How a Medical Respite Care Program Offers a Pathway to Health and Housing for People Experiencing Homelessness

When Maureen was faced with the loss of her income, she found herself unable to pay rent and was evicted from her apartment. She moved into her car with her dog, Trenor, on the streets of Ventura, California. Living with diabetes made it difficult to manage her health and she landed in the hospital. Her situation was complicated by memory loss and the risk of COVID-19. Maureen’s condition stabilized after several days and hospital staff recommended that she receive ongoing care. She needed somewhere to recuperate until she could find a permanent place to live.

To meet Maureen’s needs, the hospital connected her to National Health Foundation (NHF), which offers recuperative care in Los Angeles and Ventura counties. She stayed for close to a month in a home-like facility that provided her with social support and intensive care management, paid for by the hospital. At the end of her stay, she transitioned to a sober living facility and was happily reunited with Trenor.

Unfortunately, stories like Maureen’s remain the exception because many areas lack an appropriate place for homeless patients to recuperate after a hospitalization. People experiencing homelessness often live with chronic illnesses that may be complicated by mental health or substance use disorders as well as unmet social needs, yet many receive inadequate health care.^1,2 Consequently, many have repeated and prolonged hospital stays,³ make frequent emergency department (ED) visits,⁴ incur high health care costs,⁵ and experience poor health outcomes.⁶

To address this gap in transitional care for homeless patients, community stakeholders across the country have developed more than 100 posthospital medical respite programs since the 1980s, with more under development.⁷ In addition to promoting improved recovery and reduced costs of care, medical respite programs can play an important role in a continuum of services to prevent homelessness,⁸ which has taken increased urgency during the COVID-19 pandemic. This case study — the latest in a series describing models of care for high-need, high-cost patients — describes how NHF has developed a sustainable business model and attracted strong community support to help end the homelessness crisis in southern California.⁹

What Is Medical Respite Care?

Medical respite programs offer hospitals an alternative to keeping homeless patients longer than medically necessary or discharging them to the street or to shelters that aren’t equipped to support their recovery.¹⁰ While shelters may require people to vacate the premises during the day, medical respite programs offer a supportive environment for people experiencing homelessness to recover during a stay that may last from two weeks to 90 days.

Medical respite programs vary in scope, depending on local resources and needs, and are provided in many kinds of places including capable shelters, apartments, motels, assisted living facilities, nursing homes, transitional housing, and stand-alone facilities such as those operated by NHF. Programs may be sponsored and supported by nonprofit organizations, health centers, hospitals, and government agencies.¹¹

National Health Foundation’s Recuperative Care Program

Founded in 1973 by the Hospital Association of Southern California, NHF’s mission is to improve the health of underresourced communities by addressing food access, education, housing, and the built environment. After news stories in the early 2000s cast local hospitals in a negative light for discharging homeless patients to the streets,¹² the hospital association asked NHF to help find a better way to manage their discharge and reduce readmissions. Drawing on the experience of other programs, NHF in 2008 established a 25-bed recuperative care program in Los Angeles in partnership with hospitals and the county.¹³

When California expanded Medicaid under the Affordable Care Act in 2014, many low-income adults experiencing homelessness became eligible for enrollment in Medicaid managed care plans participating in the state’s Medi-Cal program. With a financial incentive to reduce hospital admissions and improve outcomes of care for these new members, health plans took an interest in contracting with NHF for recuperative care beds. To meet the growing needs of partnerships with hospitals and health plans, NHF now operates four recuperative care sites with a total of 117 beds.¹⁴ (A fifth site, with 148 beds, will open later this year.)

Program Enrollment: More than 60 hospitals refer patients to NHF’s recuperative care program using an online form. Enrollment criteria are straightforward, assuring a 99 percent acceptance rate. Guests need to be able to function independently and manage their own activities of daily living. They can be reliant on wheelchairs and walkers if they can transfer themselves for sleep and other needs. Upon receiving a referral, NHF staff arrange for transportation and communi­cate with hospital discharge planners for instructions on follow-up care.

Accommodations: NHF seeks to provide a welcoming environment where homeless individuals will want to come and stay because they receive the respect and comfort they deserve. They are referred to as guests, rather than as patients or residents. Guest services coordinators ensure that their needs are being met throughout their stay.

In 2018, NHF opened a renovated 61-bed facility in the Pico-Union neighborhood of Central Los Angeles, where guests stay in semiprivate bedrooms and have private showers. Warm meals are served three times a day, with fresh food available on a “grab-and-go” basis throughout the day. Guests have access to WiFi as well as computers in a common room.

