When Government Looks for Healthcare Savings, Supportive Housing Has the Answer

These days, it seems that on all levels of government, healthcare programs are being reexamined for cost savings, efficiencies and better outcomes. Nationally, healthcare reform and the Affordable Care Act will provide new opportunities to serve the most vulnerable populations and perhaps bend the country’s healthcare expenditures downward. States and localities are also looking at their own healthcare expenditures in order to help close burgeoning deficits.

In New York State, Governor Andrew Cuomo has undertaken an initiative to restructure the State’s Medicaid program. The overall aim is to improve health outcomes and reign in spending. To accomplish this, Governor Cuomo created a Medicaid Redesign Team (MRT) with appointed representatives from the State Legislature, Executive Branch, State agencies, New York City agencies, healthcare industry and consumer advocacy groups. The MRT was tasked with proposing recommendations to save a total of $2.85 billion in Medicaid expenses in the current fiscal year, and $4.6 billion next fiscal year. Through the work of the MRT, the State has approved a package of 73 proposals to streamline its Medicaid system, one of which is a supportive housing initiative (State of New York, 2011). While Medicaid, aside from some restorative services, does not pay for supportive housing, tenants and potential tenants are indeed Medicaid recipients who use public health services.

Under the MRT, 10 workgroups were formed to provide further review and recommendation. They include Affordable Housing, Behavioral Health Reform, Health Systems Redesign, Health Disparities, Managed Long Term Care Implementation & Waiver Reform, Basic Benefit Review, Programming Streamlining & State/Local Responsibilities, Payment Reform & Quality Measurement, Workforce Flexibility & Change of Scope of Practice, and Medical Malpractice Reform (State of New York, 2011).

The Affordable Housing Work Group plans to take an in-depth look at New York State’s “supportive housing” programs (the mission statement of the workgroup defines supportive housing as “any combination of market rate or subsidized housing and services that will meet the needs of the targeted populations”) (New York State Department of Health, 2011). The group will examine the availability and adequacy of such programs to make sure that people are not otherwise being improperly housed in institutional settings or denied appropriate care and services.

In addition, the housing workgroup will identify barriers to the efficient use of supportive housing resources, and make recommendations to overcome them. This may include mandate reform, as well as reassigning State resources and accountabilities with regards to development and oversight. The group will also look for Medicaid savings and service improvements from the investment of new resources into supportive housing (New York State Department of Health, 2011).

As the Affordable Housing Work Group begins to meet and make recommendations, it is important for us to realize that supportive housing is and has been a key component to reducing physical and behavioral healthcare related expenses, including savings in the Medicaid system. Evidence-based practices have demonstrated that supportive housing helps consumers manage their existing health conditions. Without stable housing in place, an individual’s health conditions would likely worsen. Vulnerable populations can quickly become at-risk for homelessness and the chronic medical conditions that seem to come along with it. When crises arise, individuals, who lack stable, affordable housing, and adequate care coordination, often seek treatment in hospitals and emergency rooms. These settings are very costly places for care, which are mostly paid for with public dollars.

Supportive housing’s daily expenses are only $45 per individual. On the other hand, in New York State it costs $1,820 a day for a person to stay in a hospital (Kaiser Family Foundation, 2010). A night in jail in New York City costs $167 per individual, and $72 in a homeless shelter (New York City Department of Homeless Services, 2009). Meanwhile, a typical state spends about $80 to $95 per inmate each day in prison (Moore, 2009; Steinhauer, 2009).

In fact, a small percentage of Medicaid recipients drive up costs from high use of services like inpatient and emergency care. In 2008, the top 5% of recipients accounted for more than half of all Medicaid spending, and 1% accounted for a quarter of expenditures (U.S. Department of Health & Human Services, 2008). In The New Yorker’s “The Hot Spotters” article that portrayed Dr. Richard Brenner and his pioneering care coordination initiative, it was calculated that 1% of the 100,000 people that made use of Camden, New Jersey’s medical facilities accounted for 30% of healthcare costs (Gawande, 2011).

Across the range of available supportive housing options, individuals with chronic medical and behavioral health conditions can live in community settings and receive less costly outpatient care and support services. In the groundbreaking study called “Public Service Reductions Associated with Placement of Homeless Persons with Severe Mental Illness in Supportive Housing,” it was calculated that a homeless person with mental illness used on average $40,449 per year in shelter, hospital or criminal justice services before being placed into housing. After being stabilized in permanent supportive housing, expenditures on these services were reduced by $16,282 per person annually (Culhane et al, 2002).

Supportive housing services provided by the community-based mental health and substance use sector include social and other non-health services that enable people to live and work independently, in the community. Individuals can be linked to various social supports, job training, employment services, and be helped with budgeting and finances. Tenants learn or relearn the daily living skills that get lost with institutional placement like cooking, cleaning, laundry and shopping.

Supportive housing units can be scattered (individual apartments in multiple buildings) or congregate (located in one building). Some buildings are mixed use, which could mean that individuals from different types of supportive housing programs live there, or that residents who do not require supportive services live there too. Buildings usually have front-desk security, providing safety to the tenants and the communities in which they live.

Maintaining New York’s supportive housing system is crucial to the success of the MRT. Each year, it gets more expensive for housing providers to make ends meet. Rent and building-related expenses rise, while funding remains level. This means that fewer dollars are available each year for support services. With this essential caveat in mind, the development of new supportive housing will also be advantageous in meeting the MRT’s objectives to save Medicaid expenditures and improve healthcare outcomes. In this vein, another MRT initiative plans to implement 5 regional behavioral health organizations (BHOs) across New York State. Over the next 2 to 3 years, the BHOs will be responsible for reviewing behavioral health inpatient length of stay and seeking to reduce unnecessary readmissions (State of New York, 2011). As the State realizes savings from decreasing inpatient length of stays and/or avoiding them all together, resources should be reinvested into supportive housing programs. This is also true with savings reached from declining use of emergency, homeless and criminal justice services, as well as other costly systems that people with severe mental illness and substance use are more likely to come into contact with if they do not have stable, affordable housing options available.

Among the BHOs’ other goals are to improve the engagement rates of people who are discharged into outpatient treatment, and facilitate cross-system linkages. This is something that supportive housing providers, through case management, are quite familiar with. Case Managers offer help navigating the health and behavioral health systems, keeping doctor appointments and applying for government benefits. Nevertheless, building a more robust community-based system of care will require new investment into support services like housing. BHOs are a transitional phase before all Medicaid recipients become part of a managed care system or special needs plan. The relationship building and non-health supports component of supportive housing will certainly need to be preserved in whatever type of system comes next.

On the federal side, provisions in the Affordable Care Act offer incentives for care coordination, which New York State will be taking advantage of. In the category for behavioral health, this involves the implementation of health homes, which will be funded at a 90% federal match for 2 years. Health homes add to the medical home model, by focusing on improving all levels of coordination between medical and behavioral health care for people with multiple chronic conditions (New York State Department of Health, 2011). Health homes are not a physical space, but a strategy for complex care coordination. Mindfulness of housing support services will be vital as a stabilizing factor in people’s lives.

As the healthcare system moves toward increased care coordination and management, we must not forget that supportive housing is already an effective tool for bringing together support services and linkages in the community for vulnerable populations. Case Managers, employed by supportive housing providers develop very strong relationships with tenants; and according to Dr. Jeffrey Brenner in The Hot Spotters, “high utilizer work is about building relationships with people who are in crisis” (Gawande, 2011). Because of community-based supportive housing, many New Yorkers with chronic medical and behavioral health needs receive the supports that they individually require to recover and thrive in the community. Moreover, it is cost efficient.

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