Summary: Relying on tax credit programs that encourage investment in affordable housing units as well as businesses and real estate projects in low-income communities, a Denver-based nonprofit built a $35 million development that combines supportive housing for the homeless with integrated physical and behavioral health services.
By Sarah Klein
For 30 years, the Colorado Coalition for the Homeless has been working to integrate health care and housing services for the homeless based on the principle that managing serious mental illnesses, substance abuse disorders, and chronic medical conditions prevalent among the homeless requires safe housing.
Over the decades, the nonprofit has overseen the development of 1,600 housing units for homeless individuals and families in Denver and across the state, a significant portion of which are targeted to those in frail health whose recovery has been hindered by lack of consistent access to nutritious food, clean water, and a place to rest.
The coalition’s most recent and largest development—the Stout Street Health Center and Renaissance Stout Street Lofts—combines a 53,000-square-foot federally qualified health center for the homeless with 78 housing units (see video). The building in downtown Denver provides those housed in coalition developments and those that are still homeless with access to a continuum of health care services—including primary care, mental health services, substance abuse treatment, and dental and vision care—generally on a same-day basis.
The new health center, which opened in September, will serve roughly 18,000 patients, 50 percent more than an aging clinic it replaces—a development made possible by Colorado’s Medicaid expansion under the Affordable Care Act. The expansion will bring the percentage of clinic patients covered by the public program from 15 percent to 90 percent—including individuals with advanced chronic conditions who were previously ineligible for benefits.
One Care Team, One Care Plan
The health center assigns residents and other patients to one of four care teams, each of which includes a primary care physician, a physician’s assistant, a social worker, and part-time psychiatrists and pharmacists who work to coordinate physical and behavioral health services as a means of improving outcomes. The teams also include a case manager and patient navigator to help with care planning and provide a variety of social supports, including helping patients find and/or maintain housing, offering crisis assistance, and facilitating access to medical services, including when necessary accompanying patients to appointments. The latter is particularly important because an estimated 80 percent of the homeless suffer some cognitive impairment because of traumatic brain injuries, serious mental illnesses, and substance abuse, among other challenges.
Coalition staff also provide counseling, training in life skills and financial literacy, and assistance identifying educational and employment options and applying for government benefits.
Expected Savings and Health Improvements
Based on experience, coalition leaders are optimistic that providing housing in combination with integrated physical and behavioral health services will reduce spending on emergency department care, inpatient medical and psychiatric care, detox services, incarceration, and emergency shelter, as it found with a much smaller demonstration of the model that was used to support 200 chronically homeless individuals with disabilities.
In comparing the health and emergency services records for a subset of participants in the 24 months before entering the program with the 24 months after, the coalition found utilization of all of these services declined, with an average cost savings of $31,546 per participant (Exhibit 1). After accounting for the costs of housing and supportive services ($13,400 per person per year on average), the average cost savings was $4,745 per person. The coalition also found that 50 percent of the studied participants had documented improvements in their health status: 43 percent showed improvement in mental health status, while 15 percent had decreased their substance use. Housing stability increased significantly: during the period studied 77 percent of participants continued to be housed.
Covering the Upfront Costs
Construction of the health center and loft project cost $35 million. To raise the money, the coalition relied on the Low Income Housing Tax Credit Program and New Market Tax Credit Program, two fairly complex federal programs that are designed to encourage private investment in projects and businesses that provide a public benefit to underserved populations. Under these programs, investors provide equity in exchange for tax credits that they can apply over a 10-year period.
The New Market Tax Credit Program, which supported the development of the health center, had never been used in this way and the coalition’s success with it has attracted attention from other organizations interested in reproducing it. While it is replicable, it can be challenging to execute because of competition for a scarce number of tax credits.
This is also true when it comes to credits for affordable housing, which are allocated by housing finance agencies in states. "They are often targeted to projects that provide housing to those with higher levels of income," says Bette Iacino, the coalition’s vice president of public policy and communications.
The coalition leveraged the tax credit programs to generate another $10 million in capital support and grants from the city and county of Denver, foundations and individuals, and the Health Resources and Services Administration (HRSA), which supplies funding to federally qualified health centers that target special populations, including the homeless.
Expected increases from Medicaid were pivotal in the decision to move forward, says John Parvensky, the coalition’s president. "It provides the long-term funding to both expand staff and to be able to expand services to meet the needs of patients we were previously turning away," he says.
The coalition also received help from the Kresge Foundation, a Michigan-based philanthropy that invests in programs for the disadvantaged, which provided a $3 million bridge loan to help the clinic purchase an electronic medical record system and expand staff before it received the increase in Medicaid reimbursements.
Challenges
While the coalition has expanded access to primary care and behavioral health services through its new health care center and satellite clinics, access to specialists—particularly radiologists, pulmonologists, cardiologists, and oncologists—is severely limited and is expected to worsen as more Colorado residents gain health care coverage through the Medicaid expansion and public insurance exchanges. At present, "20 to 25 percent of our patients need that referral. It’s probably the most frustrating thing that our providers run into—just trying to connect with specialists," Parvensky says. Some area hospitals have offered specialty care appointments for the homeless and newly housed patients, but those are insufficient to meet demand.
The coalition also struggles with finding financial support for a novel respite program that offers medical beds in shelters to homeless patients who would otherwise remain hospitalized because their medical conditions prevent them from being discharged to the street. These patients "may need oxygen or have wounds that need daily dressing changes," Parvensky says. "Others may not be ambulatory because they have crutches or a wheelchair and can’t manage the streets." Some local hospitals have chipped in to cover the cost of the program—which may help them avoid readmissions for these patients—but not enough to build a robust program with a higher level of medical services and integrated behavioral health services. Having a defined benefit for respite care in the Medicaid program would help, Parvensky says.
Moving Forward
The coalition is preparing to break ground on a project that will produce 103 more units of supportive housing in Denver and is in the predevelopment stage for a 100-unit building that it hopes to begin construction on next year—producing a portion of the 1,000 units the organization estimates it needs to house the chronically homeless in the area.
Parvensky hopes to find support for additional developments through a Social Impact Bond program with the city of Denver. Under such bond programs, private investors provide upfront funds for housing and other services, with a promise from government entities to repay the funds with achieved savings. If the city is willing to go forward with it, it would provide funding for housing for 300 chronically homeless individuals who are heavy utilizers of jail and police services, based on demonstrated cost reductions in city services.
Demonstrating impact on costs and health measures will be critical to obtaining support. To quantify that, the coalition will be collecting data on health measures—including the percentage of patients who receive appropriate medical and mental health screenings—and improvement in health status. It also will be measuring housing retention rates and costs reductions from decreased use of detox facilities, emergency departments, hospitals, and emergency shelters.
Closing the gap between Medicaid reimbursement and actual costs is also essential for sustainability, as is maintaining funding from HRSA and private sources. "Medicaid expansion was a game changer for us but it isn’t enough in itself to keep us operational," Iacino says.