Supportive Services: Within 24 hours of arrival, each guest meets with a social worker who assesses their needs, helps them determine eligibility for benefits, and links them with community social services. They also help guests obtain identification, arrange transportation to appoint­ments, and reconnect with family. Using the county’s Coordinated Entry System, social workers plan a pathway to stable housing that may include permanent supportive housing, interim housing, shared housing, or family reunifica­tion. Guests typically move two points along a housing path scale (Appendix B) toward the goal of an identified housing option by the end of their stay, when NHF supports their transition. To ensure individualized care, social workers have a small caseload of 15 guests each.

Medical Oversight: A team of medical coordinators (licensed vocational nurses) assists guests with medication management and appointments with health care providers. Home health care agencies provide onsite nursing care, such as surgical wound care or intravenous antibiotic administra­tion, when arranged in advance by the discharging hospital. At the end of a guest’s stay, referring hospitals and health plan funding partners receive a discharge summary of a guest’s progress, services received, and housing status on discharge.

Service Quality: Many homeless people have experienced trauma and perceived disrespect in their interactions with the health care system. To help overcome these challenges, NHF embraces the principles of trauma-informed care and a harm-reduction philosophy aimed at reducing both the negative consequences associated with substance use disorders as well as the stigma associated with homelessness and mental health issues. There are no security guards or metal detectors, for example. “We don’t want our guests to feel that we are afraid of them,” says Kelly Bruno, NHF’s president and CEO. Honoring their independence and autonomy encourages guests to remain at the facility until they have recovered.

Consistent with this philosophy, NHF does not perform sex offender background checks or substance use testing as a condition of enrollment. If staff learn that a guest has drugs or alcohol onsite, they ask the guest to remove them from the premises, but they don’t search personal belongings. If someone has a history of violence, staff will assess their ability to safely stay at the facility; if a guest becomes violent while onsite, they are removed immediately.

Program Statistics and Outcomes: NHF served 1,129 recuperative care guests in 2020, among whom 44 percent transitioned to stable housing and 15 percent were reunited with family following a 14-day average stay. About 10 percent leave before completing a two-week stay, the minimum that NHF requires of funding partners. Some Medicaid managed care plans will pay for longer stays (e.g., 30 to 60 days) based on their decision criteria, such as ensuring that their members find housing before discharge.

An analysis by a hospital system showed that, among 64 patients discharged to NHF recuperative care, rates of hospital readmissions and ED revisits to the system’s facilities were 9 percent and 23 percent, respectively, which is lower than typically experienced by homeless patients.¹⁵

Financing Medical Respite Care

Since there is no dedicated funding mechanism for medical respite programs, they often braid together financing from multiple sources including hospitals, governments, foundations, faith organizations, and private donors.¹⁶ Stand-alone facilities operated by nonprofits such as NHF, which do not directly provide clinical care, are not usually licensed by the state or recognized as Medicare or Medicaid providers.

NHF funds its recuperative care program primarily through contracts with partnering hospitals and Medicaid managed care plans, which now pay for almost two of five NHF guest stays. Payment is made either on a per diem basis or on a prepaid basis for a specified number of dedicated beds. Reserving beds can be mutually beneficial by ensuring a reliable referral site for hospital discharge planning and a reliable revenue stream for NHF. (As an incentive for efficiency, NHF offers tiered discounts tied to the number of reserved beds.) Contracts with health plans are structured around the provision of intensive care management, which promotes accountability for program outcomes.

Grants and donations, which make up only about 6 percent of NHF’s recuperative care program budget, provide a financial cushion to ensure the sustainability of the program through periods of reduced demand for services such as during the COVID-19 pandemic.

Costs and Outcomes of Medical Respite Care

Medical respite care is less expensive than other forms of residential health care.¹⁷ Daily expenses for these programs range from about $125 to $325, depending on their location and scope of services.¹⁸ Hospitals in Los Angeles report that they pay $225 to $250 per day for private medical respite programs.¹⁹ For comparison, average reported expense per day of inpatient care was $2,607 among hospitals nationally and $3,726 among hospitals in California in 2019.²⁰

The impact of medical respite care has been assessed in a variety of settings, some of which are similar in scope to NHF’s program (Appendix C). Reviews of the literature find consistent evidence that medical respite programs reduce hospital admissions, days spent in the hospital, and 90-day readmissions, with promising evidence for reduced ED visits and improved housing outcomes.²¹ An evaluation of 10 programs found that their guests experienced improvements in health status and in access to primary care, housing, and income supports.²²

