybody jump in on that?
Wei 40:10
Go ahead, darling.
Hightower 40:11
So I think it’s, I think it’s a couple of things like one, we’ve got to be able to be really clear about our impact, like, what, what, what, what a hospital’s getting from these investments? What’s the ROI for doing this work? And not just, you know, the feel good part of it. But, you know, why should I help organizations and others, like ama, do this investing? And so the more that we can show the impact in these neighborhoods, the better. So that’s like the qualitative or quantitative part. And then the qualitative part is important, too. How are we sharing our stories about how these investments really impacted people on the ground, from, you know, community-based organizations, to individuals that have benefited from affordable housing projects. So I think the more that we’re able to tell those fiscal financial stories and life-changing stories, the more we’re going to have people get engaged in this work. People want to glom on to a winner, and the more that you can show that you’re that bright, shining star and winner, the more people are going to want to join into the work.
Moore 41:22
I just want I think that was said beautifully a, you know, I just want to build on that with I think, I think on the political will side, we just we need to want to have systems that make people healthier. And right now we don’t always, you know, public health systems are radically underfunded. And, and that’s, that’s an issue. And I think we need to want systems collectively that really make people healthier. But to Darwin’s point, I think sometimes, because our systems right now, you know, do deal in commodity kind of market issues. When we look at investments, there really has to be strong evaluation around how is this actually impacting the people and the enterprise itself of, of health systems, because there is general kind of pockets that this general health, like initiatives actually address, but health systems have to be far more attuned to the impact that it has on their own patients. That’s why collaboration is so important. Like if we can get collaborative work happening across health systems. And I think health departments have a big role in the possibility of that, then I think you can get down into collective community evaluation around you know, this investment into this housing project or into this clinic or into this childcare center impacts these people in this way. We really, if we’re going to have strong and investment, we’re going to have to be able to create infrastructure that can do that.
Lenzo 43:00
Then I think the collaboration is key. There’s a huge desire amongst health systems to want to do this kind of work. But since it is still very nascent, you know, I think a lot of people are still struggling with you know, how do we get started? So to the extent that those of us who have started to do some of this work, you know, can be very, very I’m very open about, you know, how have we structured our programs? What successes have we had? You? I think, you know, hopefully that will help pull others along as they start to see those successes. And they can then frame what a program might look like for them, because others have gone ahead first.
Roth 43:40
Yeah, I absolutely agree with that. And then in addition to that, because I think it is so important to bring you guys are all at the forefront. And I think bringing others along, is so critical. And then I think, you know, from the partnership that CDFIs have with health systems. So one of the things that I’m really grateful about with our partnership with each of you is it’s not just about a transference of money, like the money’s great, but make no mistake about it. But we are about building pipeline in a really thoughtful, engaged way. And like sitting at the table with you all on a regular basis. And thinking about like, where capital really does need to be directed, we’re looking for partners in doing that. So that kind of partnership engagement is also saying that we really appreciate it.
Wei 44:27
Yeah, and that really reflects the continuum, right, because just because we have the capital doesn’t mean that the community is ready to absorb it. So we need to work together to identify who is ready, and for those who are not mine ways to prepare them to absorb capital, because financing can really accelerate the growth of the community. So on that note, I’m going to close our formal discussion, but please stay for the q&a session afterwards. Thank you to our wonderful panelists. And you can send us a note if you’re interested in following up. But please stay for the q&a.
Wei 45:13
Hi, everyone. Welcome back. We are joined by a newcomer, Alex Wiggins, the Chief Investment Officer at Rush. And Alex, please introduce yourself. And we’ll start off with you on any reflections from our discussion.
Wiggins 45:30
Thanks, she Well, I think you just introduced me. So I work closely with Darlene Hightower, who was just on the session, she sends her regrets. He’s not able to do the q&a here live. But like, I thought you guys had a great discussion, very informative. I learned a couple of things. I think my initial comments, if any would be you know, from my seat as a CIO, the financial piece of this doesn’t really keep me up at night, I think the I CDFIs do a great job in terms of managing their balance sheets, being properly reserved, ever, very low, long loan loss ratios. I think in part because of the great work you do with your borrowers and providing technical assistance and things like that. But I do wonder about is how we will ultimately measure our impact. And if you consider Westside United’s very aspirational goal of reducing life, the life expectancy gap by 50%, by the year 2030, in the Westside communities. I mean, to me, that’s almost a moonshot goal. And so, you know, how do we measure that? I think, you know, I pulled up your IAFF annual report recently, it’s a great report, you guys have some great information in there, on your loan activity, your loan highlights, I’m sure it meets the needs of a lot of your stakeholders. But if you think about less it united, you know, we need more targeted data just on our communities. And we need to ultimately be able to correlate some of those things, those impact metrics to life expectancy changes or improvements. And so I think that’s a very challenged I mean, you know, in my seat, again, is in Leslie can attest this, if we were just managing investment for financial return. And we were trying to say hit 7% return in a year, we could tell you exactly why we were under over that, you know, we can do attribution analysis, we can get right to the details. And I think that’s going to be very challenging for the social impact piece. But I know a lot of work is being done. I’m confident it will get there over time.
