April 1, 2009

Affordable housing that provides on-site services for people who are homeless, have a mental illness, and other vulnerable populations could dramatically reduce the use and cost of expensive public services such as state prisons and mental health facilities, according to a new report released Thursday by the Heartland Alliance Mid-America Institute on Poverty (MAIP), the Supportive Housing Providers Association (SHPA), and the Corporation for Supportive Housing (CSH).

The study found that Illinois saw an overall 39 percent cost reduction in the use of public services, such as inpatient mental health care, nursing homes, and criminal justice, over a two-year period after a sample of 177 individuals were moved into supportive housing. The shrunken need for public services yielded a total overall cost savings of more than $850,000 – an average savings per resident of $2,400 per year.

"Illinois could see significant savings from the most expensive users of public services, such as those with mental illness or substance use, if more supportive housing units are made available," said Katrina Van Valkenburgh, CSH. "This study, like others we've done across the country, demonstrates that supportive housing works and is a wise investment of public dollars." 

"Now more than ever, our most vulnerable populations need to count on a support system inclusive of housing to survive challenging times. Illinois' public services are already strained and facing fiscal woes. But an investment in supportive housing now could save the state a significant amount of dollars long term," says Janet Hasz, Executive Director of SHPA. "Supportive housing provides residents the tools to lead stable, healthy and independent lives. Once they leave us, they no longer need to rely on the state systems as much—or at all."

Supportive Housing in Illinois: A Wise Investment measured the impact of the supportive housing intervention on the use of public services from a sample of 177 residents over a four-year time period, comparing the two years before residents entered supportive housing with the two years after. Data were collected on these residents from Medicaid, mental health hospitals, substance use treatment, prisons, and various county jails and hospitals.

The study notes a dramatic shift in the use of state services pre- to post-housing. Among the key findings:

• The number of people using state mental health hospitals dropped 90 percent from pre- to post-supportive housing. The number of overnight stays in mental health hospitals went down by almost 100 percent. The sample of 177 residents used more than $400,000 worth of state mental health hospital services before entry into supportive housing—down to $873 after.
• Overnight stays in state prison dropped to zero during the post-housing time period with a 100 percent cost savings of over $215,000. County jails saw an 86 percent decrease in overnight stays post-supportive housing.
• Medicaid services saw a major shift from a high-reliance on expensive inpatient/acute services before supportive housing to less expensive outpatient/preventative services after.
• Nursing home stays decreased by 97 percent, saving over $230,000.

"The true cost saving from supportive housing is much higher than reported in this study. We weren't able to collect the costs of homeless shelters, soup kitchens, free clinics and other supportive services used by this population," says Amy Rynell, lead researcher at MAIP. "And while we also don't measure the social costs of supportive housing, we know from residents that post-housing they experience better health, an end to homelessness, financial confidence, and independence – qualities that lead to an improved society as a whole – and which don't always have a dollar amount."

According to Van Valkenburgh, other studies on the effects of supportive housing have included much of this additional data and found even greater per person savings than the $2,400 identified in Illinois.

SPHA estimates at least $11 million could come back to the state if $3 million in state funds are invested into 494 units serving 606 men, women, and children in the next fiscal year. Advocates say that if the $3 million for supportive housing is obtained, the funds would leverage more than $27 million in federal assistance. Illinois currently has 6,000 units of permanent supportive housing serving over 8,000 individuals in 28 counties.

SHPA member organizations will meet with state legislators in their districts during the April 6-20 Spring Break and in Springfield to review the study's findings and supportive housing funding needs. 

Click here to download the study final report and executive summary 

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