Hospitals may lose money caring for homeless patients, especially if their stays are prolonged.²³ By reducing the length of hospital stays and subsequent hospital use, medical respite care can reduce costs to hospitals as well as spending by payers such as Medicaid and health plans (Appendix C). NHF estimates that its recuperative care program has saved the health care system more than $20 million by preventing prolonged hospital stays.²⁴ At a societal level, savings from reduced use of health care because of medical respite programs could help offset the cost of preventing homelessness.²⁵

Insights and Lessons Learned

Integrating health care and social services supports a coordinated approach to transitional care and homelessness prevention.²⁶ Safe and comfortable accommodations, intensive care management, and supportive services are the building blocks of NHF’s approach to help homeless individuals recuperate and move toward independence. The ability of medical respite programs to fulfill this role depends on broader state and community efforts to make housing available to people experiencing homelessness.²⁷ “We want to find our guests a bed that we ourselves would be willing to sleep in and food that we would be willing to eat, but not every interim housing facility provides this,” says Bruno. During the COVID-19 pandemic, NHF leveraged charitable funding to ensure that guests found housing rather than see them return to living on the streets.

A medical respite program can help “localize and humanize” the homelessness crisis. Having witnessed the effects of a “Not in My Back Yard” mindset that derailed other programs, Bruno and her team are determined to foster a “Yes in My Back Yard” relationship with NHF’s neighbors by engaging the community in efforts to end homelessness as a matter of local pride. This appeal spurred local builders to participate in renovating the Pico-Union facility, neighbors to sew window curtains and help paint the walls, and college students to outfit a shed where guests can “shop” for donated clothing. “This facility is health equity in motion,” says Bruno.

It takes time to translate the need for medical respite care into referrals for services. The number of hospitalized homeless patients who could benefit from medical respite care typically far exceeds the availability of medical respite beds in a community.²⁸ Yet, it can take time to establish routine referral relationships between hospitals and a new medical respite program, which requires educating staff and patients about this option as well as developing contractual payment processes including data privacy protections. Because of these dynamics, one health plan initially overestimated the number of members who would use recuperative care, which diluted the advantage of contracting for a dedicated number of beds. The health plan has since seen increased use of medical respite care by its members as NHF’s increased capacity became known and hospitals stepped up referrals.

Medicaid and managed care plans can play a vital role financing medical respite care in states that expand Medicaid under the Affordable Care Act. Relying on hospitals alone to pay for medical respite care does not offer a sustainable financing model, according to Bruno. Medicaid coverage of homeless adults in California has made it possible for NHF to contract with Medicaid managed care plans to shore up its business model. It does so by structuring contracts around a recognized Medicaid service — intensive care management — wrapped around a respite care bed, says Pamela Mokler, a consultant to NHF. Additionally, NHF guests insured by Medicaid can receive covered services such as home health care, which would be an unreimbursed expense if they were uninsured — as is typically the case in states that have not expanded Medicaid.

Federal Medicaid waivers can help overcome financing challenges for medical respite care programs. Current Medicaid payment rules may discourage managed care plans from paying for medical respite care, which cannot be counted as a medical expense in their medical loss ratio (box). Moreover, the decreased medical utilization brought about by medical respite care could lead to reductions in the health plan’s capitation rate in subsequent years, according to Beau Hennemann, director of special programs for Anthem. These policies may prevent a plan from recouping its investment in paying for medical respite care.

California is preparing to implement a federal Medicaid waiver, known as California Advancing and Innovating Medi-Cal (Cal-AIM) that will allow managed care plans to pay for medical respite care — and other housing supports for homeless beneficiaries — as “in lieu of” services (box) that can be counted as medical expenses in their medical loss ratio.²⁹ The state will define eligibility criteria and core services for medical respite care, which should make it easier for managed care plans to contract with these programs statewide, according to Hennemann. This experience should be of interest to other states and the federal government to inform decisions about financing medical respite care.

Conclusion and Implications

By integrating medical care and social services, postdischarge medical respite care helps people experiencing homelessness along the path toward better health and stable housing. With growing evidence that medical respite care is a cost-effective intervention, it remains an underutilized service with the potential for expansion across the country. Payers and policymakers may wish to identify the kind of evidence needed to make a business case for dedicated financing of medical respite care, either as a stand-alone transitional care service or as part of a continuum of services to prevent homelessness.