Guest Column

Providing Secure Housing to Homeless Can Cut Public-Service Expenses

By Lynn Reaser

The homeless continue to represent a major social and economic problem for both California and the nation. Various approaches have been attempted, with varying degrees of success. A pilot program launched four years ago in San Diego has produced impressive results.

The study, named Project 25, focused on chronically homeless individuals who were among the most intensive users of public facilities in the San Diego metropolitan area, such as emergency rooms, jails and hospitals. The program followed the approach of Housing First, which is based on the premise that individuals need to be placed in affordable, permanent housing as quickly as possible and then offered a comprehensive set of services. This contrasts with the more traditional approach of requiring the long-term homeless to first qualify for permanent housing, such as by achieving sobriety or entering treatment, before they can secure housing.

Funded by United Way and managed principally by St. Vincent de Paul Village (SVdPV), the study and extensive data collection were conducted over a three-year period, from 2011-13. The Fermanian Business & Economic Institute at Point Loma Nazarene University was responsible for analysis of the study�s results and conclusions.

Homelessness in San Diego and the Project 25 Program

San Diego has the fifth largest homeless population in the nation and is only surpassed by the metropolitan areas of New York City, Los Angeles, Seattle and Las Vegas. Project 25 was designed to determine if the provision of secure housing, combined with intensive case management and a comprehensive offering of primary and behavioral health care, could significantly reduce the use and cost of various public programs by their most intensive homeless users.

A total of 36 individuals were enrolled in the program over the study period of 2011-2012. A total of 28 individuals were both enrolled in the program and placed in permanent housing by the beginning of 2012 and remained in the program through 2013. Because of the focus on assessing the impact of providing housing security, this was the sample analyzed in this report.

Data on the use of various public services -- including the cost and incidence of ambulance transportation, arrests, emergency room (ER) visits and hospitalizations -- was collected for the base year of 2010. Quarterly data was then collected for 2011 through 2013 to assess the impact of Project 25. Because of quarterly variations, this study analyzes the two full calendar years of 2012 and 2013 after all 28 individuals were housed in their own apartments.

Selection of the Participants

Project 25 selected homeless individuals who were the most intensive or frequent users of public services, including emergency rooms, hospitals, jails and ambulances. Participants had to have utilized two of the three service categories below:

• Jails
• Emergency rooms, ambulances, hospitalization
• County behavioral health services

From a list of 71 names ranked by costs, the top users were selected to be part of the Project 25 study.

Demographics of the Participants

The preponderance of the 28 individuals was male, with only four, or 14 percent, of them female. Twenty-two were white, five were black, and one was Native American. Two of the total were Hispanic. The individuals studied ranged in age from 22 to 61. The median age was 47. Five of the total group were veterans.

All of the individuals had some form of physical or mental disability. Every individual in the program was afflicted either with mental illness or substance abuse. Three of the individuals, or 11 percent, were victims of domestic violence.

Results

The results of Project 25 are impressive. In the base year 2010, the expenses of all public services used by the 28 individuals totaled approximately $3.5 million. Hospitalization accounted for more than three-fifths of the total at $2.2 million.

In the first full year of participation, 2012 saw these costs cut by more than half, or 56 percent, to $1.5 million. In 2013, there was a further 25 percent reduction to $1.1 million. The program thus showed a dramatic reduction of 67 percent in total costs comparing the base year of 2010 to 2013. The expense of all major categories -- including ambulance transportation, arrests, ER visits, hospitalizations and incarcerations -- fell by more than 60 percent to nearly 80 percent.

The average expense per person fell from more than $124,000 in 2010 to about $41,000 in 2013. The drop in the median expense was even more dramatic. Compared with a starting point of nearly $111,000 in 2010, the median expense in 2013 was only about one-tenth of that amount at less than $12,000.

A better picture of the true savings from Project 25 is obtained by extrapolating what the expense of various services would have been without the program�s intervention. Assuming that expenses only kept pace with inflation and exhibited no change in usage intensity, the total in 2013 would have climbed to $4.0 million. (Health-related expenses were adjusted using the Consumer Price Index for hospital services; other expenses were adjusted using the Personal Consumption Expenditures Price Index.) The costs of the Project 25 program were also taken into account to determine the net savings realized. These costs encompassed both the provision of housing and all of the various services provided to the program�s participants.

Subtracting the cost of the Project 25 program from the reduction in extrapolated public outlays for hospital and other services yielded a net savings of approximately $1.6 million in 2012 and $2.1 million in 2013. The net return on dollars spent for Project 25 was a dramatic 207 percent in 2012 and 262 percent in 2013.

Usage Rates

The usage rate of various public services fell sharply between 2010, the base period, and 2012-13 when the 28 individuals were situated in stable and permanent housing. In 2010, the average number of hospitalizations for medical or psychiatric care was 10, while the average amount of time spent in hospitals averaged 46 days. Ambulance rides averaged 22 that year per individual studied and ER visits averaged 42. There were a total of 82 arrests in 2010, while the average individual spent 28 days in jail. Usage of other services (including Crisis House, detox centers, homeless shelters, legal assistance, and Psychiatric Emergency Response, or PERT) totaled 151 for the 28-member group.

After the first full year of the program, usage rates of all of these services generally dropped by between 60 percent and 70 percent. Further declines generally in the range of 30 percent to 50 percent followed in 2013. Only two categories experienced increases in 2013. The number of hospital days rose because of the illness of one individual, while the frequency of legal assistance (shown as a part of �Other�) also increased.

Between 2010 and 2013, all categories of public services exhibited notable reductions. The average number of hospitalizations per year dropped from 10 to two, or 80 percent. The average number of days spent in the hospital fell from 46 to 17, a decrease of 63 percent.

Ambulance rides averaged five per individual in 2013, less than one-fourth the 2010 figure. Emergency room visits fell to an average of 10 during the year from 42 in 2010, a cut of 76 percent. The total number of arrests across the group plummeted from 82 to 18, or 78 percent, while the average amount of jail time was cut almost by a third from 28 days to 10 days. The total usage of all other services was pared by nearly a third from more than 150 to less than 100.

Current Status of Project 25�s Participants

Of the 36 total number of individuals enrolled in Project 25 during 2011-12, all but three are still in the program. (Three have passed away from natural causes.) The 33 Project 25 individuals all were housed in their own apartments, have acquired health care insurance, and are receiving necessary health care on an ongoing basis.

Although 21 of the Project 25 participants have been forced to move at least once because of behavioral issues, all but two have been successful in their second unit. Efforts are under way to secure new housing for these individuals.

Conclusions

Providing chronically homeless frequent users with stable and secure housing, combined with a comprehensive and unified set of health and social services, can yield a dramatic reduction in the use and expense of various public services. This has been the conclusion of Project 25 as it engaged the participation of some of the most intensive users of hospitals, emergency rooms, ambulances and jails in San Diego County.

While caution is warranted in inferring too much from the small sample of individuals covered in the Project and in this report, the results are encouraging and compelling. They also give weight to the Housing First approach, which emphasizes that the homeless can be treated much more effectively after they have been situated in a more permanent home. Secure and safe housing also provides an environment that can protect individuals from further risk of trauma, and damage to physical and mental health.

Read the full report.

Lynn Reaser is chief of the Treasurer’s Council of Economic Advisors and chief economist at the Fermanian Business and Economic Institute for Point Loma Nazarene University. The opinions in this article are presented in the spirit of spurring discussion and reflect those of the author and not necessarily the Treasurer, his office or the State of California.