We assembled the partners - Neighborhood Service Organization (NSO), Molina Healthcare of Michigan, Rocket Community Fund, and The Kresge Foundation – and developed a value-based care financing strategy to launch Detroit’s most comprehensive medical respite program to enable better long-term health and housing outcomes for unhoused people in southeast Michigan. This best-in-class program will help people experiencing homelessness to break the cycle of hospitalization, shelter visits, and return to the streets.

The value-based financing approach pegs payment level to the achievement of health outcomes and social impact - and can be applied to other programs that address health related social needs. The performance-based approach also is replicable, as it aligns parties around achievement of better Medicaid member health and housing outcomes.

Nationwide, people experiencing homelessness have five times the risk of hospitalization of the housed population. When released from the hospital, the vast majority of these individuals return to a shelter or the streets, compromising their recovery and creating a damaging cycle of hasty admissions and releases that has a severe negative impact on long-term health outcomes.

The health needs of the unhoused population are complex and multi-dimensional, presenting challenges for medical systems, health plans, community-based organizations, and municipalities.

Value-based care financing is built on a purpose-driven and collaborative approach that – in the case of NSO – provides holistic support to unhoused individuals to help them improve their health and find stable housing.

This novel structure ensures that risk is shared among all partners and that revenues are adequate and reliable enough to sustain program operations and enable growth.

Our team assembled this partnership and developed this financing model, which includes value-based contracting between Molina Healthcare of Michigan and NSO that aligns both parties around achievement of better Medicaid member health and housing outcomes. This innovative, performance-based approach ties a portion of the Molina payments to NSO to positive housing outcomes and reduced avoidable hospital utilization among program participants. This revenue stream drives investor returns.

The NSO medical respite program will be located in the recently completed Detroit Healthy Housing Center on the city’s east side, which also includes emergency shelter, wraparound health care, and housing support services.

The NSO medical respite program opened its doors to clients in 2023 and will serve 165 individuals annually. This high-impact approach to support people experiencing homelessness is projected to produce $1.2 million in healthcare savings annually through reduced avoidable hospital visits and stable housing.

The medical respite program and the 22,000-square-foot Detroit Healthy Housing Center are critical to efforts to end chronic homelessness in southeast Michigan, and the co-location of related services will help achieve better medical respite program outcomes.