The cost-effectiveness of independent housing for the chronically mentally ill: do housing and neighborhood features matter?

Health Services Research, Oct, 2004 by Joseph Harkness, Sandra J. Newman, David Salkever

Housing has long been a neglected area in research on persons with chronic mental illness (CMI). As a result, there is little reliable information to guide important resource allocation decisions by both the public and private sectors. There are compelling reasons for closing this information gap: the estimated 4.6 million individuals with CMI who now live most of their lives in the community; the plight of the homeless; the high cost of mental health service use by the CMI (Frank, Goldman, and McGuire 1996); attention to community-based care options in proposals to reform the health care system; research findings suggesting that housing may contribute in a significant way to a number of individual mental health outcomes (Baker and Douglas 1990; Hanrahan et al. 2001; Nagy, Fisher, and Tessler 1988; Earls and Nelson 1988); and the increased involvement of states and localities in funding housing for persons with CMI (Frank, Lave, and Goldman 1988).

This article examines the mental health service costs and residential instability of 670 persons with CMI living in alternative types of independent housing in the community (i.e., different housing structure, tenantry, and neighborhood). It also assesses whether residential features associated with lower mental health service costs are cost-effective in the sense that the mental health cost savings outweigh the cost of purchasing housing with these features. The next section provides a brief review of the literature on housing and mental illness. This is followed by a description of the approach taken in this study, the data and research methods. We then present the results, followed by a discussion of their implications for mental health services, housing policy, and research.

LITERATURE REVIEW

The past 15 years have witnessed a growing emphasis on independent housing for persons with CMI (e.g., Carling 1984; Ohio Department of Mental Health [ODMH] 1988; Hough et al. 1995; Lehman et al. 1997). Those who favor independent housing believe that housing should be viewed "as a place to live, not a place to be treated" (Ohio Department of Mental Health 1988). Two basic principles underlie this perspective. First, the need for housing remains constant over a person's lifetime, while the need for services varies. Second, only by disentangling housing from services will it be possible to create a system in which services are designed to support the person in housing instead of developing housing programs to facilitate treatment or services (Ohio Department of Mental Health 1988).

Although the pros and cons of independent housing for persons with CMI have been debated for more than two decades, rigorous research on the nature and effects of this approach to housing is extremely limited (Newman 2001). Much of the mental health literature that addresses housing issues focuses on housing with on-site services, such as sheltered care or board-and-care, rather than on independent apartment units in the housing market at large (e.g., Bond et al. 1989; Hodgins, Cyr, and Gaston 1990; Drake et al. 1997). Other studies that examine mental health outcomes of individuals with CMI living "in the community" provide little information about these community settings, making it difficult to judge whether they are, in fact, independent (e.g., Earls and Nelson 1988). Additionally, many of these studies do not control for specific attributes of the housing setting, such as its physical characteristics (e.g., structure type, number of units), whether all dwellings in the structure are occupied by persons with CMI, or the attributes of the surrounding neighborhood. Without such controls, it is impossible to distinguish the effects of a range of potentially relevant factors, such as service utilization, from the effects of housing per se (Newman 1992, 2001). Much past research has also been based on very small samples. Finally, past benefit-cost and cost-effectiveness analyses pertaining to persons with mental illness have focused mainly on different modes of treatment--not different types of housing (e.g., Jerrell and Hu 1989; Dickey et al. 1997; Rosenheck, Frisman, and Gallup 1995). Thus, while previous research suggests that independent housing has salutary effects on individuals with mental illness, it has not examined what housing features have the most important effects. Nor has it explored how the mental health outcomes associated with different configurations of housing compare to their costs.

CONCEPTUAL FRAMEWORK

The conceptual foundation for the relationship between housing configuration and mental health outcomes stems from the work of Earls and Nelson (1988), who build on the motivation-hygiene theory of Herzberg et al. (1974) and Bradburn (1969). According to this theory, long-term psychiatric patients struggle to satisfy "pain-avoidance needs," which range on a continuum from pain to relief. Failure to satisfy these needs results in worse mental health, poorer functioning, and psychiatric symptomatology. Earls and Nelson suggest that quality of housing may be one way individuals with CMI can move toward the "relief" end of the continuum.