Can California Health Care Providers Help Solve State’s Homelessness Crisis? | Lost Coast Outpost

Can California Health Care Providers Help Solve State’s Homelessness Crisis? | Lost Coast Outpost

Construction workers build an apartment complex for an affordable housing project in Bakersfield on May 29, 2024. Photo by Larry Valenzuela, CalMatters/CatchLight Local

When a shortage of hundreds of thousands of dollars made building new homeless housing in Bakersfield nearly impossible, the bailout that was supposed to save the project turned out not to be an affordable housing nonprofit, a government housing subsidy, or some other traditional source.

However, it involved a healthcare company that had never built a house before.

The unorthodox move is part of a broader effort to merge California’s health care and homeless services. Health care providers in both fields are increasingly coming to grips with a hard truth: It’s nearly impossible to be healthy when you’re living on the streets.

Health care company Akido Labs, which runs clinics and outreach teams in Southern and Central California, covered about 10% of the cost of building that 16-unit project in Bakersfield. Health insurer Anthem Blue Cross Blue Shield funds homeless housing projects in Alameda, Kings and Tulare counties. And Los Angeles County’s largest health plan is paying to lease buildings for its homeless clients.

“For the homeless, housing is medicine,” said Karthik Murali, chief public health officer at Akido Labs. “Providing stable housing can alleviate more health problems than just taking people to the ICU and the hospital and providing street medicine… With that in mind, we wanted to be part of the solution.”

According to the National Health Care for the Homeless Council, homeless people are more likely to be sick and die 12 years younger, on average, than the general U.S. population.

Gov. Gavin Newsom kicked off the marriage of housing and health care in 2022 with his massive overhaul of the state’s Medicaid system. With the launch of CalAIM, the state is allowing Medi-Cal to fund things that health care traditionally doesn’t, like helping homeless clients find housing, pay security deposits and prevent evictions.

As an incentive for managed care plans to ramp up these new services, the state has also provided $1.3 billion in additional funding under the Housing and Homelessness Incentive Program. Managed care plans can earn those funds by investing in homelessness solutions. Akido and other managed care providers use that money to build and lease new housing for the homeless.

Dr. Rishi Patel of the Akido Street Medicine team checks on a homeless man living in a vineyard in Arvin on May 28, 2024. Photo by Larry Valenzuela, CalMatters/CatchLight Local

It’s still a relatively rare use of the money: More often, it’s used to pay for homeless services, like case managers or secure RV parking. That’s partly because creating housing is so expensive in California, and partly because most providers don’t know much about building housing.

Still, Murali said the new funding made a big difference. Akido realized it could only do so much to help its homeless patients while they were on the streets, and it had long wanted to get into the housing development business. The incentive program gave it the funds to do that.

“It was impossible before, and now it is possible,” Murali said.

Living as medicine

Los Angeles-based Akido Labs started as a health tech company with Y Combinator, the startup incubator that grew big companies like Airbnb and Dropbox. It later launched medical clinics and street medicine teams in Central and Southern California.

When the Kern County Housing Authority went over budget for its Bakersfield homeless housing project, in part because the housing authority underestimated the cost of an expensive retaining wall, Aikido stepped in.

Construction workers build an apartment complex for an affordable housing project in Bakersfield on May 29, 2024. Photos by Larry Valenzuela, CalMatters/CatchLight Local

“We would have been stuck, and who knows where we would be now if we hadn’t gotten that money,” said Stephen Pelz, executive director of the housing authority, who said Akido funded about 10 percent of the roughly $3 million project.

The two-story development, where tenants pay 30 percent of their income in rent, sits on a former vacant lot next to what was once a large homeless camp. Each apartment is a small one-bedroom, one-bathroom condo — about 5,000 square feet — and on a clear day you can see the Sierra Nevada from the upstairs windows. It’s a major accomplishment to complete a project in this area, where most of the street doesn’t even have a sidewalk and new construction is rare, Pelz said. You’re more likely to see something burn down here and get torn down than you are to see something new built, he said.

