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