There's a new way to think about – and solve – homelessness that involves the private sector. Some forward-thinking companies are going outside of their core business to look at how investing in the communities where they work can ensure the company's sustainability.

Kaiser Permanente, the largest integrated healthcare organisation in the United States, recently unveiled a $200 million investment in a fund that will both preserve and offer low-interest loans for affordable housing, in collaboration with a consortium of other organisations.

Kaiser Permanente wants to take 500 particularly vulnerable homeless people off the street and into long-term housing, creating an investment in community health that, as both an insurer and a provider, ultimately improves their bottom line as well as alleviates some of the negative social impacts of chronic homelessness.

And because there is both an indirect and direct return on investment, their impact will sustain and grow as there will be fewer alternative instruments to attract like-minded, return-seeking capital.

Bechara Choucair, Senior Vice President and Chief Community Health Officer at Kaiser Permanente, told us that "housing and health are totally connected… what we know from the data is people who are homeless have a life expectancy that’s 27 years less than those who are housed."

"As a health organisation, we have to be looking at housing and homelessness as a key indicator for health."

Understanding the Broader System

Kaiser Permanente understands that the broader system is critical to shaping the future of their business.

Couchair explains: "Homeless people are more likely to be admitted to the hospital. Once they're in the hospital, they're likely to stay two to three days longer, and once they're discharged, they're 50% more likely to be readmitted."

In fact, a recent study shows that the costs associated with homelessness are disproportionately generated by a small portion of the homeless population. Eighty percent are only homeless for a couple of days and are able to regain their footing quickly with limited support. The relatively smaller population of the "chronic homeless" have significantly different and more complex needs. Targeting innovative investments for this population could save the government (federal, state and local) and taxpayers money, but may also drive an increased bottom line for hospitals and health systems with overburdened emergency services, as well as other businesses.

By investing in a targeted solution within the communities in which Kaiser Permanente operates, the company is helping halt a perpetual cycle: the chronically homeless are often hospitalised for treatment and then released without appropriate follow-up services. The homeless are then more likely to stay longer, and more likely to be readmitted with diseases that require consistent treatment.

Investing in the affordable housing issue, along with a wide array of other homelessness initiatives, reflects Kaiser's widening definition of preventive care. It goes beyond traditional medicine to encompass factors ranging from guns to renewable energy.

"This type of investment into the community where a business operates is the sort of innovation required to address chronic, seemingly intractable problems across business and society," says Palladium’s William Upshur, Senior Manager of the Commercial Innovation Practice. 

This goes beyond the traditional CSR mentality of most companies, where the focus is around donations, philanthropy, or volunteer projects. This is the next generation of corporate responsibility – tying business results to social impact.

"The old paradigm of ‘invest or donate’ has shifted," Upshur continues. "We see this not only in healthcare, but also in extractives, financial services, food and agriculture, and more."

Kaiser Permanente's most recent pledge was $3M in 15 communitites, an initiative it plans to scale across the country.

Dr. Bechara Choucair was a panelist at the 2019 Palladium Positive Impact Summit in New York City. Read the Post-Summit Report for additional takeaways.