The authors assess the short-term effects of a permanent supportive housing (PSH) program—operated by a large not-for-profit managed care plan—in Southern California for adult enrollees experiencing homelessness who have chronic health conditions. The authors provide an overview of program referrals and enrollment, housing placements, and participant characteristics. They also examine the PSH program costs for specific periods.

Health Service Utilization and Cost Outcomes from a Permanent Supportive Housing Program

Evidence from a Managed Care Health Plan

Sarah B. Hunter, Adam Scherling, Ryan K. McBain, Matthew Cefalu, Brian Briscombe, William Mcconnell, Priya Batra

ResearchPublished Feb 16, 2021

Although rates of homelessness have remained fairly steady in the United States over the past decade, the number of people experiencing homelessness in California has continued to grow. California now has an estimated 151,000 people experiencing homelessness, more than any state in the nation. Permanent supportive housing (PSH) has been recently adopted by health plans, hospitals, and large health systems as a way to address one of the key social determinants of health: stable housing. This report represents a second examination of a PSH program operated by a large not-for-profit Medicaid and Medicare managed care plan in Southern California. This PSH program combines a long-term housing subsidy with intensive case management services for adult plan members experiencing homelessness who have one or more chronic physical or behavioral health conditions and represent high utilizers of inpatient health care. In this report, the authors provide an overview of implementation to date, including information about referrals and enrollment into the program, housing placements, and participant characteristics. The authors also assess the short-term impact of the program by examining health care service utilization and associated costs in the six months prior to and six months following enrollment in PSH in comparison with an observational control group of adult plan members who did not receive PSH. The authors also examine the PSH program costs during this period.

Key Takeaways

Placement in PSH may be associated with significant reductions in health care service utilization and costs; however, the transitional costs after identification but before PSH placement can be substantial

  • Enrollees used a significant amount of health services in the six-month period prior to program entry—a finding that suggests the health plan was successful in engaging individuals with high health care utilization.
  • PSH enrollees' average health service costs for the six months prior to program entry were $45,727, or $7,621 per enrollee per month.
  • PSH enrollees' average health service costs in the six months following program enrollment decreased to $27,692, or $4,615 per enrollee per month—a reduction of $3,006 per month between pre- and post-enrollment periods.
  • Those in the comparison group observed a similar reduction of $3,057 per enrollee per month between pre- and post-enrollment periods, despite not participating in the PSH program.

The estimated PSH program costs were $2,405 per enrollee per month

  • When accounting for the PSH program costs and health care service utilization among enrollees, the PSH program has yet to achieve any net cost offset from program participation during the first six months after enrollment.
  • The average transitional period cost per enrollee was $3,547 per month, and the average enrollee cost during the PSH period was $2,414 per month. The difference in costs between these two periods (transitional versus PSH placement) was statistically significant.
  • The average time between enrollment and housing placement was about three months, with a range of ten to 258 days.

Recommendations

  • Reducing the time between identification and PSH placement could reduce costs because the transitional period (i.e., after program enrollment and prior to PSH placement) showed the highest level of service costs to the health plan.
  • Examining a longer period, instead of our short-term observational window of six months post-enrollment, will lead to more-precise estimates of the PSH program's effectiveness.

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Hunter, Sarah B., Adam Scherling, Ryan K. McBain, Matthew Cefalu, Brian Briscombe, William Mcconnell, and Priya Batra, Health Service Utilization and Cost Outcomes from a Permanent Supportive Housing Program: Evidence from a Managed Care Health Plan. Santa Monica, CA: RAND Corporation, 2021. https://www.rand.org/pubs/research_reports/RRA374-2.html.
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This research was funded by the Inland Empire Health Plan and conducted in the Community Health and Environmental Policy Program within RAND Social and Economic Well-Being.

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