Supportive Housing Reduces Healthcare Spending for Formerly Homeless

Homeless people have rates of emergency department (ED) use and inpatient hospitalization that are 3 and 4 times higher than those of the average person. Meanwhile rates of homeless people using primary care are low and noncompliance with prescription medication is high. In response, policy makers are beginning to examine models that include both healthcare and housing, such as supportive housing with integrated on-site health services, which can house the homeless and allow them access to health resources.

A recently published pilot study of supportive housing for 98 homeless, high healthcare users in Portland, Oregon, found significantly lower overall healthcare expenditures after formerly homeless people moved into supportive housing between 2010 and 2014. Bill J. Wright, regional director of the Center for Outcomes Research and Education at Providence Health and Services in Portland, and colleagues reported that expenditure changes were driven mostly by reductions in ED visits and inpatient care. However, the savings were not at the expense of quality—respondents reported improved access to care, stronger primary care connections, and better subjective health outcomes.

Study subjects were highly medically vulnerable and faced significant medical and psychosocial challenges. Experiences and health outcomes before and after they moved into supportive housing were examined through a combination of self-report surveys and historical Medicaid claims data. The year after moving in, residents with Medicaid (58 of the 98 study subjects) saw an average annual reduction in Medicaid expenditures of $8724. Expenditure reductions were also observed in the second year after moving in. The amount of the annual reduction in Medicaid expenditure is roughly comparable to the estimated annual cost of housing a resident at the study site ($11,600).

The investigators said the lower costs were a function of changing patterns of care instead of reduced access.

“The use of primary care and outpatient behavioral health services went up slightly, but there were dramatic drops in ED visits and inpatient stays,” they noted.

In addition, participants were much less likely to report unmet medical needs after moving in than before. Importantly, the expenditure reductions observed cannot be attributed simply to requiring people to be sober in exchange for shelter because many residents were still struggling with substance abuse issues and others were making no particular efforts to stop using.

The investigators conclude that policymakers should consider supportive housing with integrated health services as a potential support for high-risk, high-cost patients experiencing housing instability. The 58 study participants who were on Medicaid had over $1.1 million in Medicaid expenditures the year prior to moving into supportive housing, and about half that amount in the year after moving in. Although homeless people are a relatively small share of the overall population, they can account for a large share of healthcare costs.