Residential therapy

Charles Sanford left a Minneapolis shelter for his own apartment in June, a move that has meant relief from the anxiety of being homeless and the joy of cooking in his own kitchen.

For Hennepin County Medical Center, the Minneapolis hospital that found Sanford an apartment, the move is an unusual prescription for a troubling and costly problem: Patients who frequently return to the hospital or emergency room.

Housing stock could be healthcare's new bricks and mortar. Complex patients who frequently seek the most expensive care have long been identified as a disproportionate source of U.S. health spending. As healthcare organizations and policymakers look for the right mix of expanded primary care, care coordination and support for these patients, some see spending money on securing them somewhere to live as a critical piece.

The Twin Cities hospital has sought housing for 14 patients since January as part of a strategy that pairs homeless patients who landed in the hospital at least three times last year with two newly hired county housing coordinators. The coordinators, who scour rentals and meet with landlords, work exclusively to find homes for medically complex Medicaid patients. “Everything happened just so fast,” said Sanford, who had been admitted to the hospital seven times in the 16 months before his move. “I'm in a shelter one week. Two weeks, three weeks later, I'm in an apartment.”

The effort and others under way are targeting the housing needs of chronically ill and costly patients in a bid to keep them out of the hospital and reduce their healthcare costs.

The initiatives come as Medicaid, the safety net health program for the nation's poor, undergoes major policy changes that increase the potential financial losses for hospitals and private insurers when patients return to the hospital again and again.

New York in 2010 began to penalize hospitals with Medicaid patients who were readmitted shortly after leaving the hospital. Massachusetts did the same last year. Medicare will penalize hospitals with high readmission rates starting Oct. 1.

States continue to shift Medicaid away from paying for every hospital visit into managed-care contracts that pay a fixed amount per month for each enrollee, regardless of how many times patients visit the hospital or emergency room. Hospitals are left with a loss when patients' care costs more than the fixed amount. Seven out of 10 Medicaid enrollees were covered by managed care in 2010 compared with 57% in 2001.

Pressure on state and federal Medicaid budgets is expected to intensify as the safety net insurer expands in 2014 under the health reform law. New eligibility rules could expand Medicaid rolls by as many as 13 million people in 2014, though the number is projected to be closer to 7 million after the U.S. Supreme Court ruled in June that states could forgo expansion without penalty.

New York officials are gambling that housing and supportive services for chronically ill patients could save Medicaid as much as $1.3 billion over five years.

The state asked the CMS in August for $375 million from Medicaid to build or renovate 3,000 apartments to house high-cost Medicaid enrollees.

Dr. Ross Wilson, corporate chief medical officer and senior vice president of the New York City Health and Hospitals Corp., said a lack of available housing frustrated efforts to find a home for high-cost Medicaid enrollees in an ambitious care-management pilot that ended in May. The pilot, funded by New York's Health Department, targeted costly and complex Medicaid patients with care coordination and social services, including housing.

Half of patients in the three-year pilot at HHC were homeless or living in a shelter. “We do not have housing stock,” Wilson said. “We're a healthcare system. What we have is patients who have a need.”

In preliminary results for homeless patients in the pilot, monthly Medicaid spending dropped by one-fifth, or $855, to $3,426 a person. Overall, hospitalizations dropped by 47% and emergency room visits fell by more than half. Spending for hospital care fell by 27% and emergency room spending by 30%.

As health-policy makers and the industry search for ways to spend less for better results, the pilot suggests “it might mean that we have to pay for housing,” Wilson said.

Inspired by the results of the pilot, the New York system now seeks to expand its effort to house high-cost Medicaid patients with funding under the Patient Protection and Affordable Care Act. “We saw that housing was pretty critical,” said Rachel Davis, an assistant director with the HHC Health Home program. One housing coordinator can work with up to 40 patients at a time to help them navigate subsidy applications and the city's tight rental market, she said. It's unclear how many housing coordinators the 11-hospital system will hire.

Under the law, the federal government will pay 90% of the cost of certain care-coordination services targeted toward complex, chronically ill Medicaid patients for 24 months.

It is not only hospitals that have begun to experiment with housing their highest-cost patients.

The San Francisco Health Plan, a Medicaid managed-care plan, working with the city's health department and a local development agency, will begin in December to house 50 homeless enrollees who most frequently end up in the hospital and emergency room.

The health plan's members will gain housing under an effort that will also provide homes for another 122 chronically ill, homeless individuals in San Francisco in a newly redeveloped nine-story building scheduled to open at the end of the year.

Dr. Kelly Pfeifer, chief medical officer for the San Francisco Health Plan, said a 2011 California mandate that shifted seniors and the disabled into Medicaid managed care increased the insurers' membership by 13,000, an influx that included many with chronic illnesses and an unknown number of homeless.

“It's difficult to know how many” because it can be difficult to collect the information, Pfeifer said, but the health plan began to scour medical records for patients who required the most medical care and found homelessness, mental illness and substance abuse were common.

