Some healthcare systems give new meaning to the expression "thinking outside the box."
For some systems, getting outside the box of their acute-care hospital has meant building outpatient clinics or expanding into home care.
For a smaller number of not-for-profit systems, it has also meant getting into the low-income-housing business.
"As they are building a whole continuum of care, housing is part of that (process)," says Julie Trocchio, director of long-term care for the Catholic Health Association, a St. Louis-based organization that represents more than 1,200 Catholic healthcare providers.
Although much of the evidence of healthcare systems getting into the housing business is anecdotal, the CHA recently surveyed its members on the issue, and the results are due out this spring.
In rural Nogales, Ariz., just a stone's throw from the Mexican border, the Carondelet Health Network in November opened a 40-unit apartment complex for low-income elderly tenants.
The complex, called the Casitas de Santa Cruz, sits on the campus of 80-bed Carondelet Holy Cross Hospital.
The Tucson, Ariz.-based Carondelet network, which includes three hospitals, is part of the larger 15-hospital Carondelet Health System, a Catholic system based in St. Louis.
"The sisters knew there was need in Nogales," says John Taylor, who recently retired as senior corporate director for property development for Arizona Carondelet. "A lot of the people were living in substandard housing."
Built with $1.9 million in federal grant money from the U.S. Department of Housing and Urban Development and another $400,000 from the state, the apartment complex is operated under a separate not-for-profit corporation, called Chalon Living. Chalon is part of the Arizona Carondelet network.
"The sisters looked at it as part of their mission; there was a need there," Taylor says. "It is not a money-making operation by any means. You hope you can break even."
Carondelet officials say their project is the first to bring subsidized housing for the elderly to Nogales.
"There was no housing for low-income elderly who could still be on their own and didn't need a rest home or long-term-care facility," says Dina Sanchez, a spokeswoman for Carondelet Holy Cross Hospital.
The project, Sanchez says, also is good because "it's easier access for these elderly people . . . to any medical services they may need."
Carondelet Holy Cross is Nogales' only hospital.
For health systems, the proximity of the apartments they build to the services they offer can be a real benefit.
"You're going to get a ready pool of patients for utilization of their facilities and their services," says Sheryl Skolnick, managing director and senior healthcare services analyst at BancBoston Robertson Stephens in New York.
Skolnick applauds systems' move into housing: "It's a very reasonable thing for them to be doing because it does meet a need."
Federal grant money has helped other healthcare systems launch their housing projects.
For example, Seattle-based Sisters of Providence Health System recently received a $7.3 million HUD grant to build 80 units of subsidized senior housing in that city.
HUD statistics don't break out how many of its grant recipients are healthcare providers.
The agency has money to give away. In 1998, Congress appropriated $645 million for a grant program that funds low-income senior housing projects.
The HUD grant to the Sisters of Providence included $6.1 million to build the apartments and another $1.2 million in rent subsidies for the tenants, says Dan Smerken, director of low-income housing for the Sisters.
He says the system has been providing low-income housing for about 14 years. Including the new apartments in Seattle, the health system has developed 10 sites of subsidized housing for the elderly and disabled.
"Housing has always been an important aspect of healthy communities," Smerken says.
Nine of the 10 sites are federally subsidized, while one is subsidized internally by the Sisters' religious community. The apartments are in California, Oregon and Washington.
Each site is set up as a separate not-for-profit corporation, Smerken says. The system manages the apartments.
"They're designed to be self-sustaining," he says.
Some systems will undertake their own housing initiatives, and others will work with a partner.
One popular partner is Denver-based Mercy Housing, a not-for-profit corporation that develops and operates affordable housing. It operates more than 5,000 units in 14 states.
Founded in 1981, Mercy Housing is sponsored by Catholic women religious congregations, including those that sponsor a variety of healthcare systems, such as San Francisco-based Catholic Healthcare West, Denver-based Catholic Health Initiatives, and Marriottsville, Md.-based Bon Secours Health System, says Sister Lillian Murphy, Mercy Housing's president and chief executive officer.
The systems that work with Mercy Housing have identified the need for housing in the communities they serve but have turned to Mercy Housing for the expertise, Murphy says.
For example, in Oxnard, Calif., CHW gave Mercy Housing a plot of land on which it developed 64 units of low-income housing called Casa San Juan.
Murphy says healthcare systems also are active in Mercy Housing by investing in a special fund-now valued at $16 million-that makes loans to groups interested in building affordable housing.
"If health systems are interested in doing something in housing, they should get a partner, because it's such a different business (from healthcare)," she says.