How the lack of affordable housing is a crisis for North Bay health care

In a market where the average home price is north of $800,000 and rent at nearly $4,000 a month for a two-bedroom apartment, that people leave jobs or don’t accept offers may not be news to North Bay employers.

But when housing is an issue in the health care industry, it brings the crisis to another level.

“It’s really made it difficult for us to recruit, and I'm not just talking about entry-level wage earners, it's across the spectrum,” said John Hennelly, president and CEO of Sonoma Valley Hospital. “We've lost physician recruits because of the current environment.”

The housing environment, of course, is exacerbated by inflationary pressures and, for some, it’s become too much, he said.

“I lost a (mid-level) leader in the last 90 days who decided that it just wasn't financially viable to stay in a market that they had lived in for 15 years,” Hennelly said. “They had been very transparent, and we sort of talked through options and whatnot, but it came to the point where it just wasn't viable.”

Prohibitive costs

Lynn McKissock, Sonoma Valley Hospital’s chief human resources officer, said the city of Sonoma has traditionally been more expensive compared to other Sonoma County communities which, from time to time, has proven a deterrent for job candidates.

“However, over the past year in particular, I believe we are seeing an uptick in that regard,” McKissock said in an email statement. “We have not only experienced employees leaving to relocate to less expensive areas, we have also experienced candidates declining our job offers after conducting research on housing costs (and) availability.”

The prohibitive cost of living in Sonoma will remain a barrier in the hospital’s ability to recruit and retain workers unless more affordable housing options are developed, she added.

“Five years ago, the average home in Sonoma was under $700,000, and it's now well over $1 million,” Hennelly said, citing data from Redfin, a Seattle-based residential real estate brokerage. “Where is it going to go from there? Wages aren't following that trend. I’m not seeing a 30% to 50% increase in wages over the last five years, so the math is not adding up right now.”

As costs go up, especially for people who are renting, Hennelly said, not only does it become increasingly difficult to stay, it also is challenging for the hospital to try to help when its costs are also rising.

“So, it doesn't afford us the luxury of saying, ‘Well, let's just pay everybody a little bit more, or let’s pay transit subsidies to alleviate those stresses,’” he said.

Hennelly said he sees a couple of different pathways for long-term solutions. One is to pursue partnerships with a couple of foundations to promote affordable housing, something big institutions like Stanford Health and UCSF Health have done, he said. But that route would have to be measured so as not to harm the character of the community, “whether it’s Sonoma, Petaluma, Napa or somewhere else,” he said.

Hennelly said he’s also looking at ways to provide some transitional housing, perhaps a one-year rental that the hospital would host or partner with another entity to host.

Some roles are conducive to being carried out remotely, such as case management, billers and coders, among others, and Hennelly has made those accommodations to retain staff.

The hospital has several workers scattered throughout the state, one in Oregon and another on the other side of the country, in South Carolina, he said.

Retention is also somewhat easier to manage for the physicians who do join the hospital because doctors tend to stay in the community where they establish their patient base, Hennelly noted.

But it still doesn’t mean they’re able to live nearby, or within a reasonable commute, which Hennelly describes as about 20 minutes.

“When you’re getting up to that round trip of an hour a day, it starts to weigh,” he said. “And honestly, we have people that are commuting from close to Sacramento. That's a crazy commute. That's 80 miles. You're doing that twice a day? That’s not optimal.”

A big investment

It’s also not optimal when your health care system is situated in a geographic region not conducive to commuting.

For Napa-based OLE Health, it’s a double whammy because affordable housing in the county comes at a premium.

“If someone is not already based in Napa, we find it incredibly difficult to get people to relocate to the Napa area,” said Alicia Hardy, CEO of OLE Health. She noted that OLE pays “competitive salaries,” but that’s often not compelling enough to recruit health care workers when they have many options of places to live in an industry suffering a severe workforce shortage. OLE Health is a federally qualified health center (FQHC) that cares for a vulnerable segment of the community, including the uninsured, Medi-Cal families and seniors.

One strategy OLE has employed is to offer, contingent on availability, up to six months of subsidized transitional housing for medical providers. The amount is taxable for the provider, according to the health care system. OLE also offers partial subsidized transitional housing from six-to-nine months at half-market rent, and charges the provider the other half.

But even that effort hasn’t proven too fruitful once the subsidy runs out.

“And so they're moving out … which is really challenging, of course, because you've already made an investment at that point,” Hardy said.

So, OLE made a bigger investment, to the tune of $4.1 million. In November 2021, the health care system purchased a 24,000-square-foot building in west Fairfield, where it had been renting just a portion of the space since 2015. OLE bought the building from New York City-based CDI LLC, a technology company. The Business Journal reported the transaction at the time.

Hardy said the west Fairfield building will serve as a second headquarters to help recruit and retain staff in a more affordable housing market than Napa, and to help stabilize OLE from a health provider standpoint. That transition will take place early next year, she said.

While the move is expected to help alleviate OLE’s recruitment and retention challenges, the inflated cost of living has made the situation “significantly worse,” Hardy said.

“For a while, we had some protections, like the inability to increase rent because of the COVID emergency,” she said. “Once those rules started to change, landlords (started) changing their rental structure, and that definitely has impacted our employees as well.”

Helping medical students

It’s been four years since the launch of the Kaiser Permanente Family Medicine Residency program in Santa Rosa, a three-year program comprised of six medical students created with a dual purpose: to help alleviate the longstanding nationwide shortage of family physicians and, importantly, retain the doctors after they graduate.

That first program, which graduated in June 2021, included several medical students from out of the area, of which two have stayed, said Dr. Trish Hiserote, program director. One physician relocated from Oregon, the other from Southern California, she said.

“Housing is an obstacle for sure because residents are not paid the same way a career physician is,” Hiserote said. “And I would actually go farther down in the pipeline as well, because we have a lot of medical student programs, and the debt of medical school is just continuing to go up and estimated now to be around $300,000.”

Hiserote said there are a few ways Kaiser helps with the cost of housing.

Kaiser Permanente Santa Rosa has garnered about $1 million in grants from the state of California and from other grant projects for medical education, Hiserote said. That funding is used to offset the cost for medical student housing when they're rotating through the program.

Kaiser also works with local organizations and contracts for reduced rates with local hotel chains that offer short-term stays, she added.

“But usually what happens is that (the medical students) find housing through a Vrbo or an (Airbnb) for the time that they're with us,” she said.

Cheryl Sarfaty covers tourism, hospitality, health care and employment. She previously worked for a Gannett daily newspaper in New Jersey and NJBIZ, the state’s business journal. Cheryl has freelanced for business journals in Sacramento, Silicon Valley, San Francisco and Lehigh Valley, Pennsylvania. She has a bachelor’s degree in journalism from California State University, Northridge. Reach her at or 707-521-4259.

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