'Housing is health care': It's 30% cheaper to provide housing to people with mental illness

Metro Phoenix could save millions of dollars of taxpayer money per year by providing supportive housing to people with chronic mental illnesses like schizophrenia, according to a new report out of Arizona State University.

The report from the university's Morrison Institute for Public Policy found that it is almost 30% cheaper to provide housing to people with serious chronic mental illness than it is to allow them to become homeless.

Most significantly, a person's health care costs decreased by almost $20,000 per year when they were living in a housing program that provides on-site behavioral and medical supports, the report found.

The report focused on people with the most severe and persistent forms of serious mental illness, who often cycle through emergency rooms, jails, prisons and homeless shelters because their conditions are chronic and untreated.

"I think it's recognized that treatment and supportive housing is expensive but not treating and housing people with chronic mental illness is even more costly to the public," said Alison Cook-Davis, one of the authors of the report.

The most expensive cases

Dr. Charles Goldstein, a former emergency medicine physician at John C. Lincoln Medical Center, watched police officers drop off people with serious mental illness at his emergency room over his 40-year career.

Police officers found these individuals in crisis on the street — shouting, talking to themselves or getting into fights — Goldstein said.

Officers either took them to jail on a low-level offense like disorderly conduct, let them be or took them to the nearest emergency room.

When people in crisis would arrive in his emergency room, there was very little Goldstein could do to help other than give them sedative medication. But doctors would still have to perform a full evaluation to make sure there wasn't anything medically wrong.

Then the individual, still experiencing a mental health crisis, would be forced to stay in their hospital bed, guarded by a nurse or security guard, "like they're imprisoned," until a crisis team could come get them, Goldstein said. More often than not, the crisis team would discharge the person back to the street.

Goldstein said the individual's hospital stay was ineffective in every way. The cost of the emergency visit was billed to the state's health care system, an emergency room bed was taken up by someone not experiencing a medical emergency, and the person in crisis did not receive any behavioral health treatment.

"It's the worst possible environment I can think of to treat someone with active psychosis," Goldstein said. "You need a quiet, recuperative environment, and the emergency room is everything that's not that."

Prisons or homeless shelters are just as expensive and ineffective for people with chronic mental illness, he said.

Goldstein's frustration goes beyond his professional experience. His son has a chronic mental illness and was on the receiving end of this ineffective care.

Goldstein's wife, Laurie, said their son ended up in the emergency room five to 10 times per year for more than a decade. He spent time experiencing homelessness and had run-ins with the criminal justice system.

Each experience was costly to his family and the public health care and law enforcement systems, and more importantly, did nothing to help him and often made his condition worse.

Their son has what experts call "chronic mental illness." These are the most serious and persistent of all mental illnesses. In Maricopa County, about 140,000 adults have a serious mental illness. About 10% of those individuals have a more severe chronic condition and will likely need lifelong treatment and support to manage their conditions.

People with a chronic mental illness most commonly have schizophrenia, severe major depression, bipolar disorder or some other psychotic disorder.

Laurie said people with severe forms of these disorders do not realize they have a disease and therefore fight treatment and refuse to take medication, making managing their condition much more difficult.

"They have a lack of insight. If you don't believe you're ill, why would you take all these medications that have side effects?" Laurie said.

Cost savings

The Goldsteins teamed with other parents a few years ago to form the Association for the Chronically Mentally Ill to advocate for better long-term supportive housing options for people with chronic mental illnesses.

ACMI's foundation was a partial funder of the Morrison Institute's new study.

Laurie said providing supportive housing instead of allowing people with chronic mental illness to bounce between prison, hospitals and homeless shelters "is a no-brainer, but government agencies and the Legislature don't want to hear, 'It's just the right thing to do.' So that's why we thought it was so important to have the research behind it."

The Morrison Institute conducted a cost analysis to look at the financial impact of chronic homelessness on the taxpayer-funded health care, social services and criminal justice systems.

The report tracked almost 6,300 people with chronic mental illness enrolled in the state's Medicaid system from 2014 to 2019, concluding that people provided with housing required less medical attention and cost the system less.

The study found that a person with chronic mental illness experiencing homelessness racks up an average of $72,969 per year in housing, health care and criminal justice expenses.

When provided with housing that does not have onsite support services (like life skills training and behavioral health programs), a person with chronic homelessness costs the system about $61,262 per year.

