Dramatic improvement in helping the chronically homeless grow toward better lives is unlikely to happen without fixing the structure of the current system.
The problem
The current segmented system of specialized service providers is a flawed structure. It is a broken market.
Markets work when the receiver of a service or product is also the payer. In a healthy market, products and services continually improve because customers reward those who give them what they need and punish those who don’t.
When the payer and the customer are different actors, entities pay attention to what satisfies the payer, not the customer. The automobile market flourished when Henry Ford produced a ready-to-drive, reliable, cheap and complete product. Imagine what would happen if you had to buy your own carburetor, wheels, chassis, transmission, etc., and put it all together. First of all, few cars would function. Second, all of the parts providers would point fingers at each other, claiming others were the ones failing to do their job. Customers don’t want a carburetor; they want a car.
This is the problem in today’s homeless services system. The chronically homeless person gets stellar parts from individual providers but never makes it to the real goal: becoming permanently housed, self-reliant, drug-free and crime-free (PSDC). Every provider claims success, but the system is a failure. And nothing changes because the payer keeps paying while the customer experiences failure.
In the current services system, providers are incentivized to deliver specific interventions — shelter stays, mental health care, transitional housing, warming centers, meals or resource hubs — each addressing only a part of the problem. When success is measured by the delivery of individual services rather than the achievement of true outcomes, fragmentation results.
The solution
There are three steps that the State must take to fix the broken system.
- Fund only those who solve the whole problem. The State should start demanding cars instead of carburetors. It should work only with “super-providers” who agree to accept any chronically homeless person who either walks in or is diverted from police or courts. Many of the chronically homeless refuse to work with the current broken system because it hasn’t worked for them in the past. They’ve failed too many times. It’s not that they love street life — it’s that they hate failing. Who doesn’t? They successfully complete rehab, then have nowhere to go. They enter a homeless resource center but find it more dangerous than the streets. They get mental health treatment but don’t feel better because they’re living in squalor. The State must stop reimbursing anyone who simply solves a piece of the problem and start working only with providers who help people get all the way from the street to PSDC.
- Demand transparency. The State should be agnostic (within the law) to methods. It should not care what workshops, what “evidence-based practice” or what faddish replacement to “Housing First” emerges. When the State dictates methods, the State becomes responsible for results. Providers need to simply comply with what they’re told — whether it works or not. The State should require that every super-provider post, on the landing page of its website, an audited percentage of all those who entered their system who are PSDC for 2+ years.
- Provide motivational accountability. Few people change until the pain of not changing exceeds the pain of changing. The criminal justice and public safety systems must fully enforce laws (camping, public disorder, intoxication, drug possession and distribution, property crime) both to protect the interests of all citizens and to provide motivation for the chronically homeless person to do the hard work of personal change that emerging from chronic homelessness entails.
If the State does this, three wonderful things will occur — the same things that happen naturally in every efficient market:
- Consolidation. Fragmented service providers will realize that, for survival, they need to consolidate upstream and downstream. Super-providers will emerge who are riveted on outcomes and not on activities.
- Improved outcomes. And when laws are fully enforced, many more of the chronically homeless will choose to engage with super-providers to move toward PSDC. And when policymakers and the public see clearly which super-providers perform best, resources will naturally begin to flow to those who do it better and away from those who do it worse. That’s how markets work.
- Reduced bureaucracy. When the State gets into the business of telling providers how to produce outcomes, bureaucracy grows and innovation dies. When the State focuses exclusively on outcomes, innovation and outcomes will flourish — with less State bureaucracy.
We urge Office of Homeless Services leadership and the Legislature to fix the system problem. Lives depend upon it. Improvement will be marked and rapid if leaders act quickly and wisely.