Aikido also took on a second, 40-unit homeless housing project in Bakersfield. That development, now set to open in 2025, would have fallen apart without the health care company’s funding. The county applied for a state Homekey grant, but it wasn’t enough to buy the property or fund the project.

Aikido paid about 20 percent of the project’s $10 million total cost and is now working with the county housing authority. Aikido is pushing for features it knows will help its customers, such as wheelchair-accessible outdoor spaces, suicide-prevention designs (like shelves in closets instead of rails) and semi-gloss paint that makes cleaning easier. The health care company is learning how to navigate the complicated world of housing production.

“That was an interesting process,” Murali said.

Homeless Housing from Sacramento to LA

Other counties are using the money to secure housing without breaking ground. Sacramento County won $3.2 million for its Landlord Engagement and Assistance Program, which provides homeless clients with rent subsidies and places them with private landlords, while also working with landlords to prevent evictions.

With that money, the province can expand the program by about 30%, said Neil Kurtz, program manager for social services.

“It’s everything,” Kurtz said. “I think we can make a significant impact in reducing homelessness.”

A homeless encampment on W Street and Alhambra Boulevard in Sacramento on April 11, 2023. Photo by Rahul Lal for CalMatters

Los Angeles County’s largest health plan, LA Care, is using the stimulus money to open 1,700 homes for homeless people by 2027. Working with the county, the plan is funding programs to buy and lease those units, or to pay security deposits and other costs. As of the end of last year, there were 600 of those homes available, said Dr. Sameer Amin, chief medical officer for LA Care.

Anthem Blue Cross Blue Shield recently invested money in a housing project for 42 homeless people in Tulare County, helped fund two other projects in Kings County and contributed to a fund in Alameda County that is building additional housing.

“We’re looking at other options,” said Kris Kuntz, program director for housing and homeless strategy at Anthem. “We’re looking at: Do we buy single-family homes that are on the market? That kind of thing.”

Can the collaboration between housing and healthcare be sustainable?

The blurring of the lines between housing and health care is confusing for many stakeholders, says Carolina Reid, a research advisor at the UC Berkeley Terner Center for Housing Innovation.

Health care providers don’t know which organizations to partner with to build housing, or how to enter their clients’ information into the state’s homeless data system. Housing providers don’t know how to navigate strict patient privacy laws. The Terner Center is exploring ways to help both sides adapt.

The state is portraying the health care and housing experiment as a success so far. Providers using Housing and Homelessness Incentive Program money report that they are now screening patients for homelessness more often, while also offering them more housing-related services. According to the state’s Department of Health Care Services, 48,172 patients have been placed in housing, and 81 percent of them have remained housed.

But the problem with this money is that it’s a one-time grant, and Newsom has given no indication he’ll replenish the coffers when it runs out. After Newsom and lawmakers rushed to close a multibillion-dollar budget deficit this year, there’s little in the way of state funding to be had.

“One question I have that I can’t answer is: Are these efforts going to continue after the HHIP funds run out?” Reid said. “There has to be a continuing source of funding to help managed care plans do this kind of work.”

A sign for a construction site for Golden Empire Affordable Housing in Bakersfield on May 29, 2024. Photo by Larry Valenzuela, CalMatters/CatchLight Local

Murali hopes Akido can attract private equity to replace state financing in future projects, but it remains to be seen whether investors can be convinced this is a good business move.

Moreover, when you compare it to the high cost of building or buying housing in California, the money the state has allocated is not that much, Reid said. That’s why, she said, we haven’t seen more health care providers using the money to create new housing.

Kuntz agrees.

“When it comes to housing and homelessness,” he said, “you think it’s a big number, but by region it’s still … not huge, given the need.”

In Kern County, the housing authority typically receives 500 to 1,000 applications for each new project, Pelz said. The project scheduled to be completed next month in Bakersfield has space for just 16 households.

That means if you get elected, Pelz says, “it’s a little bit like winning the lottery.”

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