Examining the Role of Housing in the Healthcare System

By Oxeonites Jacqlyn Blatteis, Michael Bernstein, and Teddy Wickland

At Oxeon Partners our mission statement is simply to make people healthier.  We do this in collaboration with our investment fund, Town Hall Ventures, by investing in and partnering with healthcare entrepreneurs and companies that want to transform care delivery and health outcomes for the most underserved and highest need populations across the country.  Recently, we’ve partnered with a number of organizations addressing these needs through a new healthcare lens: Drivers of Health (also known as Social Determinants of Health). These are the conditions in which people are born, grow, live, work and age. And as it turns out, one of the primary influences of health is simply housing.

On any given night in the United States, more than a half-million individuals experience homelessness or a lack of affordable housing and millions more will experience housing insecurity over the course of their lifetime. This is greater than the population of many cities and likely many times greater than the towns most of us grew up in.  While many of us reading this might not know someone who has personally struggled with homelessness, the impact of the lack of affordable housing in America is incredibly pervasive. More than 30% of Americans are deemed “housing-cost burdened” by HUD, meaning they spend more than 30% of their income on housing; leaving little left to cover other expenses (including healthcare).  Even in today’s divided political climate, support for ending homelessness transcends political party lines. In September, President Trump expressed urgency to address this problem: “We have people living in our best highways, our best streets, our best entrances to buildings… where people in those buildings pay tremendous taxes, where they went to those locations because of the prestige.” 

Regardless of how you read into that quote (homelessness as a human rights issue versus a nuisance for the rich), the increasing media attention on this topic reveals that there’s unprecedented momentum to tackle this issue. So, before we think about potential solutions, we want to take a minute to examine the way we currently approach this problem to understand why our previous attempts have proved futile. 

One primary way we deal with homelessness today is by creating structural barriers that push this community to the outskirts of society--far from our view. In NYC’s Upper West Side this becomes apparent when you see benches designed specifically with metal bars to prevent someone from sleeping on them, and railings and ledges constructed with spikes.  In addition to investing in unfriendly architecture, many cities have implemented laws that prohibit activities such as panhandling or sleeping outside in public. The expectation seems to be that you can be homeless, so long as you stay out of sight and are “not in my backyard.”

And so we fund shelters and food pantries, often in neighborhoods we don't live in, and we give dollars on the subway.  But this does little to improve the structural issues of homelessness and housing. Why?

The most frequent backlash is that the cost is simply too great. Yet, in addition to our philanthropic efforts, we’re already spending significantly on the matter. On a national level, it’s estimated that the cost of inaction actually costs taxpayers an average of $40,000 a year for each homeless individual.  This cost largely comes through the healthcare sector for hospitals and organizations who rely on public sources of funding to provide care. On a local level, the picture can be even more mind-blowing. New York City alone spends over $3 billion annually to fund shelters and social services... and that’s not including the cost of healthcare, which can range from an additional $50,000 to $500,000 per individual annually in uncompensated care. Individuals experiencing homelessness are 8x more likely to wind up in the emergency room, stay 2 ½ days longer than average, and are re-admitted at a rate of 50%. These stats are almost unbelievable.

Perhaps even more striking though is that 80% of those emergency room visits made by people struggling with homelessness are for an illness that could have been treated with preventative care. In other words, we may feel like it would be overbearingly expensive to provide housing and quality healthcare to the homeless community, but in reality, our current system already spends billions to provide an inadequate safety net.  And there is ample opportunity to reduce the cost!

Part of the problem lies in the cyclical nature of our gaps of care within our healthcare system. Often referred to as the “revolving door,” our emergency departments treat individuals experiencing homelessness for their most urgent health needs and then immediately release them back onto the streets, no more equipped to prevent the health concern from perpetuating than they were before and with no stable environment to improve their situation.  The cycle continues, the cost rises. 

As the american healthcare system begins to shift towards providing more care upstream and outside the walls of expensive, tertiary academic hospital settings, so too should we intervene with this population to alleviate the cost and improve physical and mental well-being, long before the need for a trip to the emergency department.

The million (or potentially billion dollar) question in this case, of course, is how?  

From a policy perspective, those in charge of crafting innovative legislation on the matter are taking notice.  Earlier this year, Alex Azar announced a potential game changer in addressing the housing situation through new payment initiatives. The Center for Medicare and Medicaid Services may soon allow hospitals to reroute Medicaid funding towards paying directly for housing. If enacted this transition will likely be implemented through public-private partnerships. 

This would mean that healthcare innovators, business leaders, and investors could soon work together to directly reduce the rate of homeless using the framework laid out in CMMI.  But you can bet that this signal from the federal government, regardless of the outcome of the payment model, will be the catalyst for private sector innovation, and the train is already boarding.

Here at Oxeon, we’re excited by the opportunity to be a part of this change.  We expect this to be one of the next great improvements to our healthcare system; one that will look at whole person health and engage with patients beyond the four walls of the clinic. But in the meantime, it’s never too late to volunteer and get involved.  There are a number of great organizations right in your backyard that could use your help right now here.