Leveraging Philanthropy to Advance Community Health Equity
It’s reported that 85% of hospital CEOs have a strong commitment to community health, but even prior to COVID-19, only 19% of hospital CEOs strongly agreed they had the financial resources to advance the work. And the current forecast is not looking better. Kevin Holloran, the senior director at Fitch ratings stated that, “2022 [was] one of the worst years ever in healthcare.” He added that health executives expecting a quick turnaround are likely to be disappointed as Fitch ratings is projecting, “a very bumpy 2023 for the hospital industry.”¹
With this in mind, how can health care organizations advance community health equity initiatives to elevate health outcomes and to prepare for the shift to value-based reimbursements? Let’s consider how health care organizations create revenue. First and foremost, health care organizations earn revenue through clinical practices and services. Another option is to borrow funds, which is more volatile as bond ratings begin to slip further. Many health care organizations have alternate business ventures and partnerships. Of all these options, community health equity initiatives are primarily being funded out of direct operations, reallocation of community benefit resources and/or reserves.
Philanthropy should be part of every health care organizational strategic portfolio.
Many times, philanthropy is not even considered as a funding source. If it is, it is significantly underutilized. Philanthropy should be part of every health care organizational strategic portfolio. It’s worth stating again. Philanthropy should be part of every health care organizational strategic portfolio. While many hospitals are currently struggling for even a 2% operating margin, foundations performing at the median level have an approximately 75% margin returning about $4 for every $1 invested in philanthropic activities. In other words, it cost approximately 26 cents to raise a dollar based on the Association of Healthcare Philanthropy Report on Giving for 2022.²
Historically, 88% of health care organization’s major gifts have come from grateful patients and their families.³ But, for those health care organizations that lean into community health equity initiatives, this statistic could rapidly change as we see more and more philanthropists embracing a more holistic approach to health care. As health expands its reach, so will philanthropy. In 2021, health care organizations received $40.58 billion. Addressing upstream initiatives, health care organizations could also benefit from other donors currently supporting human services ($65.33 billion) and public society benefit organizations ($55.85 billion).⁴
Two significant factors attributing to increased donor interest in equity and a more holistic approach to health care are COVID-19 and the murder of George Floyd. COVID-19 put a spotlight on the connectiveness of social determinants, environment, race and policy to healthy outcomes. “In the blink of an eye, a healthcare crisis became an economic crisis, a food crisis, a housing crisis, a political crisis. Everything collided with everything else.”⁵ Then, the murder of George Floyd highlighted systemic inequities and put pressure on the country, especially corporations, to make changes.
For many non-profits, this shift has led to a change in how we approach philanthropy. As hospitals enter into strategic partnerships, foundations are also partnering with other nonprofits, seeking to make a more positive and substantial impact. Philanthropists want to be inspired. Philanthropists want to make a difference and are seeking a non-profit (or non-profits) who can make a significant impact while delivering the highest return on investment. Philanthropists, many times, want to be partners in this journey. Health care organizations can take a lead role in connecting these important stakeholders. Health care organizations have an opportunity to serve as the anchor institution for strategy as well as for philanthropy. The right structure will depend on many factors including the organization’s infrastructure and committed resources, ability to access community influencers and funders and the current community trust and established partnerships.
Whether advancing health equity as a solo organization or as part of a collaborative, philanthropy can be a significant resource. There is a significant rise of funders and investment from payer philanthropists (health insurance foundations), foundations, corporations, government and individuals to elevate community health. Together, with the significant rise of funders and investment from payer philanthropists (health insurance foundations), foundations, corporations, government and individuals, community health can be elevated beyond the hospital walls. ¹ https://www.chiefhealthcareexecutive.com/view/hospitals-looking-at-very-bumpy-2023-fitch-ratings-projects
³ https://www.advisory.com/our-history (2007 Report)
⁴ Giving USA 2022