Financing the Expansion of Innovations
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Transcript of Financing the Expansion of Innovations
Financing the Expansion of InnovationsThe Green House Project 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
• 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
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
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
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