Financing the Expansion of Innovations The 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