Health Enterprise Zones: Maryland's Unique Approach

Offering financial incentives to boost services in select areas is common for economic development -- but rarely, if ever, used to reduce health disparities.
by | December 18, 2012
 

In the next month or so, Maryland will announce the location of its four Health Enterprise Zones (HEZs). It’s a unique pilot program -- which is being carried out by Lt. Gov. Anthony Brown and the state health department -- dedicated to reducing health disparities among the economically disadvantaged.

Numerous studies have shown that poorer Americans are more likely to be obese, and as a result, have the associated chronic health conditions like heart disease and diabetes. Down the road, these chronic conditions lead to higher costs for everyone. Health Enterprise Zones are being touted as a possible solution.

Brown compares them to economic development zones, except with a focus on health instead of business. In order to qualify for the pilot program, coalitions comprised of health-care providers, government agencies, nonprofits and local businesses must identify the population they want to help (which must be at least 5,000 people so data-tracking would be possible), the health disparities they want to reduce, their plan for expanding primary-care access and the community resources they have to do it. A total of 19 groups initially applied to the state health department for funding in September. The applicants have been whittled to 10, and four will eventually be chosen, according to Brown.

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The state Legislature has allocated $16 million over four years ($4 million a year, for an average of $1 million per zone per year) for the pilot. Here’s where the zones get creative. The coalitions that receive funding can use that money for six purposes: state income tax credits, hiring tax credits, loan repayments (for medical school students, for example), capital improvement grants, priority in a state patient-centered medical home program and priority in a state program that provides finance assistance for electronic health records (EHR) adoption. The funding's flexibility helps groups tailor their program to their specific needs. If they need more primary-care doctors, hiring tax credits and loan repayments would be useful. If they need a better care infrastructure, capital improvement grants and EHR adoption might make more sense.

I caught up with Brown at our Healthy Living summit last week in Atlanta, where he spoke about Health Enterprise Zones to state and local policymakers of all parties and regions. Here's a transcript of our conversation, condensed and edited for clarity.

Collaboration seems to be a key component of the Health Enterprise Zones, as evidenced by the coalitions. Why is collaboration so crucial to reducing health disparities?

Lt. Gov. Anthony Brown: Collaboration is extremely important in addressing health disparities, so that’s why when we designed the Health Enterprise Zone program, we require applicants to demonstrate that they're collaborating across stakeholder groups -- that providers, local departments of health and patient and community advocates are involved. Then, of course, the state will continue to be involved, not only in providing financial resources but technical assistance and support to the zones and the applicants so that they’re successful.

Collaboration is important for a number of reasons. One is that, look, we’re in a tough budget environment and you’ve got to leverage resources -- not only financial ones, but experience, talent, knowledge and best practices. Also, for the Health Enterprise Zones to be effective, we have to be able to reach deep into the communities and connect to those people who are the intended beneficiaries -- many of whom are living in poverty or in economically disadvantaged communities. Government can’t do that alone. We need community-based organizations. We need organizations and individuals familiar with the communities that can help us connect the enhanced services that are going to be provided in the zones to the population that's in greatest need.

Applicants have to use data to pinpoint the health disparities that they want to address, and then track data to show their progress. Why have you placed such an emphasis on data for this program?

AB: Data drives so many decisions in our lives. Data drives decisions on the best educational policies to implement and how to implement them. Data drives decisions we make about deploying public safety resources in the communities that are in greatest need. And that’s no less true for addressing health disparities. What we're requiring for a successful Health Enterprise Zone is that we at the outset identify the metrics that are going to be used to measure the progress toward the stated goals. The goals are to reduce health disparities, to deliver more services in underserved areas and to reduce the cost of delivering health care.

So we will measure things like hospital admissions and readmissions, particularly for those conditions that are going to be addressed in the Health Enterprise Zones. So in other words, if the goal is to reduce asthma, then we’re going to measure the number of emergency room visits for asthma attacks. We’ll look and see if there's a downward trend as we’re bringing more services into the zone. But we’re also going to ask the applicants to identify the metrics that we should use to measure progress. What are the enhanced resources in the zone? Are we increasing the number of primary-care resources in the zone? So that’s some of the data that we’ll be looking at.

Public health advocates often talk about having to “make the case” to those outside public health circles. Obviously, you had to make the case for Health Enterprise Zones with the state Legislature to get funding, and you’ve talked about wanting to take the program statewide after the three-year pilot period. How did you make your case the first time, and how will you again?

