Mich. system's projects aim for healthier community

Is a hospital's role to treat sick people or help forge healthier communities?

Increasingly, the answer is both. And efforts by the St. Joseph Mercy Health System show the system is doubling down on its funding for community improvement projects—with an eye on the bottom line, government mandates and a commitment to local population health management.

St. Joseph Mercy, a six-hospital system based in Ann Arbor, MIch., has added $3 million this year to its $12 million budget for community improvement projects primarily because charity care has declined from the Healthy Michigan Medicaid expansion and the system finished fiscal 2015 in June on a financially strong footing.

Another broader reason for expanding community projects — which will focus on obesity prevention and behavioral healthcare — is that the Roman Catholic system believes its mission goes beyond hospital walls, said Rob Casalou, CEO of St. Joseph Mercy.

"St. Joe's is a health and wellness company with true community health improvement as part of its mission," said Casalou, who also is chairman of the Michigan Health and Hospital Association.

Casalou told Crain's he delivered this message to fellow hospital CEOs at the association's recent annual meeting to encourage others to increase their efforts because it's the right thing to do.

"It is not good enough to say our health system made a lot of money and did great things with the patients we treated," Casalou said. "We need to be able to say health improved in our community."

Casalou said some hospitals give lip service to population health management. Population health is an effort to manage the health outcomes of a group of individuals in a geographic market.

If population health measurements of such chronic illnesses as diabetes, heart disease and hypertension are increasing in the community your hospital serves, Casalou said, more needs to be done to reverse those trends.

"We are talking about the total cost of care imposed on society. We need to lower per-member-per-month costs overall," and working on public health improvements can accomplish that, said Casalou, noting that St. Joseph is cooperating with local organizations in Southeast Michigan on community improvement projects.

Some St. Joseph projects in the area of community health:

• Expanding the obesity prevention program for teens called Shapedown from Ann Arbor and Livingston County to Canton Township and Pontiac.
• Further investing in programs that provide housing and behavioral health programs to homeless people and veterans, namely the FUSE (Frequent Users Systems Engagement) and SOAR (Social Security Outreach, Access and Recovery) programs.
• Contributing $25,000, and another $25,000 in matching funds, to help complete the city of Ypsilanti's $125,000 Heritage Bridge project, a biking and jogging trail that crosses the Huron River between Riverside Park and Michigan Avenue.

Historically, most hospitals have invested money on community improvement projects to improve overall public health and fulfill requirements under 501(c)(3) tax-exemption laws.

However, new IRS rules that went into effect in 2012 under the Patient Protection and Affordable Care Act of 2010 mandate hospitals identify and fund projects that address significant health needs.

The law also requires hospitals to develop an implementation strategy to address those needs and report the projects and expenditures on Schedule H on the annual Form 990 to the IRS.

Cynthia Taueg, vice president of community health with Warren-based St. John Providence Health System, said the five-hospital system expects to complete its second, three-year community health needs assessment by next June 30 when its 2016 fiscal year ends.

Taueg said St. John's priorities continue to focus on reducing infant mortality rates, diabetes prevention and management and improving access to care for the underserved.

In fiscal year 2015, St. John's spent $103.2 million, or about 6% of net revenue, on health system community benefit projects. St. John focused on increasing dollars spent on taking care of the poor and vulnerable, increasing from $2.7 million in 2014 to more than $3.6 million this year.

Of that amount, St. John provided more than $700,000 in sponsorships and grants to nonprofit community agencies serving area residents, Taueg said.

In June, St. Joseph Mercy's board approved the system's second community benefit report since the Affordable Care Act was approved. The report indentified obesity prevention and behavioral health issues as the top two needs.

Michael Miller, St. Joseph's chief mission officer, said the system will continue to fund a variety of community projects, but decided to increase funding in the obesity and behavioral health areas as a result of its 2015 report.

"We wanted to step back and rethink how our community benefit budget is balanced," Miller said. "We will continue to do direct care through safety-net clinics, but widen it a bit and look at things more upstream and invest in social determinants."

Miller said investing in community projects can improve health outcomes and therefore end up helping St. Joseph, as many of those people end up as patients in the hospital or emergency department.

In 2012, St. Joseph Mercy spent $134 million, or 8% of net revenue, on community benefits, according to IRS Form 990.

"We have three buckets for community health," Miller said. "One is uncompensated care (charity care and bad debt), the second is medical education and research, and the third is programming."

Miller said the additional $3 million, a 25% increase over the 2014 budget, allocated for community improvement projects is considered the programming budget.

Going forward, Miller said, St. Joseph is using a two-part strategy to identify how to spend the $3 million on community projects.

First, invest $1.5 million on shovel-ready projects and initiatives that it has identified in the past but had no extra funding to accomplish. Projects include obesity prevention and homelessness reduction.

Second, gather input from community organizations and analyze data to focus on long-term investments to improve health.

"We have significant networks in Washtenaw County and the Southeast Michigan region, and also across the country with Trinity Health," Miller said. "We want to look at successful projects and consider replicating them here."

One way St. Joseph is seeking input on projects is through what it calls its "Join Me" campaign. The campaign was started by Casalou to encourage people in the community to improve their personal health. It also encourages healthier lifestyles for St. Joseph's 14,000-employee workforce, Miller said.

But Miller said "Join Me" also is providing information on additional long-term community benefit projects the system could add.

"St. Joseph Mercy projects aim for healthier community" originally appeared on the website of Crain's Detroit Business.