Program Nets Substantial Savings by Housing Homeless Individuals With Health Issues

A public-private partnership in California found that investing in supportive housing and combating homelessness among people with complex medical and behavioral health issues. For every $1 invested in a housing a support program, the Los Angeles County government saved $1.20 in healthcare and other social service costs, according to a new report from RAND Corporation.

Los Angeles County has the highest rate of individuals who experience homelessness, and in 2012 the county’s Department of Health Services launched Housing for Health, which was designed to reduce homelessness and inappropriate use of the emergency department and inpatient care, while improving the health of this population.

“Individuals experiencing homelessness are more likely to have serious and chronic health conditions than the general population,” RAND authors wrote in the report. “Studies also have shown that individuals living on the street utilize health and other social services at a significantly higher rate than similar individuals who are not experiencing homelessness.”

The Housing for Health program includes interim housing and permanent supportive housing, and has created more than 3400 housing placements since the beginning of the program. In 2014, Los Angeles County commissioned RAND to evaluate the program’s permanent supportive housing.

The evaluation of the Housing for Health program sought to address the following questions:

1. Did Housing for Health permanent supportive housing recipients use fewer public services in the year after receiving housing compared with the previous year?
2. Did the change in service use produce net savings to the county?
3. Was the program associated with improvements in participants’ health?

The report determined through a pre-post study design that clients’ use of medical and mental health services dropped substantially and costs also decreased. The program housed 890 individuals and 96% of the participants stayed in housing for the full year.

“These findings suggest that a permanent supportive housing program that targets people who are both homeless and frequent users of county health services is feasible and may save local government money overall,” Sarah Hunter, lead author of the study and a senior behavioral scientist at RAND, said in a statement. “It will be important to continue to examine the effort as it scales up to help even more people.”

The costs for public services used during the year after getting into housing declined by nearly 60%, dropping from $38,146 in the year prior to housing down to just $15,358. In the year after moving into housing, the participant made an average of 1.64 fewer emergency department visits and inpatient hospital stays decreased by more than 4 days.

The researchers also conducted a health functioning survey and found participants’ mental health functioning improved. However, mental health functioning scores will still lower than the general population and physical health functioning scores were no different from those reported when the participants went into housing.

After taking into account the outcomes of the program, and the cost of housing the participants, RAND determined there was a 20% net cost savings.

“Oftentimes, these programs strive to 'break even' in terms of costs and only exhibit cost savings among the most vulnerable, while the Los Angeles program shows considerable savings across a diverse population,” Hunter said.

RAND had 3 major recommendations for improving the program and ensuring it is sustained:

1. Consider the extent to which the Housing for Health program can continue to engage with service providers. The close ties during the initial implementation might not be sustainable if the program scales up.
2. The program should consider setting benchmarking goals for partner agencies and departments to monitor performance.
3. The program should provide more specific guidance to service providers on assessment tasks.

The researchers noted that as more people enroll in the program, future research will be needed to see if the savings change. Additional research will also need to determine if savings change over time for those enrolled in the program.