Among newly enrolled health plan members, hospital visits were “unlike anything we've ever experienced before,” she said. For every 1,000 health plan members who are seniors or disabled, the health plan saw 157 days of hospital care a year, compared with 17 days for the health plan's other 55,000 members.

Pfeifer said the health plan has worked during the past year to identify strategies to keep patients out of the hospital by improving access to outpatient and primary care. “Hospitalization is a failure of the medical system,” she said. “It means that the condition has gotten so out of control that someone is at risk of life or limb.”

More support will be needed for homeless patients with behavioral health needs than for patients in existing care-management programs, such as those that pair nurses with seniors struggling with congestive heart failure. “We had not developed a lot of infrastructure for people with complex conditions,” Pfeifer said.

In recent months, the health plan has revamped its support program with help from a University of California at San Francisco physician and has started to find and contact patients.

A partner of the health plan, the Tenderloin Neighborhood Development Corp., received one of four grants from the Corporation for Supportive Housing to curb San Francisco's public health spending by increasing access to housing.

Dr. Josh Bamberger, the medical director for Housing and Urban Health at the San Francisco Department of Health, said New York University researchers will study whether healthcare spending changes for patients who gain housing and will evaluate how that spending compares to those who remain homeless. Bamberger said the study will build on prior research that has found a link between reduced healthcare costs and housing.

For example, Chicago patients enrolled in a 2003-07 study made 1.2 fewer emergency room visits and spent 2.7 fewer days in the hospital per year when provided with housing compared with those who received no housing support.

Bamberger, a family practice physician who was named this month as special adviser to the executive director of the U.S. Interagency Council on Homelessness, has long been an advocate for housing to address chronic diseases. “I think that providing healthcare for the homeless without housing is like shooting an elephant with a BB gun,” he said.

Money spent on housing improves health, he argues, so spend healthcare money on housing. “My point is that housing should be a healthcare intervention,” he said. “The etiology of chronic homelessness is not exclusively economic, it's predominantly medical.”

In Los Angeles County, 11 hospitals, six safety net clinics and more than a dozen housing and homeless agencies will begin in October to target housing and support services for 107 adults who rank among the costliest 10% for public spending, or $78,348 a year, on average, of which emergency room visits and hospital admissions count for half.

The effort will overlap with another initiative launched in the spring of 2011 that has found homes for a dozen patients and is seeking housing for another 14. It's too early to say how health spending has changed, said Susan Lee, a senior program manager for the Corporation for Supportive Housing, which provided grant funding for both initiatives.

Dr. Theresa Brehove, director of homeless services for the Venice (Calif.) Family Clinic, one of the half-dozen federally qualified health centers in both efforts, said housing alone cannot address conditions such as mental illness or substance abuse that commonly contribute to patients' homelessness, but a home gives patients stability that can improve medical care. Diabetics gain greater control over their diets. Nurses can make home visits. “Certainly, things like medication adherence is greatly improved when they have a place to stay and more of a routine and less chaotic life,” she said.

“It feels good when you see a patient get better,” Brehove said. “That's what I like to see. That's why I went into medicine. I feel like I have fewer obstacles in the way of helping my patients get better.”

In Minnesota, Hennepin County said this year it would give priority for housing development loans to projects that will house Medicaid patients at high risk for hospital readmission who are enrolled in the county's accountable care organization, Hennepin Health.

“Stable client housing has been identified as an important element of Hennepin Health's efforts to end the cycle of costly crisis care,” the county said in a February project request to developers.

Hennepin County, Minnesota's most populous county with 1.2 million people, hired two housing navigators in January to help frequently hospitalized adults who gained Medicaid benefits after the state expanded the safety net in March 2011 under the Affordable Care Act. Minnesota was among a few states to expand Medicaid enrollment ahead of the law's 2014 target date.

Mental illness and substance abuse are common among high-cost homeless patients identified so far. Housing helps patients reduce instability that can lead to the cycle through the emergency room and hospital. “You can see that's a cycle that we want to break,” said Pamela Clifford, director of the Center for Healthcare Innovation at the county's hospital.

Among 14 patients housed since January, early results are “not definitive, but promising,” she said.

During the six months before finding housing, the 14 patients collectively made 18 emergency room visits and were admitted to the hospital six times. Clifford said six months of data is not available for all patients, who moved at different times during the year, but the group has seen three emergency room visits and two hospitalizations since patients found apartments.

Sanford, 55, a diabetic, moved between shelters in Minnesota and Illinois during the past year. Since moving into his apartment in June, he has not returned to the emergency room or been admitted to the hospital. He has almost weekly medical appointments, he said.

Sanford no longer fears losing his medications to theft. “I feel safe,” he said. He stores his insulin in the refrigerator instead of the ice chest that he carried when homeless. He cooks meals that won't run afoul of his diabetic diet, which he couldn't always get in shelters. A longtime professional cook, Sanford said he enjoys revisiting his favorite recipes and finds it rewarding to prepare his own meals. “I get to eat healthy.”

TAKEAWAY: Under pressure to cut costs? Find housing for the most expensive patients who need a place to live.