Homelessness: Cost Evaluation of a Permanent Supportive Housing Program

Background and Significance

Despite the considerable amount of wealth, level of industrialization, and countless scientific and technological advancements, homelessness persists as a serious and devastating problem in the United States. Nationally, on any given day, approximately 744,000 people are homeless (National Alliance to End Homelessness, 2005). Further, as many as two to three million people experienced homelessness during an average year (Burt, 2001). There are many factors and causes of homelessness, including one or a combination of the following: loss of employment, drug and alcohol addiction, domestic violence, family conflict, mental illness, unavailability of affordable housing, and negative stigmatization (Main, 1998). In turn, homelessness can cause or exacerbate many of the same conditions that led to an individual becoming homeless (Main, 1998) Research on homelessness living in large metropolises indicates that supportive housing is a cost effective alternative to expensive emergency room visits and high priced in-patient substance abuse and psychiatric intervention (Culhane, Metraux, & Hadley, 2002). Less is known about the cost effectiveness of supportive housing in smaller urban areas (Culhane, Metraux, & Hadley, 2002).

Purpose

This study is investigating whether providing affordable housing and support services reduces the total cost of providing services to homeless individuals

Methods

A purposive, non-probability sampling strategy was utilized for this study. Semi-structured interviews were conducted with 31 supportive housing residents. Only 21 of those residents had been living in the complex for two years or longer. The cost analysis is based on the experiences of these 21 individuals. A cost effectiveness analysis was employed for this study. Service cost data were collected on participants for the two years prior to their entry into supportive housing and two years after moving in.

Results

The cost analysis indicates that overall costs have fallen from $377,141.66 in the two years before entry to $265,785.20, a decline of $111,356.46, or 29.53%. If the cost of the on-site social worker who is stationed at the supportive housing complex is excluded, the service costs decline to $210,950.00, a decline of 44%. The costs for inpatient substance abuse treatment have fallen from more than $127,720.57 in the two years prior to entry to zero after entry into supportive housing. Outpatient mental health services for these individuals fell from close to $85,381.09 to $4,000. Costs for incarceration fell from $3,486 to zero. Not all costs have fallen. The cost for medical treatment has risen from around $110,550 to close to $201,604. Two individuals account for 64% of the spending in the two year period after entry. Both have chronic medical conditions.

Implications

Permanent supportive housing costs are low, especially when compared to alternative housing outcomes, such as hospitals, treatment centers and jails or prisons. In addition, supportive housing provides stability. Almost all of the residents were homeless when they moved into supportive housing, yet more than half of the individuals who were interviewed had been living there for more than three years.