Joe Dennis

A True Accounting: Taking a Look at the Costs of Health Care for the Homeless

by Joe Dennis
Originally published in Flagpole (cover story)  on Feb. 28, 2007

Athens hospitals – and in effect hospital consumers – spent more than $12 million in 2005 providing care to area homeless people.

“A lot of people don’t realize the serious homeless problem we have in Athens,” says Evan Mills, community development specialist with the Athens-Clarke County Department of Human and Economic Development. “The economic costs of homelessness are very high, and when it comes to health care, the hospitals have to make up that cost somewhere. The expense trickles down to those who pay for their hospital care.” Mills, who conducts the county’s annual homeless census, got the idea for a study of those costs based on similar studies done in Asheville, NC and San Francisco, CA. He collected 891 Social Security numbers obtained from area homeless providers – such as the Athens Area Homeless Shelter, the Salvation Army and the Homeless Day Service Center – and submitted them to Athens Regional Medical Center (ARMC) and St. Mary’s Health Care System to compare with their service records for the year 2005. What Mills found over the three-month study shocked him: 576 area homeless people accounted for 7,000 total hospital visits. Including emergency room, inpatient and outpatient services, and ambulance rides, the total cost absorbed by hospitals in providing care to homeless patients was $12.38 million.

According to the study, repeat visits account for a large part of the hospital bill, with 234 homeless individuals visiting the hospital more than eight times during the year for a cost of $4.2 million, or approximately $19,950 per individual. The preferred entry point for homeless patients is the emergency room, with 4,687 ER visits during the year costing more than $3.23 million. Nearly half of the homeless individuals who visited one of the hospitals were also identified as clients who have been diagnosed as having a mental health and/ or addictive disorder by Advantage Behavioral Health Systems, a state-funded agency that provides mental health care services to the uninsured.

No Surprises

The high use of the hospital by homeless individuals with mental health or addictive disorders doesn’t surprise Laurie Wilburn, adult mental health services coordinator for the Athens office of Advantage.

“It’s really difficult if you’re sleeping out on the streets or living from shelter to shelter to consistently take your medications and manage your symptoms,” she says. “What happens is many of these people end up in a crisis and head to the emergency room.” Who pays the bill? The $12 million spent on homeless individuals is part of a combined $47.5 million the two Athens hospitals spent in uncompensated care in 2005. “A homeless person is no different than someone in the working poor who is getting paid minimum wage and has no insurance,” says John Drew, President and CEO of ARMC. “It becomes a cost that the hospital, and the doctor, has to absorb in its cost structure.” The expense is made up through higher costs for hospital procedures, personal care, equipment and supplies. Since most paying customers of the hospital have health insurance, these higher costs are billed to insurance companies who eventually pass on the additional expense to the consumer and employer providing the insurance. “It’s truly a hidden tax to those who are paying for private insurance,” Drew says. “In essence, everyone in this country is helping bear the load for the uninsured, and at nearly 50 million people, that number is increasingly growing.” For uninsured people, the emergency room has become the destination of choice for health care needs. Under federal law, emergency departments are required to provide lifesaving care to those who need it, regardless of their ability to pay. However, Drew says hospitals have traditionally provided much more than lifesaving care in the ER, taking care of all patients who walk through the doors. “It’s the charitable mission of the hospital,” he says.

It’s also the most expensive form of care. In a July 2006 letter to Judge Steve Jones, chairman of Partners for a Prosperous Athens, Drew and St. Mary’s President and CEO Thomas Fitz expressed concern about the increasing use of their emergency rooms. “At both of our hospitals we see excessive use of emergency services by patients who have no other access to health care,” they wrote.

While the hospitals provide care to all who walk through the doors, it’s up to hospital administrators to determine how to make up the expense of treating the uninsured. “We have to be around for tomorrow,” Drew says. “We can have small aberrations, but what we’re going through now is really stretching us to the limit. The system is in a bad need of an overhaul.” A cheaper alternative? The community has a number of places that offer some form of health services to the uninsured, such as Advantage, the Athens Neighborhood Health Center, the county Health Department, the Athens Nurses Clinic and Mercy Clinic. In their letter to Judge Jones, Drew and Fitz said such programs offer much-needed primary care that can be provided at significantly lower costs than in the hospital emergency room. However, Mills points out that those programs are grossly underfunded. “Our current delivery system doesn’t have the capacity and the resources to meet the needs of patients,” he says. “And when clinics aren’t open or can’t provide the care, people go to the emergency room.” In providing health care for the homeless, Mills says the solution lies in shelter-based care. One such program already in place is the Shelter-Plus Care program run by Advantage. Funded in part by a federal grant from the Department of Housing and Urban Development, the program is part of the Assertive Community Treatment (ACT) program run by Advantage (which was described in more detail in a Flagpole article of Nov. 8, 2006). Through the

program, homeless individuals are provided an apartment in the community. Advantage staff work closely with the individuals, monitoring the clients’ mental health and/ or substance abuse issues, and linking them to available resources in the community.

“Once you get into the program, you have to do one of three things: either find a job, volunteer in the community or complete your education,” says Michael Dock, residential services coordinator with Advantage. Although the client initially doesn’t have to pay for rent, as they earn income, 30 percent of it must go towards their housing costs. As the client proceeds through the program, social workers with Advantage continue to work with the client on everything from ensuring they take their medication to providing budgeting advice.

The program works because it provides the two aspects critical in treating the homeless: shelter and care. “Housing is not enough, and providing care is not enough,” Wilburn says. “People who have a mental illness or an addictive disease don’t have the ability to maintain housing, and a homeless person with a mental illness will definitely not be able to consistently care for themselves.” The Shelter-Plus Care program currently has 21 apartments in Athens and 28 in the greater Athens area. At an annual cost of $110,000, the program spends roughly $4,000 annually for each resident, or the cost of roughly six emergency room visits. “What can cost the hospital up to $500 a day runs about $30 with one of our clients,” Wilburn says. More importantly, as clients transition out of the Shelter-Plus Care program – with the average stay at between two and three years – they become self-sufficient, Dock points out.

Forward Thinking

An easy solution? Mills says programs like the Shelter-Plus Care program are examples of how forward thinking can help alleviate a long-term problem at a much cheaper cost. “The hospitals are spending more than $12 million to provide health care to the homeless,” he says. “We can eradicate homelessness with just half that amount.” Mills backs up his statement using the following logic: taking the estimated 475 homeless people in Athens according to the 2006 homeless count, and multiplying that by the Athens fair market rent of a one-bedroom apartment at $500 a month ($6,000 a year) results in a total cost of $2.85 million. That would leave more than $3 million for area health care clinics, job training programs, childcare programs and other homeless services.

Furthermore, Mills says this would put the person in a stable environment, and as they transition into work would convert them from being a strain on the system to being a contributing taxpayer. They would rely less – if at all – on charitable care as they begin to join the ranks of the insured.

Unfortunately, because that $12 million expense is money that doesn’t exist in one place – instead spread out through thousands of insured employees and employers – it’s not that simple to obtain that money. However, Mills hopes that future efforts by the city and local organizations – including the collaboration of Partners for a Prosperous Athens – will consider such sweeping solutions.

“We can really wrap our hands around the homeless problem in Athens,” Mills says, contrasting the relatively small homeless population of Athens to the large populations cities like Atlanta and Augusta. “We’ve got enough folks in Athens that care a lot about this issue. We just don’t have the resources we need. If we had the resources, we could really make a dent.”