When provided with housing that has onsite support services, the cost drops to $51,976 per year.

The study also tracked 78 people with a chronic mental illness who transitioned from homelessness to permanent supportive housing and found the average cost-per-person declined by 10% upon their transition.

What is permanent supportive housing?

The Morrison Institute report showed that housing of any kind brings down costs associated with people who have a chronic mental illness, but permanent supportive housing is most effective.

Permanent supportive housing is housing that includes some level of support onsite, whether it be drug rehabilitation programs, case management, life-skills training or job training.

"What I've found in my career is that you could put people in housing but unless you give them the supports they need to succeed, they most likely won't," said Michael Franczak, director of population health at Copa Health.

The level of support in permanent supportive housing can range from 24/7 supervision to occasional meetings with support systems, depending on the individual's level of need.

Dick Dunseath's son required the more intensive level of support. It took his family two decades to find a housing program that could provide that. 

Dunseath said his son, who has a chronic mental illness, would get kicked out of behavioral treatment programs for not following the rules of the house. Dunseath said the program leaders could not see that his son's behavior was a byproduct of his disease.

"We kind of blame them. We say, 'They're not complying with treatment, so of course they're choosing that by not complying. He's choosing to be homeless by not complying,'" he said.

In between programs, Dunseath's son would sometimes end up living on the streets after he was kicked out of programs. Dunseath wouldn't know where his son was until he ended up in a hospital. Twice, his son was hit by a car, requiring surgery and significant physical rehabilitation, he said.

Dunseath watched again and again as the system, which was paying an extraordinary cost for his son's emergency health care, failed to help his son.

A few years ago, Dunseath's son was selected to be one of the first residents of a pilot program by Copa Health that offers long-term housing with 24/7 professional behavioral health support.

There are now two Lighthouse Model Community Homes, with five men in one home and four in another. The residents are free to come and go as they please, but behavioral health technicians are always available onsite to encourage the residents to take their medications and promote good hygiene and nutrition.

Technicians also help with cooking, shopping and job training and take residents to and from medical appointments.

Franczak said the technicians also recognize mistakes or rule-breaking as learning opportunities instead of immediately evicting residents.

"They don't try to find ways to kick them out or drop them off at a homeless shelter," Dunseath said.

For Dunseath's son, the Lighthouse model provided the appropriate amount of support to allow his son to manage his mental illness. All nine original Lighthouse residents are still in the program.

"My son now has a place. That's been a godsend. I don't even know if he would even still be alive if it wasn't for that concept coming into being as he was getting worse," he said.

The Morrison Institute found that the health care costs of residents in the Lighthouse programs fell 12.1% in the 2-3 years after the program began.

'Provide incredibly better care and probably save money'

Despite the cost savings associated with supportive housing for people with mental illness, metro Phoenix has an extreme shortage of it.

According to the Morrison Institute report, only 5,221 beds were available in behavioral health residential facilities and supportive housing through the state's Medicaid system — only enough to house 15% of people with serious mental illness enrolled in the system.

Advocates like Dunseath and the Goldsteins — whose son is also in the Lighthouse program — are urging the state to build more affordable, permanent supportive housing for people with mental illness.

Dunseath said his son was costing Medicaid, the Department of Corrections, law enforcement and other government agencies money every time he experienced crisis before he found a permanent supportive housing program that worked for his needs.

"Redirect those dollars and provide incredibly better care and probably save money," Dunseath said.

Cook-Davis said experts she talked to recommended "increasing supply of housing and making sure that housing is accessible and affordable to vulnerable populations like individuals with chronic mental illness."

Accomplishing that will take community and political support, she said. 

"If the data shows that there's savings to taxpayers, then it's more impactful to a broader audience in Arizona," Cook-Davis said.

Franczak said he's optimistic that the Morrison Institute's findings coupled with an influx of housing dollars from the federal government and increased acknowledgment of homelessness issues at the state level will lead to the imminent development of more housing options for people who have mental illness. 

"It's the opposite of perfect storm. It's the perfect sunshine," Franczak said. 

Coverage of housing insecurity on azcentral.com and in The Arizona Republic is supported by a grant from the Arizona Community Foundation. 

Reach the reporter at jessica.boehm@gannett.com or 480-694-1823. Follow her on Twitter @jboehm_NEWS.

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