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

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

3. Shifts in Health Care Industry Provide Opportunity for a New Funding Model • Industry moving from “pay for volume” to “pay for value” • Shift from access to “sick care” to health care” and “well care” • 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

4. Figure 4

5. Proposed Health and Housing “Products” • Care Management services: generallyfocused on increasing services and improving outcomes for existing residents or in new properties using traditional HUD/LIHTC deal structures • Supportive Housing– service-enriched housing, typically for formerly homeless individuals, including seniors, veterans and/or disabled • 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

6. Funding Considerations

7. Funding Model Options • 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.

8. Factors that influence revenue potential 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 Annual Medicaid Expense Alignment / Access Control

9. Potential business models

10. 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

11. 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

12. 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

13. Fee-for-service senior housing

14. 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

15. 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.

16. “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

17. 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.

18. 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 Activity Well-being Checks • Transition Plans Benefits Acquisition • SF DPH also provides access to a roving team that can meet • the “medical” needs of residents

19. 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

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

21. How else might we understand pricing?