Study shows that medical respite care for patients experiencing homelessness is cost-effective for hospitals

May 22, 2018

Don Shepard and Dan Shetler headshots
Heller Professor Donald Shepard (left) and Columbus House Data Scientist Dan Shetler (right)

By Bethany Romano, MBA’17 

A new study by Professor Donald Shepard and Dan Shetler in The Journal of Health Care for the Poor and Underserved demonstrates a powerful business case for providing medical respite care to hospitalized patients experiencing homelessness. In the article, titled “Medical Respite for People Experiencing Homelessness: Financial Impacts with Alternative Levels of Medicaid Coverage,” Shetler and Shepard examined two hospital case studies: St. Francis Hospital in Hartford, Conn. (a Medicaid-expansion state) and Holy Cross Hospital in Ft. Lauderdale, Fla. (a non-Medicaid-expansion state).

Their analyses show that the total population of patients experiencing homelessness in these hospitals is two to nearly three times larger than identified through existing routine data. They also demonstrate that hospitals and payers in both states would enjoy savings of several thousand dollars per admission if they were to implement and jointly fund medical respite (MR) programs, which provide a safe, sanitary, round-the-clock space for a recently discharged hospital patient experiencing homelessness to convalesce.

Professor Shepard says, “At the end of a hospital stay, patients who are housed would typically go home to their family to continue their recovery. But persons experiencing homelessness can’t. Sometimes they can stay overnight in a shelter, but shelters are typically closed in the daytime. That means patients experiencing homelessness sometimes stay longer in the hospital, or they get discharged someplace where they don’t have support.”

“Our first question in this study was, ‘How many patients experiencing homelessness came to a hospital in a year?” says Shepard. Hospitals track housing status through diagnosis data and address data, but both sources severely underestimated the population of patients experiencing homelessness.

“Either people don’t want to be identified as experiencing homelessness because there’s a stigma there, or hospital staff aren’t asking the right questions,” says Data Scientist Shetler. Through a capture-recapture analysis, the authors determined that these hospitals have 2.2 times (St. Francis) to 2.7 times (Holy Cross) the number identified through hospital data. 

These population underestimates have a significant impact on cost estimates. Patients experiencing homelessness tend to have a higher rate of comorbidities and require more complex care, which means their care is more expensive.

For many patients experiencing homelessness, MR facilities fill the gap between shelters and inpatient hospital facilities, which are expensive and over-qualified to treat patients who simply need time, basic care, and space to recover. “Each day spent in a hospital is about ten times as expensive as a day spent in medical respite,” says Shepard.

Shetler works at Columbus House in New Haven, Conn., which has partnered with Yale New Haven Hospital to develop a shelter-based MR program. He says, “We have 12 beds in individual rooms and offer three meals a day, and a visiting nurse comes and cares for the patients while they’re here.” Some other MR programs, he notes, are based in federally qualified health centers. “Those are medical facilities that also offer shelter, whereas we’re a shelter that provides some level of recuperative care.”

For patients who otherwise must manage their healthcare from out of a backpack, not having access to medical respite usually results in extended hospital stays. The 2010 Affordable Care Act (ACA) made it illegal for hospitals to discharge patients to unsafe situations. Therefore hospitals often cannot discharge patients experiencing homelessness who are medically ready to leave, increasing costs to the hospital and, if the patient is on Medicaid or Medicare, ultimately to taxpayers.

In addition to increased hospital stays, the lack of MR care often results in a patient returning to the hospital after discharge. Shetler says, “When hospitals discharge people to the street, their wounds don’t heal, their medication doesn’t get taken or isn’t properly refrigerated, and they end up right back in the emergency room.” These preventable readmissions are costly as well.

Shepard and Shetler calculated the savings that St. Francis Hospital and Holy Cross Hospital would gain if they were to implement MR programs and split the cost with Medicaid. Past research shows that patients experiencing homelessness who receive MR care decrease their hospital stay by an average of two days, and reduce future inpatient and emergency room episodes by 0.6 and 1.8, respectively.

For St. Francis Hospital in Connecticut, which has Medicaid expansion, the hospital would save an estimated average $4,635 per medical respite admission. Even after funding 50% of the cost to provide MR care, the hospital would still enjoy a net savings of $1,575 per MR admission.

For Holy Cross Hospital in Florida, which does not have Medicaid expansion, the savings are even more pronounced. The hospital would save an estimated average $8,268 per MR admission, and after splitting the cost of an MR program it would return a net savings of $5,208 per medical respite admission.

“One of the more surprising findings,” says Shetler, “is that in non-Medicaid expansion states, the hospital could pay for the entire cost of a medical respite care and still come out financially ahead. That’s because they’re losing so much money on patients who are experiencing homelessness who are not insured under Medicaid expansion.”

The authors hope that their data will encourage hospitals across the country to partner with payers and managed care organizations to establish MR programs—or, in the case of non-Medicaid-expansion states—to consider funding the endeavor themselves. Shetler estimates that only 79 medical respite facilities existed in the U.S. as of 2016, and they vary widely in the level of care they provide and the ways in which they are funded. 

Shepard says, “So 79 programs exist, but there are thousands of acute care hospitals around the country. Even if each program served two hospitals, it would fill a tiny portion of the need.  We hope that our study can show that medical respite is a promising idea, and that it will grow.”

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Dan Shetler is a data scientist at Columbus House (a homeless services agency in Connecticut) with a personal mission to help nonprofits harness the power of data through statistical analysis, data visualization, and machine learning. He likes to approach data (and life) through play and brings a sense of joy and creativity to his work. His master’s degree from the University of Pittsburgh’s Graduate School of Public and International Affairs focused on methods for monitoring and evaluating nonprofit organizations.

Donald S. Shepard, Ph.D., is professor at the Schneider Institutes for Health Policy at the Heller School and director of the institutes' group on cost and value. He is a health economist concerned with maintaining and improving health in the United States and internationally. His major areas of research are cost and cost-effectiveness analysis in health, health financing, and performance incentives. Substantive areas concern malaria, cardiovascular disease, HIV/AIDS, dengue, lymphatic filariasis, vaccines, measurement of the quality of life, and control of mosquitoes, and oral health.

Media Contact

The Heller School welcomes media inquiries on this and all other news items. Email  Bethany Romano or call 781-736-3961.

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