Wei 47:22
Yeah, thank you for those reflections that got straight to one of the audience questions around the speaker’s thoughts around impact measurement. How do we actually know that the investments are leading to advancements in health and economic equity? Do others have thoughts?
Moore 47:40
Yeah, I can, I can jump in some of the I think the most valuable things about the social impact on work is actually the evaluative mechanisms that come out of that, you know, for is clunky is is Pay for Success or social impact bonds can be. Yeah, that collaborative platforms pretty interesting where the work that we’re doing around maternal and infant health, you know, is really looking at specific measures in the population. So looking at baseline, maternal and infant health and looking at rapid repeat pregnancies, setting a baseline and setting a baseline or a goal against that baseline over time. With the population that we’re serving, and our capital is simply moving our operations towards that, towards that change in the baseline. So, you know, moving the baseline of infant mortality in all black births over a period of time. 7%. You know, so as a way to hold that investment accountable. I mean, I think that’s a really radically important discussion. I mean, if investments alone, you know, we’re going to meet our social needs, it probably would have already happened, and it hasn’t, so that that accountability is really important. And I think having those discussions prior to any kind of investment is important, like the strings that are attached to it.
Roth 49:06
Yeah, I’ll add, like for us at I FF, I think we hold two truths at the same time. So we were very fortunate to have a robust Research and Evaluation practice and team at AI FF, and we were able to secure philanthropic funding to do a much deeper dive on an impact measurement framework to help us get at these questions that are being asked. And at the same time, we also hold the truth. And I think, you know, Darlene mentioned, it’s both in terms of measuring impact, but also embracing stories. Right, and I go back, one of my heroes in the sector of impact investing is sister Korean, who’s who’s done a lot of impact investing for decades. And she said at a conference, careful about applying capitalist tools to gospel questions. And so we were cognizant of that. And we’re also cognizant of, you know, for IAFF, where our mission is to strengthen nonprofits, we don’t want to pose more burdens on nonprofits. So the food pantry that I mentioned earlier, they do what a lot of organizations do, right. They measure outputs, they how many meals are served, how many people are served, but they will need support, which requires a lot of philanthropic support and others to help them that are measure outcome data as opposed output, just like organizations like IPF are leaning on our stakeholder partners to help us on that journey as well.
Lenzo 50:35
And I do think this is probably the biggest challenge that all of us are facing. Because we can collect that direct impact data on your how many units of housing did we create? How many jobs did we create, how many patient visits did we enable, but then linking that to things like, you know, mortality rates, like Alex mentioned, or health outcomes, and particularly those metrics that we’re looking for from a social impact perspective within our specific geographies that we care about as healthcare systems is really tricky. And then throw on the other layer of you know, when you’re an investor in a CDF II, you’re contributing capital to the CDF II as an organization, you’re the CDF II is then investing in projects throughout their footprint. So it’s not like we as the healthcare organization are funding specific projects that we can then measure the metrics of only those projects. So I think there’s a lot of different layers of complexity here that we as an industry need to work through over the next year, a couple of years. But I’m with Jeremy, I think we’ll get there, it’s just going to take some time.
Wei 51:45
Yeah, and I think it reflects the range of low control to high control, right, when you’re investing at the ecosystem level, you’re building infrastructure, and not directly providing direct service to clients and beneficiaries. So that level of attribute ability is really difficult. And the evidence that I think we have confidence in is that when people have access to quality, affordable housing, living wage jobs, healthy foods, their health and lives improved, and there are the systems of delivery that are necessary for them to be able to access those services. So I totally agree that it’s a very complex challenge. And as an intermediary, we also do not have direct control over providing those services. So I think it’s a collective effort to figure out what is the burden of proof we need because getting that proof is expensive, right? Like when Jeremy talks about that eval it evaluative component of the social impact bond, there is a dedicated evaluator they’re designing a very specific study and if you want attribution at the gold standard level, you need to conduct randomized control trials, which require a huge number of sample sizes at the social level, because there’s so many complex factors and some of the evaluative components of these projects can be half of the project cost. So the cost-benefit analysis also have Do you direct the resources to evaluation or more to providing this direct service that based on other public health research, we have strong faith that they improve the outcomes. But complex question and thank you very much for asking that question. Do you have any questions for each other? I know, it’s been a learning experience for all of us.
