Sometimes the best “merger-like” news doesn’t make the headlines.
If a senior executive of a large healthcare company said they wanted to work “with” a competitor instead of against it, the market might start to think merger talks may be happening behind closed doors.
While I, categorically, know nothing of any merger talks between two of the largest health insurers in the United States, our recent conversations with UnitedHealth Group
In particular, John Barger, the head of Medicaid for Humana said, “I don’t want this to be Humana against United or Humana against Aetna
Barger was talking about investments in housing for people with barriers to safe and stable housing, making the case that a single company, even one as large as Humana with a market cap of $63 bn, can’t do it alone.
Here’s the setting: As neighborhoods get older and the residents in those communities age, decay sets in especially in moderate or low-income areas. Houses deteriorate, businesses leave, and infrastructure repairs get backlisted. Worst of all, the families in these neighborhoods often face health problems that limit their ability to live safely and independently in their old homes. When you add the recent inflation landscape, housing can quickly become unattainable, unaffordable, unsafe, or a combination of all three.
So what happens when Grandma breaks her hip in her home or apartment in these neighborhoods, whether a low-income area or an aging one? She often loses her home and her community. If she’d been able to affordably upgrade her living space with modifications that allowed her to remain safely in her home, her health — physical, mental, and social health — would have been buoyed, allowing her to age in place at a much lower cost to her health insurance company.
A growing number of reports demonstrate a direct connection between healthcare and housing, and we’re starting to see corporations and organizations taking concrete steps to do something about it, because it’s the right thing to do and, if done right, it is profitable.
Investing in Housing for Better Healthcare
UnitedHealth Group and Humana are two of the largest health insurers in America and each of them is taking significant steps to help. I spoke with Andy McMahon and John Barger from UnitedHealth Group and Humana, respectively, to get their insights into which actions these corporations are taking to help solve our country’s current housing crisis.
In 2022, UnitedHealth invested $100 million in building affordable housing in parts of the country where they operate. That’s in addition to the $700 million they’ve already invested in the past decade, creating a total of nearly 20,000 homes — so far — for low-income residents.
Andy McMahon, vice president of community engagement and investment at UnitedHealth Group (its Community & State division), emphasizes the connection between housing and health.
“Safe, stable, affordable housing is unequivocally linked to improved health outcomes. We continue to see in our own Medicaid data that when people have access to stable housing and supportive services, their health is managed more effectively. Our investments in affordable housing intend to build healthier communities through meeting social needs and helping to bridge gaps in care for everyone,” McMahon said.
Affordable housing means better health outcomes for UHG’s customers — a win in and of itself — and better health means lower costs for the company, as well as other social benefits.
“Addressing factors that impact people’s health, or what we call ‘social determinants of health,’ is critical to improving not only personal health but the health of entire communities,” McMahon explained. “There are many ways companies can invest in the communities where they live and work, including real estate. Each organization should commit to researching and evaluating how they can have the greatest impact through their investments and, importantly, determine who they can partner with in their communities to address critical needs.”
These communities UnitedHealth is building aren’t your stereotypical housing projects. They include on-site health services for the people living in those neighborhoods, as well as access to public transportation and other essential services.
Investing in Housing Is an Investment in Health
Humana, a Kentucky-based health insurance and health care company and the country’s fifth-largest health insurance provider (by market capitalization), has been taking similar steps for reasons that are both financially grounded and socially beneficial. In my conversations with John Barger, national president of Medicaid programs at Humana, we talked about his company’s real estate investments and their connection to better health for their customers.
“Our work in this space is just getting started,” Barger said. “Since 2021, we’ve made $90M in affordable housing investments. Beyond just a financial investment, we are now exploring how we can enable local services to tackle other challenges related to food, employment, health access, transportation, etc. for people who live in these housing developments and the surrounding communities.”
He said Humana understands the inseparable nature of their customers’ lives beyond health care.
“We can stabilize someone with housing for 90 days, give them behavioral health support, job training, or whatever it takes to just help them get back on their feet. It’s a solution that delights our hospitals, delights our members, and increases broader community health,” Barger explained.
According to the National Academy of Medicine, 80% of a person’s health is determined by factors beyond the doctor’s office, including (and especially) the person’s home. By acknowledging this all-encompassing reality, these insurance companies are strengthening their future while providing much-needed assistance for a growing number of Americans.
Why Investments in Real Estate and Beyond Are Gaining Traction at Health Insurance Companies
Why are these for-profit corporations financing affordable housing? While they likely have a long list of reasons, one in particular rises to the top: it’s good for business.
As a healthcare industry executive, Barger genuinely cares about the well-being of his customers and is optimistic about the work yet to be done. “We’re just scratching the surface of what’s possible. We’re doing unique and powerful things that have tremendous potential for solving some of our country’s key problems,” said Barger. “Housing is important, employment is important, healthy meals are important. I know firsthand that corporations can’t do everything, but some of them are taking significant steps toward making a real, lasting difference in tens of thousands — and soon, hopefully, millions — of people’s lives.”
The leaders at UnitedHealth understand the inseparable link between income, housing, and health. In areas where UHG serves patients, its costs for care actually decrease when the residents have a safe, stable home to live in. By investing in its patients’ housing and other related needs, UnitedHealth stands to improve its bottom line while ensuring better health outcomes for its “customers.”
McMahon said partnerships are key to making these efforts succeed. “A big part of our recent work includes a $200 million investment in the Health & Housing Fund in partnership with the Stewards of Affordable Housing for the Future and the National Affordable Housing Trust. As part of this investment, we not only provide seed financing for these services but also measure resident health and wellness outcomes over a three-year period to really understand the impact of this work,” McMahon said.
Finding the Win-Win for Corporations and People by Working Together
The recognition that clinical medical care alone isn’t enough to ensure positive health outcomes is growing well beyond these two large health insurers. Other healthcare organizations are also jumping on board as they realize the connection between health and home benefits both citizens and corporations.
But here’s the key, the healthcare industry must find, and is currently seeking ways for multiple companies to work together. In the health insurance business, for instance, it is disadvantageous for Humana, by itself, to make the investment that improves someone’s housing situation if the financial return on that investment will accrue to another health insurance company.
While some corporations are finding smart and creative ways to invest in the future, it’s essential that other industries do the same. We as investors and business leaders need to be having daily conversations about the intersection of health, wealth, and housing as we solve our society’s problems.
It makes financial sense for healthcare organizations to invest in housing in an effort to reduce their costs while improving patient well-being. But what of other industries? What will motivate companies in the fields of energy, communications, technology, or manufacturing to take similar steps?
If you’re interested in diving deeper into this subject, you can find a variety of reports and other resources. The Center for Active Design offers a document called Healthcare: A Cure for Housing. The National Health Care for the Homeless Council offers some helpful insights with their Housing Is Health Care report. And the National Academy of Medicine posted an insightful and in-depth view of social determinants in healthcare.
Of course, there remain a lot of questions that need to be answered in order for other companies to follow suit. Yet these kinds of innovations that address both the financial needs of businesses and the health and well-being of their customers, employees, and neighbors are foundational for our future.
Source: https://www.forbes.com/sites/joshuapollard/2023/03/02/humana-and-unitedhealth-want-to-invest-more-deeply-in-housing/