Gentrification’s effects felt by community residents and their hospitals

Chicago’s Logan Square neighborhood, located on the city’s northwest side, has experienced the kind of rapid change that could make it nearly unrecognizable to anyone who last lived or visited the community more than a decade ago.

What was once a working-class, predominantly Latino community has seen an influx of economic investment since 2000 that has brought a host of new businesses and higher-income residents. In the past two decades, home prices have skyrocketed to a median of $585,000 in 2020, a 186% rise since 2000, according to data from DePaul University’s Institute of Housing Studies. 

The new investment has also changed the neighborhood’s demographics. The Latino population has steadily declined, dropping from 65% of Logan Square residents in 2000 to 39% by 2019, according to an August community data snapshot report compiled by the Chicago Metropolitan Agency for Planning. During that same period, the number of white residents continued to increase, from 26% in 2000 to more than 50% in 2019.

For Humboldt Park Health, a community hospital that serves both Logan Square and neighboring Humboldt Park, being the long-standing safety-net provider for both neighborhoods can be seen as both a positive and a negative as the socioeconomic and racial makeup of the area continues to change. 

“We do have substantial challenges in a very competitive market,” said Dr. Abha Agrawal, chief medical officer for Humboldt Park Health. “We only have our finances and our quality performance to rely on to improve our hospital.”

Agrawal said the hospital has been running in the black nine out of the past 10 years. In fiscal 2020, the hospital had more than $115 million in operating revenue with a total profit margin of 2.27%, according to the most recent hospital cost data report from the Centers for Medicare and Medicaid Services. Yet net patient revenue has remained relatively flat, ranging from $67 million to $103 million between 2016 and 2020, for an average of $89 million per year. 

The 200-bed independent hospital’s history as a point of care for vulnerable patients has been an important part of its identity as an inclusive healthcare provider. But that label could work against providers like Humboldt Park Health as they try to attract many of its community’s newer residents, who aren’t flocking to the hospital. Agrawal said many of their regular patients who used to live in the neighborhood continue to visit the hospital for care.

“People from this community are very loyal to us,” Agrawal said. “We want to be inclusive, we welcome everyone and we also believe the economic progress in the community will benefit everyone, but at the same time we want to retain the very DNA of inclusivity and the more intimate environment of a community hospital that makes us unique.”

Proponents of gentrification contend it often leads to economic revitalization and increased diversity in impoverished neighborhoods. Critics argue when the process occurs too rapidly, it can drive up living expenses for existing residents so fast that they are often forced to move to more affordable areas. For residents who remain, the economic benefits that may come with increased community investment are often offset by higher rents and property taxes, leaving them with less income to spend on items like food and routine healthcare services.

Even healthcare providers endure these mixed results. A revitalized neighborhood can attract new healthcare sites and service options where few existed before, creating greater competition for new patients. Outpatient care sites such as urgent care clinics have been steadily growing in recent years. Since 2014, the number of urgent care centers nationally has grown from roughly 6,400 to more than 9,200 in 2019, according to an Urgent Care Association white paper. The report found Medicaid beneficiaries represented approximately 16% of urgent care clinic visits.

Subsequently, the neighborhood changes often don’t result in substantial improvements to existing hospitals and clinics’ bottom lines. More than 60% of Humboldt Park Health’s patients are covered through Medicaid.

“We shouldn’t assume that those providers are going to do well because now they have a paying population,” said Dr. Georges Benjamin, executive director of the American Public Health Association. “The people living in those communities—unless you have rent stabilization—they get forced out, and many times their providers get forced out.”

A changing healthcare landscape 

Gentrification has appeared to neither stop nor slow down the financial challenges many urban safety-net providers face. 

Urban safety-net hospitals typically serve a larger share of patients who are either covered by Medicaid or are uninsured. Community hospitals also traditionally receive a smaller share of patients with higher-paying commercial insurance compared with larger health systems. Such factors often result in many safety-net providers operating on slim margins. 

While such challenges have forced some urban hospitals to close over the past decade and put many more at risk, an array of outpatient care options, including urgent care centers, specialty practices, ambulatory surgical centers and retail health clinics, have opened in many of those same gentrified communities. 

“If their paying patients with the better-reimbursed insurance plans leave them for these other entities, either another hospital farther away or for these outpatient opportunities, then they lose the patients that give them the margins,” Benjamin said. “In some ways it could precipitate an already fragile financial situation at that institution to spiral down.”

