Chronic Homelessness Pay for Success Initiative

The Problem

Individuals experiencing chronic homelessness disproportionately utilize significant government resources in the form of emergency room visits, mental health services, substance abuse detoxification and treatment, criminal justice resources, and other services. Massachusetts has a chronically homeless population of nearly 1,600 individuals.

The Basics

Location: Massachusetts

Policy area: Homelessness

Population served: High Use Homeless Individuals, meaning all individuals either: (1) meeting the U.S. Department of Housing and Urban Development definition of “chronically homeless” or, (2) identified by MASH as homeless, anticipated high-cost users of emergency services in its reasonable judgment. The project aims to provide 500 units of supportive housing for up to 800 individuals.

Service provider: Massachusetts Housing and Shelter Alliance

Size of investment: $26.5 million

Maximum success payments possible: $6 million

Investors: Corporation for Supportive HousingUnited Way of Massachusetts Bay and Merrimack ValleySantander Bank

Intermediaries: Massachusetts Alliance for Supportive Housing (MASH), in partnership between the Corporation for Supportive Housing and United Way of Massachusetts Bay and Merrimack Valley (fundraising intermediary and financial manager)

Other partners: Harvard Kennedy School SIB Lab (technical assistance), Corporation for Supportive Housing (technical assistance)

Evaluator: Root Cause

Evaluation methodology: Root Cause verifies the number of participants who have been housed and for how long, as well as the number that transition into a successful housing outcome outside of the PFS project.

Outcome payor: Commonwealth of Massachusetts

Outcomes that yield payments: Number of days participants are continuously housed in permanent supportive housing, with a minimum of 12 consecutive months (with the exception of past participants whose days may count as Former Qualified Participant Days although they left the program before the 12-month mark)

Timeframe: 5 year service delivery term; 6 year repayment term; 5.25 year evaluation period

Project start: June 2015

Photo via Shutterstock.

The Intervention

Intervention: Home & Healthy For Good is a Housing First model. Housing First provides permanent housing to individuals experiencing homelessness, simplifying the process of accessing housing by streamlining the application process and removing unnecessary barriers. In Housing First, tenants have access to a broad range of comprehensive community-based services, though treatment or services are not a requirement of tenancy.  A combination of housing and supportive services is referred to as Permanent Supportive Housing (PSH). 

Evidence base behind the intervention: A 2014 review of individual studies from 1995 through 2012 found substantial literature, including seven RCTs, demonstrating that components of PSH reduced homelessness, increased housing tenure, and decreased emergency room visits and hospitalization.  A 2014 longitudinal study shows PSH is also associated with reductions in the rate of chronic homelessness on a community level. Although at least three studies show that the net public cost of providing PSH to homeless people with mental illness and/or addictions is about the same or less than the cost of allowing them to remain homeless, this benefit-cost analysis suggests the intervention may not be cost beneficial. A meta-analysis of PSH showed positive outcomes for hospitalization, psychiatric hospitalization, homelessness, emergency department visits, and primary care visits.

The effectiveness of this intervention for the target population had been evaluated, and the service provider had provided this intervention previously.