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Impact on Use and Cost of Services

Permanent supportive housing has a salutary effect on the use of crisis health care services by homeless people with mental illness. A San Francisco study of formerly homeless people with psychiatric and substance-use disorder compared their use of crisis services in the two-year period before placement into supportive housing with their use of services in the two years after placement. Administrative data from the city’s public health system revealed significant reductions in emergency department use and hospital admissions in the period following housing entry (Martinez & Burt, 2006).

A New York City study of the effect of a large-scale public investment in supportive housing found a similar result. Information on nearly 4,700 people in receipt of supportive housing was combined with administrative data on the utilization of public shelters, public and private hospitals and outpatient services, and incarceration in state and local correctional facilities. Recipients of supportive housing and matched control subjects who were homeless but not placed in housing were tracked to determine their use of services over time. Study results revealed that individuals placed in supportive housing experienced marked reductions in use of shelters, hospitals, and incarceration in correctional facilities. Less use of these costly crisis services reduced annual service costs by about 40 percent (per person annual cost of services prior to housing placement was $40,449 in 1999 dollars, reduced by $16,282 in the post-placement period) (Culhane et al.,

2002). Given that the annual cost of a supportive housing unit in 1999 was estimated at $17,277, the savings in reduction of service costs in the preplacement period nearly offset the cost of housing.

Similar findings on the effect of supportive housing on reduction in crisis service use and cost have also been reported for chronically homeless people with severe alcohol problems (Larimer et al., 2009). In a study of service use and cost among shelter and street-dwelling chronically homeless people, Poulin et al. (2010) observed that about 20 percent of the highest-cost service users accounted for 60 percent of the total service costs. High service-cost users were predominantly found among people with a diagnosis of severe mental illness, and most of the costs were for psychiatric care and jail stays.

Despite a reduction in use of high-cost crisis services following placement in supportive housing, a California study found that greater use of enriched rehabilitation and recovery services in the post-placement period was costly. California’s Full Service Partnerships combine subsidized permanent supportive housing with enriched services provided by multidisciplinary teams. A study of health care utilization and costs before and after obtaining housing was conducted comparing 10,000 participants in Full Service Partnerships with a matched control group of over 10,000 participants in receipt of usual care. Information on service use and costs, tracked through administrative data sets over a multi-year period, revealed that participants in the Full Service Partnership group experienced increased mental health outpatient visits following placement in the program, while outpatient utilization in the control group remained stable. The annual per person increase in service costs for the Full Service Partnership group exceeded $12,000 (Gilmer et al., 2014b), indicating that enriched rehabilitation and recovery services can be costly and should be efficiently designed and tailored to specific individual needs.[1]

  • [1] In the At Home/Chez Soi project, the average annual Housing First interventioncost for high-need recipients of assertive community treatment services was $22,257,and $14,177 for moderate-need recipients of the intensive case-management approach(Mental Health Commission of Canada, 2014).
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