Providing permanent housing for homeless in rural areas reduces cost, improves quality of life

Study shows significant savings and improved health

AUGUSTA, ME – May 19, 2009 – (RealEstateRama) — Providing permanent supportive housing for homeless people in rural Maine is less expensive than serving them while they are homeless, and provides a better qualify of life at the same time, according to the results of a new study.

Rural homeless people with disabilities who retained permanent, supportive housing saw a reduction in spending of 32 percent. The study defined permanent supportive housing as affordable housing for those who are homeless, where support services for people with mental illness or co-occurring disorders of mental illness and substance abuse are available, either on-site or in other community locations.

The study also reported a 57 percent reduction in the cost of mental health services over a six-month period. Part of that reduction was a dramatic 79 percent drop in the cost of psychiatric hospitalization, from $452,800 to $96,641.

The study was prepared by Melany Mondello of Shalom House; Jon Bradley of Preble Street; and Tom Chalmers McLaughlin, PhD. and Nancy Shore, PhD., both from the University of New England. It is the first statewide cost of homelessness data collection in the country that looks at costs of rural homelessness.

“Providing permanent housing has been the mission and purpose of Shalom House for over 37 years,” said Mary Haynes-Rodgers, Executive Director of Shalom House, Inc. “This study provides further evidence that permanent supported housing is an effective solution for people with mental illness who are homeless. We are thrilled to have partnered with so many agencies, statewide, to complete this study.”

The 163 participants in the study were chosen from all areas of the state, except Greater Portland. Researchers looked at actual cost records of service providers and individual service records to determine costs. Previous studies in other states used estimated cost calculations and estimated service contacts to determine costs.

The great majority of participants (97 percent) have severe mental illness; more than a third also suffer from chronic alcohol or drug abuse.

Other reductions reported in the study include a 95 percent decrease in incarceration costs and a 32 percent decline in ambulance transportation costs. Homeless people who obtain supportive housing avoid returning to emergency housing, cutting emergency shelter costs by 99 percent.

Total costs, including that of providing the permanent supportive housing, were lower for people living in supportive housing by $1,348 per person. That is a total savings of nearly $220,000 over 6 months for the 163 people in the study.

“This study shows that providing permanent housing and services to people with mental illness or substance abuse issues is cost-effective, even in rural settings,” said Nancy Fritz, Director of Homeless Initiatives for Governor Baldacci. “It offers clients a higher level of personal stability.”

MaineHousing Director Dale McCormick said the findings provide a winning strategy for Maine.

“Providing permanent housing saves the taxpayer money and improves the lives of people who are homeless in rural Maine,” McCormick said. “Everyone benefits.”

The study found an equally dramatic improvement in the quality of life, measured in areas that include work, learning, health, relationships, understanding self, and independence.

“I have regained my self-assurance, which was absolutely taken from me during my 11 months of homelessness,” one supportive housing tenant said.

Meanwhile, income increased on average by 77 percent. The number of study participants reporting that they had no income declined from 41 percent to 17 percent.

This study mirrors findings of a 2007 study of homelessness in Greater Portland. That study found it was less expensive to provide permanent housing and services to homeless people with disabilities than to serve them through emergency shelters.

The new study is available at MaineHousing’s website at www.mainehousing.org.