University Hospitals deploy an investment strategy linked to the mission
In a new community benefit strategy, university hospitals have committed to shifting certain assets they would otherwise invest into vehicles such as stocks and bonds to make them available for mission-related investments in sub-areas. funded from Greater Cleveland.
As the first investment under this model, UH has committed $ 1.2 million to the Lead Safe Cleveland Coalition, a public-private partnership formed to combat and prevent lead poisoning.
Mission Linked Investments (IRMs) are “a mechanism that allows us to use our endowment funds to invest for good purposes like this, and to receive a return on investment that may not be interest, dividends or an appreciation in stock prices, âsaid Bradley Bond, vice president of treasury for UH. “The return could be better health for our community, and we count that among our returns on investment.”
The funds from UH will go to the Lead Safe Home Fund, a pool of resources to help landowners secure their lead homes. It stands at $ 47.3 million.
Of UH’s commitment, $ 200,000 is a grant that will support landowners, lead safety worker training and / or community engagement. The rest is the new strategy: a $ 1 million investment in the coalition loan fund that finances low-interest loans to eligible homeowners and homeowners.
MRIs (also known as Impact Investing, Territorial Investing, or Social Impact Investing) are an opportunity to provide flexible, low-cost capital to help solve a social need within a company. a community, said David Zuckerman, president and founder of Healthcare Anchor Network (HAN). The association promotes a framework for health systems, as mission-driven anchor institutions, to leverage their day-to-day business practices – from hiring to buying to investing – to complement their efforts to improve community health.
âSubsidies are scarce,â he said. “So having the ability to bring more dollars into these much-needed investments in the community, that allows those dollars to become a father because they can be recycled into new projects.”
UH’s contribution will cap the coalition’s initial target of $ 20 million for the lending portion of its domestic fund. In September, the Cleveland Clinic contributed $ 2.5 million to the Lead Safe Home Fund, of which $ 1 million was also allocated to the loan portion of the fund.
Although the clinic’s loan contribution to the Lead Safe Home Fund is an example of this investment mechanism, the system currently does not have a specific policy regarding the transfer of funds from traditional investments to MRIs. Rather, its model of community support is more focused on community benefits, where traditional grants or funds do not generate direct financial returns, as well as on using its purchasing power to support its mission.
Lead Safe Cleveland’s commitment is just the first step in UH’s new community benefits strategy. It will use data on the social determinants of health and community needs to guide future investments.
MRIs are a new way to partner with the community on health and economic development opportunities, said Heidi Gartland, government and community relations manager at UH. This helps the system impact health further upstream outside the walls of the hospital, she said.
âWe know that preventing lead exposure is so much more important than testing,â she said, âand of course testing is important, but we would much prefer children not to be exposed. to start.”
Historically, the model has been used extensively by Catholic health systems, but it has gained traction among other health systems over the past two years, Zuckerman said.
The Sisters of Charity of Cleveland Foundation, a ministry of the Sisters of Charity health system, completed in 2020 a five-year social impact investment in the Cuyahoga Partnering for Family Success initiative. While the investment did not generate any return on the investment, it did ensure housing stability, the reunification of children with their parents and other mission-aligned initiatives, according to the president of the foundation, Susanna Krey.
HAN encourages systems to consider allocating at least 1% of their investment portfolio to MRIs over a five-year period to incorporate it into their policy in a sustainable manner, Zuckerman said.
UH declined to share details, but a spokesperson said it was committing “well over” 1% of its endowment to its overall MRI strategy. Lead Safe is only the first step.
UH developed the IRM part of its investment policy in 2016, and it was officially adopted by the board the following year, Bond said. So far, UH has used the tool in the biopharmaceutical space through its Harrington Discovery Institute, which has partnered with Morgan Stanley and venture capitalist Advent Life Sciences to launch the Advent-Harrington Impact fund. Fund, the profits of which are shared with Harrington.
Biopharmaceutical investments aim to help bridge the “valley of death” where discoveries often meet with waste on the long and expensive road to commercialization. By the nature of this goal, these investments are riskier and can take more than a decade to generate returns, Bond said.
Now, the health system is deploying the investment approach as part of its community benefit work to address the social determinants of health, which it said was part of the vision when it was first developed. of policy in 2016. Investing in the Lead Safe Fund, however, carries less risk and will generate a faster return, which Bond said he expects to reach 3%, although this is tangential to health. community, he said.
âI would rather have houses sanitized and a lower return on investment than the other way around,â Bond said.
Lead exposure is a completely preventable and extremely important environmental health problem for children, with effects that can last into adulthood, said Dr Aparna Bole, associate professor of pediatrics at UH Rainbow Babies and Children’s Hospital and Case Western Reserve University.
A return on investment can come in the form of the potential benefits of preventing lead exposure, such as avoided educational interventions, higher academic performance and productivity, and reduced risk of interaction with the criminal justice system, she declared. Depending on the extent of this net, studies have calculated from primary lead prevention (preventing exposure before it occurs) between $ 17 and over $ 200 for every dollar invested.
âEven at the lower end, the most conservative estimate, it’s a pretty impressive comeback,â Bole said. “It benefits our company, not to mention, of course, that it’s the right thing to do.”