Moore 53:43
I have a question. I don’t know where, how to ask this. But I’m curious, all of us, or at least we have several from health systems here. I mean, I’m curious as is, especially in the last couple of years, as we’ve seen the pandemic, I think kind of uncover a very, a lot of fragmentation in just health system overall. And even I think in the conversation around, like, how do we impact? How does, how does health systems impact the total health of somebody given social determinants of health like housing, and that’s where we start to get into the investment? I’m wondering, you know, I’m wondering how we feel that the public health like, like, are we seeing places where public health should be invested in or showing up or there needs to be kind of new collaborations with public health? And I asked this, because I sometimes wonder if what we’re talking about is health systems trying to do the work that a better-funded public health would be able to do? And I wonder if we’re wrestling with some of that question, but I want to throw that out to my other healthcare, you know, folks, as well, and to see what their thoughts are.
Lenzo 55:07
I think there’s probably a variety of different roles for a variety of different parties here. And that’s why partnership is so important, whether it’s partnership amongst healthcare systems or partnerships between health systems and CDF, eyes, potential partnerships between health systems and public health. Yeah, I don’t think this is going to be something that solved by just one party, but it’s going to take a lot of collaboration over a very long time period.
Wiggins 55:36
Yeah, I would agree. I think, you know, what we’re talking about, at least we, when we approached it is I said, Look, our job is to help fill capital gaps on the west side. And hospitals, just like other organizations have, you know, we don’t have infinite amounts of capital scarce. And, you know, so I think we have to be careful, like in even like, underwriting a direct project, what does that open yourself up to? Does it mean, then others going to be coming knocking at your door, say, Well, look, you did this, you should be doing that. And so that’s where I think we need to stay very coordinated with the CDFIs, with banks with other capital providers. And for hospitals, I think our role should be at least for us initially, just to provide fill gaps, we can’t.
Roth 56:23
But I liked Jeremy, I think the term you used earlier was market share mitigation. And I think there is such an opportunity, because you’re right, like when I go into rooms with bankers, and it’s mostly the community development, folks, it’s all collaborative. They’re all like we’re all rowing in the same direction for community development. And I think there’d be an opportunity. And maybe even going back to the last question in terms of measuring impact, I think there’d be a big opportunity for health systems to collaborate there with CDF, eyes, but amongst yourselves as well, because you house directly a lot of that data, right. I mean, you people are showing up in emergency rooms, you know, but you know, incidents of asthma and obesity. So you have proprietary information that gets at outcomes as opposed to outputs, but having like fostering conversations among other health care systems, you guys are all at the forefront in the community development space, but bringing others in And with that, I think is an opportunity that’s really strong.
Moore 57:33
Yeah, that was exactly that market. Share. mitigation is exactly my concern is that I, you know, public, public health has been under, like, defunded for decades, and like, like the funding has been going down. And I actually think that some of the lack of collaboration that we see as an issue, not that there’s not an intent, but just the capacity to, to collaborate between health systems actually comes from the underfunding of public health. And there’s a lot of research out there that shows that where, for instance, there’s higher public health funding, you actually see better outcomes for black and brown individuals, for instance. And so, you know, I think there’s a correlation there around when we have the funding that actually leads to collaborative work, you actually begin to see See improved outcomes because you can begin to mitigate some of those market share issues.
Wei 58:26
Yeah, I think that fragmentation issue is really important. Um, I was on a panel yesterday where someone was talking about how COVID really showed us that a lot of the other systems outside of traditional health have been recognized as crucial delivery partners for health, right, like when schools closed, we realized we lost a core component of our nutrition delivery system. So how do we think differently about how these systems work together? And what is the role of capital and how do we finance different arms and tributaries of the health system, so that it’s not as fragmented. On that note, we’ve arrived at the top of the hour and I really appreciate this group of panelists for sharing your insights and experience. Thank you all for joining us.
All 59:12
Thank you.
