Dealing with chronic homelessness

Pay-for-success approach shows promise

IN THE PAST TWO WEEKS, the city of Boston put the finishing touches on a new shelter for 400 homeless individuals on South Hampton Street and announced a bold homelessness triage system. Mayor Martin Walsh and city officials should be applauded for their swift and comprehensive response to the emergency closure of the Long Island shelter. Finding 400 new beds in an overtaxed shelter system is no small task, nor is the goal of housing all of Boston’s chronically homeless individuals within three years.

Now, it is time to begin housing the homeless in Boston and across the state–for good. The goal of the new pay for success initiative launched last month by the Commonwealth is to place nearly half of the state’s chronically homeless population in supportive housing. There are an estimated 1,590 chronically homeless individuals in Massachusetts. That means if the effort is successful, up to 800 of these chronically homeless individuals will be placed in supportive housing.

The term “chronically homeless” is used to describe an individual with a disabling condition who has either been homeless for a year or more, or has had at least four episodes of homelessness in the past three years. These men and women often suffer from complex medical and behavioral health conditions that are virtually impossible to manage in the unstable setting of homelessness.  The cost of their medical care far outpaces their demographic numbers; chronically homeless individuals constitute 10 percent of the homeless population, yet consume more than half of available emergency resources, according to University of Pennsylvania researchers Randall Kuhn and Dennis Culhane.

In this supportive housing, or housing first model, individuals live in leased, independent apartments or shared-living arrangements that are integrated in the community. They have access to a broad range of comprehensive community-based services, including medical and mental health care, substance abuse treatment, case management, vocational training, and life skills training.  By removing the barriers to housing, individuals are given an opportunity to deal with the complex health and life issues they face as tenants, rather than as clients of a prescribed system of care.

What’s unique about the new pay for success effort is that it leverages funding from private investors, investors who are repaid by the Commonwealth only if certain benchmarks are achieved.  The program will leverage $3.5 million from philanthropic and private capital investments from Santander Bank, the Corporation for Supportive Housing, and the United Way of Massachusetts Bay and Merrimack Valley.

First announced in December 2014, this initiative marks the implementation of Massachusetts’ second pay for success model. The program expands upon the Massachusetts Housing and Shelter Alliance’s flexible funding approach to permanent supportive housing, which is called Home & Healthy for Good. That program has significantly lowered the Commonwealth’s public emergency expenses by securing long-term housing and supportive services for more than 800 chronically homeless individuals since 2006.

We know that the housing first model works and that it saves the state money; average Medicaid, shelter, and incarceration costs drop significantly once a chronically homeless individual has a stable place to live and access to support services.

The Commonwealth will make up to $6 million in success payments for this six-year project.  Success will be achieved if chronically homeless individuals participant in the initiative remain in stable housing for at least one year.  Since the soft launch of the program this past spring, 33 individuals have already been placed in supportive housing.

In addition to private funding, the initiative leverages public resources to incentivize the redirection of finances from the traditional emergency shelter response to funding for permanent supportive housing. An independent evaluator, Root Cause, will determine if the pay for success initiative has achieved its goals, upon which the state will repay the money along with a return to the investors.

We have seen the results of Boston coming together in the face of a homelessness crisis. We believe the launch of this supportive housing initiative and growing support for the pay-for-success model cements Massachusetts’ role as an innovator on the cutting edge of efforts to end homelessness.

Meet the Author

Joe Finn

President, Massachusetts Housing and Shelter Alliance
Meet the Author

Michael K Durkin

President, United Way of Massachusetts Bay and Merrimack Valley
Long-term homeless persons with histories of cycling in and out of emergency and acute care are best served by being housed. This approach ends their homelessness and their reliance on emergency resources, ultimately serving as a more cost-effective and efficient approach to creating change that lasts.

Joe Finn is president and executive director of the Massachusetts Housing and Shelter Alliance. Michael K. Durkin is president of United Way of Massachusetts Bay and Merrimack Valley, and a member of the mayor’s Task Force on Homeless Individuals.