Can Health Care Savings Drive a New Funding Model For Affordable Housing?

Shifts in Health Care Industry Provide Opportunity for a New Funding Model 1.Industry moving from “pay for volume” to “pay for value” 2.Shift from access to “sick care” to health care” and “well care” 3.Public Purchasers are shifting their patients to managed care plans Capitated rates with cost savings and risk potential for health plans Better potential for aligning costs and savings

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Proposed Health and Housing “Products” 1) Care Management services: generally focused on increasing services and improving outcomes for existing residents or in new properties using traditional HUD/LIHTC deal structures 2) Supportive Housing– service-enriched housing, typically for formerly homeless individuals, including seniors, veterans and/or disabled 3) Service-enriched senior housing: Unlicensed housing with support services that do not reach the level of care and supervision of assisted living or skilled nursing

Funding Considerations

Funding Model Options 1) Traditional approach (current): Reliant on public funding for capital, services, and operations. Health and housing integration and innovation occurs at project level with some philanthropic support 2) Fee for service (proposed approach): directly contract with a health plan or provider for a monthly fee that covers health and housing costs in an integrated payment that is not dependent on health outcomes. 3) Pay for Success: Seek contract with public agency to pay fee in return for specific outcomes (e.g.. avoided hospitalizations, lower costs, etc.). Would require partnership with investor that would pay for the up- front costs of the housing and services in return for share of savings.

Factors that influence revenue potential Alignment / Access Control Annual Medicaid Expense Access: what is the process by which residents gain access to apartments Alignment: Degree to which the residents are members, enrollees, patients of the health partner

Potential business models

Opportunity #1: Care Management service-enriched housing communities are a platform for comprehensive health promotion and risk reduction On-site staff can deliver targeted care coordination services in a community-based setting Coordinators also facilitate access to residents for third party services such as health screenings Mercy Housing has the expertise and opportunity to reach individuals who elude clinic-based case management

Core Wellness Practices and Programs Health and Wellness Interview Preventative and Primary Health Care Behavioral Health Care Health Benefits Acquisition Health Education and Risk Reduction Food Physical Activity WellBeing Checks Activates for Daily Living Screening and Support Transition Plan to and From Hospitals/Institutions

Examples of Third Party Services Coordinated by Mercy Housing Health screenings and immunizations Services to promote healthy pregnancies and help children with special needs Hospice In-home Support Services/ Adult Day Health Food services: Meals on Wheels; Food Bank

Fee-for-service senior housing

Hot-spotter approach: Small percent of “high cost” individuals drive health care costs High-cost Medicaid enrollees (over $25,000 annual spending) are 4% of all enrollees, 49% of all spending 49% are elderly and 43% are disabled. nursing homes or other long-term care represent 77% of cost attributable to elderly “high-cost enrollees” of Medicaid

Problem: Traditional “medical” solutions are unlikely to avoid key cost drivers of highest cost enrollees Nursing homes or other long-term care represent 77% of cost attributable to elderly “high-cost enrollees” of Medicaid There is currently no affordable alternative to skilled nursing Homeless individuals and other extremely low-income individuals are often difficult to treat for illness and/or discharge from hospitals because they lack stable housing and often fail to access behavioral health supports.

“Market Failure” Medicaid will pay for skilled nursing or residential care facilities at three to four times the monthly cost of Mission Creek Medicare will pay 20X the daily cost of Mission Creek for hospital beds for patients that lack a home to be discharged to. Once the patient’s medical needs have been met, hospitals pay the cost of “housing” the dual eligibles in their $1,000/night beds

Case Study: Mission Creek Senior Community San Francisco Service-enriched independent living alternative to nursing home beds at Laguna Honda 50 of 140 units direct referral of SF Dept of Public Health from skilled nursing, hospitals and shelters SF DPH pays $700/month operating subsidy for exclusive access to those units.

Case Study: Mission Creek Senior Community San Francisco Mercy’s on-site team provides a holistic “blended” approach to services and property management Service Coordination Health Interview Health Education Food banks Physical ActivityWell-being Checks Transition PlansBenefits Acquisition SF DPH also provides access to a roving team that can meet the “medical” needs of residents

Study Findings: San Francisco Department of Public Health Medicaid/Medicare costs of the 50 original DPH referrals shrank from $1.7 million per year to $253,000 Per capita, $29,000 annual savings, Medicaid and Medicare Savings: reduced hospitalizations and skilled nursing stays

Value Proposition: Estimated Total Costs & Savings Net Savings Fee Fee Health care cost $65k-100k per year Health care cost $65k-100k per year Impact of Independen t Long Term Care Pre-Intervention With Independent Long-Term Care Ongoing health cost

How else might we understand pricing?