In Brooklyn, New York, the increase of affluent, white residents into some of its working-class neighborhoods over the past 20 years has coincided with the rapid decline of Black and Latino populations in those communities. 

The Williamsburg neighborhood in northern Brooklyn has been one of the fastest-gentrifying areas for years. The average cost of rent went from $1,050 in 2006 to $2,060 in 2019, according to data from New York University’s Furman Center. By contrast, median rent within Brooklyn overall rose from $1,150 to $1,510 during that same period. 

“Gentrification creates housing insecurity in poor communities that leads to immense challenges to delivering good healthcare,” said Robert Hayes, president and CEO of Community Healthcare Network, a chain of 13 federally qualified health centers throughout Brooklyn, Manhattan, Queens and the Bronx. 

While Hayes acknowledged the gentrification that has occurred in Williamsburg has had a minimal impact on patient volume at CHN’s clinic in that neighborhood, he said the vast majority of those patients remain among the area’s most vulnerable. Approximately 65% of its patients are covered by Medicaid and 10% by Medicare, with many of the rest being uninsured. He said other providers that have opened sites within the community in recent years are primarily seeking patients covered by Medicare or who are privately insured. 

The result has created a niche patient market for CHN, at least until more of the community’s low- and moderate-income residents are displaced.

“The profit-making health businesses don’t really want our patients,” Hayes said.

While patient volume remains largely unaffected, the influx of newer outpatient sites into the area has increased competition for healthcare professionals. Hayes said the higher demand for workers has made it more difficult to hire and retain clinical staff when other providers can offer more competitive salaries. 

“We’ve always had to struggle with competition for doctors and other providers with the hospital systems,” Hayes said. “Some of these groups that come in with a load of private equity pose a similar threat to our workforce.”

Addressing concerns

Ten years ago, Humboldt Park Health, known at the time as Norwegian American Hospital, was on the verge of closing its doors when the provider faced bankruptcy. Agrawal said it was then the organization put in place a transformation plan that heavily focused on improving quality measures to gain the community’s trust in the organization’s care delivery services. 

That focus has resulted in Humboldt Park Health lowering its infection rates and reducing unsafe practices among clinical staff. 

Agrawal felt the organization could leverage the success of its quality improvements to attract more of the community’s newer residents to access their services. In recent years the organization has also sought to use its digital front door as a means of attracting more tech-savvy residents. Agrawal said the hospital’s self-scheduling options on its website makes it more efficient for residents to set up appointments. She said patients discover they can get diagnostic services like MRIs in a couple of days at the hospital compared with waiting a few weeks at other providers. 

But it has been the hospital’s focus on establishing partnerships with other community healthcare providers that has been one of its primary approaches to attracting more community patients. 

The hospital currently has partnerships with two local community health centers and frequently reaches out to new neighborhood physician practices and clinics to find opportunities to work together, Agrawal said. Such outreach has led Humboldt Park Health to form informal affiliations with several community-based physicians.

“It’s for people who like to see this as a high-quality option for the care of their patients,” Agrawal said of the partnerships. 

Community collaboration is also the focus of the approach taken by University of Houston College of Medicine as providers there seek to help mitigate effects of the early stages of gentrification going on within the city’s Third Ward.

Investment within the historically Black community began roughly 10 years ago, yet many of the changes associated with gentrification have yet to be fully realized, said Dr. Brian Reed, chair of the clinical sciences department at the medical school.

Though parts of the area remain impoverished, the increase in new residents has quickly driven up housing prices. The median price for a home increased by 15% since 2020 to more than $269,000, according to real estate market website Zillow.

Reed said the area remains medically underserved, with few providers outside of University of Houston’s community health center sites located within the area to serve its more than 15,000 residents.

Revenue declines drove the demise of historic community healthcare providers like Riverside General Hospital, regarded as the city’s first for Black patients, which closed in 2015 after filing for bankruptcy. Quentin Mease Health, another former community hospital owned by the county’s Harris Health System, began renovation in 2019 to be converted into an outpatient facility but has yet to reopen.

The university has launched a number of programs in recent years to help meet the demand for care services as well as address the community’s social needs. The school’s Household-Centered Care program connects residents in need to local resources to help with issues like food insecurity or lack of transportation. 

More broadly, Reed said healthcare has a role to play to help ensure gentrification does not result in harming residents who leave or those who remain in those communities. He said providers can and should be more active in advocating to local government leaders to consider the health impact of their housing and zoning policies.

“Let’s begin talking about and thinking about what the potential downstream health effects are before we make a decision on these issues,” Reed said.