AB: I think the most compelling case to address disparities and to invest in the resources that it takes to do that is the moral imperative that every Marylander regardless of race and ethnicity should experience the same quality of health. When you live in a state like Maryland or in a country like America where an African-American child is two and a half times more likely to die before their first birthday than a white child, that’s not good enough. We can do better. And by addressing disparities of hypertension and diabetes and other contributing factors to infant mortality, we will in fact save more babies. So there’s a real moral imperative.

But if you’re not convinced that there’s a moral imperative, there’s certainly a business case to be made. In Maryland alone, in 2010, we spent $800 million for excess hospital admissions of African-Americans, and when you look at the percentage of African-Americans in Maryland, and you compare it to the percentage of African-Americans who are admitted into hospitals, it’s a higher percentage that are being admitted. And the cost of that is $800 million a year. There’s certainly a cost to the quality of life, but there’s a real financial cost.

In Maryland, we’re in an all-payer system. So for those African-American patients who are admitted to the hospitals, some are on Medicaid and that’s certainly a cost to taxpayers. For those African-Americans who do not have health insurance (and African-Americans are disproportionately without health insurance) in our all-payer system, the cost of that uncompensated care is spread out among bill payers. So everyone is paying for the cost of treating and insuring and responding to health disparities, particularly in our hospitals. We know that three-quarters of the cost of delivering health care in this country is for treating chronic diseases and illnesses. African-Americans and Latinos have higher rates of chronic diseases. So that’s costing us all money.

So if you’re not convinced that there’s a moral imperative to ensure that all of us enjoy the same quality of life and quality of health, there certainly is this business case to be made that all of us have a financial interest to reduce and eventually eliminate health disparities in our communities.

To create the Health Enterprise Zones, you looked at existing models like economic development zones and the Harlem Children's Zone, and then turned them into a health initiative that hasn’t been seen elsewhere. Do you think this program could be a model for the rest of the country? Or more broadly, do you think it will have lessons for policymakers elsewhere who are confronting health disparities?

AB: The Health Enterprise Zones are modeled around two similar programs in different areas. The economic development enterprise zones were created several decades ago to help economically disadvantaged communities that have high rates of unemployment. The idea was to offer incentives to employers to create jobs in those communities. Over the past several decades, we’ve experienced success across the country with that model.

In the area of education, the Harlem Children's Zone has proven to be a very effective concept or tool to identify low-performing schools that have considerable disadvantages. The goal being to target those schools and those districts and bring in additional resources. The program is so successful in Harlem that the Obama administration developed the program at the national level, in a program called Promise Neighborhoods. The idea that you can target disadvantaged communities and neighborhoods, deliver additional resources and incentivize the private sector to participate has proved successful. That's what gave birth to the concept of the Health Enterprise Zones.

Maryland has always led the way in health care and health reform. We’re proud of the work that we’re doing on behalf of our residents. But we’re equally committed to sharing our best practices, the models that we develop with partners around the country. If we can eliminate disparities in Maryland, and our model gives policymakers on the West Coast or in the Midwest or in the southern states a tool that can be implemented in their states and their communities to address disparities, that’s a good thing. Then we will have done our part not only for Marylanders, but for Americans.

Checking Up on Health News

  • Speaking of health disparities, the National Conference of State Legislatures (NCSL) has started tracking 2013 bills related to the issue. New Jersey and Oregon are the only states with legislation introduced so far, but expect more to follow.
  • Nevada Gov. Brian Sandoval (a 2012 Governing Public Official of the Year) made headlines last week when he became the first GOP governor to announce that his state would expand Medicaid under the Affordable Care Act. If the consensus of health policy analysts is right, he won’t be the last.
  • In other ACA-related news, Friday was the deadline for states to inform the U.S. Department of Health and Human Services that they would be running their own health exchanges. Eighteen chose to do so, and HHS announced last week that they had awarded preliminary approval to six states (Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington).
  • On the state reform side, Kansas hired an ombudsman last week to oversee the transition to KanCare, the Medicaid managed-care program that the state is launching in January, the Topeka Capital-Journal reports.
  • Lastly, our own Mark Funkhouser, director of the Governing Institute, collected some of his thoughts on the Healthy Living summit in a piece about child obesity and the opportunity for Medicaid cost-savings if we can successfully combat it.

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