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Financing the Expansion of Innovations

Financing the Expansion of Innovations. The Green House P roject Experience. The Green House Project. Innovation reinvents nursing homes by: Rebuilding as multiple small homes per campus (10 people each) Moving to new staff models, including combined work roles

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Financing the Expansion of Innovations

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  1. Financing the Expansion of Innovations The Green House Project Experience

  2. The Green House Project • Innovation reinvents nursing homes by: • Rebuilding as multiple small homes per campus (10 people each) • Moving to new staff models, including combined work roles • Designed to improve long-term care ahead of aging demographic surge • Multiple research projects showing: • Greater satisfaction • Better clinical outcomes • Medicaid cost savings • Cost neutral operations • Occupancy gains • Funded by The Robert Wood Johnson Foundation

  3. Financing Challenges • New housing + services models for low-income individuals • Require significant long-term capital for real estate and operational redesign • Primarily Medicaid/Medicare funded • Combination of business, political, regulatory, and program compliance risks discourage investors and lenders (i.e., they can find easier deals) • Flexible and customized financing needed but expensive, short-term, and scarce • High mission, low margin business • Providers achieve better returns elsewhere • Internal competition for organization’s/system’s capital

  4. Financing Approaches • What approaches worked to spread The Green House Innovation? • Under the radar - tie innovation to well understood models - “it’s just a nursing home” • Rounding error - bury a small dollar innovation in a large and strong financing • Use what you have - Fit into existing subsidies where possible (e.g., NMTC, LIHTC, HUD, FHLB, bonds) • Specialized loan funds - grant and PRI supported programs • CRA induced lending - outside the box, longer term, and lower interest • Gaps • Insufficient availability of what is working • Access to capital for projects without a large system and/or private pay market (e.g., grass roots, CDC sponsored) • Access to internal equity for projects in large systems where competition for resources limits innovations to higher margin projects • Access to external equity subsidies for complex innovations when the subsidy depends on investors • Flexible financing designed for innovations that don’t fit into existing programs

  5. What More is Needed? • Lots more of what is working today • New sources of consistently available financing designed to: • Fill in for declining public sector guarantees and subsidies • Leverage ACA shared savings incentives • Provide credit support for projects in low-income markets without large system and/or private pay markets • Provide flexible structures with longer-terms and affordable fixed rates • Deliver significant and consistently available capacity

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