Two experimental studies from St. Louis (Wolff et al., 1997) and Baltimore (Lehman et al., 1999) examined the cost offsets associated with providing case management services to people who are homeless and have a severe mental illness. In the St. Louis study, the authors found comparable housing outcomes when comparing two assertive community treatment (ACT) models to a broker case management model (assessment and referral), but improved clinical outcomes for the ACT groups. The ACT models cost approximately $9,000 more than brokered case management, but those costs were offset by reductions in inpatient use, making them effectively cost-neutral. Similar results were found in the Baltimore study. People enrolled in the ACT model had improved clinical and housing outcomes compared to standard care. ACT services cost about $8,244 more, but those costs were again offset by reductions in inpatient service use.
In his review, Rosenheck (2000) questions the generalizability of these findings. As noted in the previous section, Rosenheck compared the average inpatient costs for large national samples of homeless people with mental illness from the VA Chronically Mentally Ill Homeless Assistance Program and the ACCESS program to the samples from the St. Louis and Baltimore studies. The comparison shows that average utilization in both the St. Louis and Baltimore studies is much greater than in the larger and, presumably, more representative national samples. Rosenheck concludes that, while the experimental nature of the local studies gives them high internal validity, they likely had a sample bias by selecting more costly users of services for participation in the study. Cost neutrality for such an intervention would presumably have been much more difficult to demonstrate in the national samples, as average inpatient costs are only approximately $8,000 to begin with. Rosenheck concludes that only in the higher cost groups would cost offsets likely be achieved.
The other service intervention that Rosenheck and Dickey reviewed for its potential cost-effectiveness is the Critical Time Intervention (CTI) experiment in New York City (Susser et al., 1997; Jones et al., 2003). The critical time intervention involved providing support services for a nine-month period to people who were homeless with a mental illness as they transitioned from shelter to housing. The support services involved strengthening ties to services, family, and friends, and providing people with practical and emotional support. The control condition was also transitioning from shelter to housing, and received “usual services” such as referrals to mental health and rehabilitation programs. The CTI group had better housing and clinical outcomes up to 18 months after enrollment in the program. However, the CTI group had more hospital days (3.8), emergency room visits (.3), outpatient visits (12.8), and day program visits (4.4) than the control group, leading Rosenheck to conclude that the intervention likely increased costs (a cost analysis was not part of the original study). This assessment does not include consideration of the shelter and outreach costs associated with increased homelessness (an additional 60 days on average) or related criminal justice system costs for the control group.
In a recent reanalysis of the data from the CTI study (Lennon et al., 2005), the authors were able to distinguish different subgroups within each condition and observed that the experimental condition likely prevented chronic homelessness from occurring and was an added, but as yet unobserved, benefit of the intervention. The experimental and control groups had three similar groups with regard to their pattern of recurrent homelessness, with the exception of a chronic homelessness pattern that emerged in only the control group. This group, while relatively small (8.3 percent), returned to homelessness quickly after their initial exit and remained homeless for the duration of the study. No such group was observed in the CTI group, leading the authors to conclude that CTI was associated with preventing chronic homelessness.
A recent study of an intervention for people with serial inebriation found significant reductions in emergency medical services use among adults, many of whom were homeless (Dunford et al., 2006). Judges offered residential treatment for the duration of custody as part of an experimental intervention to address “serial inebriates.” Of the 156 people who accepted the residential treatment option (58 percent of those offered), costs declined by $5,642 one year after enrollment. The authors were not able to examine costs beyond EMT services and data from two participating hospitals, so the reductions are likely to be underestimates. The authors do not provide an estimate of the costs of the intervention, but given that the intervention included residential treatment, they are likely to be greater than the offsetting costs from the service reductions. Because the study was part of a formal court-administered program, random assignment was not possible. The study data indicate that people who accepted residential treatment had higher costs prior to enrollment than the people who refused the treatment option, a selection bias in the treated sample that would favor greater cost offsets.