• Journal Article

Costs and effectiveness of substance abuse treatments for homeless persons


Schumacher, J. E., Mennemeyer, S. T., Milby, J. B., Wallace, D., & Nolan, K. (2002). Costs and effectiveness of substance abuse treatments for homeless persons. Journal of Mental Health Policy and Economics, 5(1), 33-42.


Background: Several reviews of the effectiveness of drug abuse treatment have concluded that treatment works. However, studies analyzing cost-effectiveness or cost-benefits of drug treatment have been limited. Consequently, policy decisions regarding substance abuse treatment have utilized educated guesses or consensus of experts in the absence of controlled and scientifically rigorous studies of the benefits and costs of treatment.

Aims of the Study: This study presents a cost analysis of two randomized controlled studies comparing four drug addiction interventions for homeless persons. The studies controlled for some limitations of previous research in this area including random assignment. Findings are based on treatment costs obtained from actual expenditures and treatment outcomes of drug abstinence from toxicology tests. Cost-effectiveness is considered from the viewpoint of the treatment program. Cost-effectiveness from a societal viewpoint is discussed, but not calculated.

Methods: This is a retrospective analysis of treatment and treatment outcome costs from two randomized controlled drug addiction treatment outcome studies: Homeless 1 and Homeless 2. Both studies were two-group-usual versus enhanced-care designs with similar treatment components, outcome variables and assessment points, but different research questions. Both studies investigated the efficacy of a contingency management intervention specifically designed for persons who are homeless. This costs analysis reports direct costs of treatment by service category and costs of abstinence at 2-, 6-, and 12-month points by study and study treatment group. Treatment costs and costs per week abstinent are reported for four substance abuse treatments across two studies for persons homeless and addicted primarily to crack cocaine. Treatment components for each program included counseling, housing, work, administrative, and other expenses.

Results: Drug abstinence rates by treatment program for each study revealed superior outcomes for the enhanced interventions with the greatest abstinence found at the earlier time points (up to 6 months) as established by previous research. Abstinence rates at 12 months failed to differentiate treatment groups. Average costs per abstinent week were generally greater for the enhanced programs compared to usual care, except early in treatment where these were similar. The incremental direct cost ratios (in year 2000 dollars) for these enhanced programs to increase abstinence by one average week were similar ($1,244 and $1,007) for the Homeless 1 and 2 projects at 12-months. These figures are compared to figures of other “life saving” events.

Discussion: When only the direct costs of programs and their abstinence rates are considered, treatments that involve abstinent contingent work and housing have incremental cost ratios that are within the range of many other common social and medical interventions. These enhanced programs are more cost effective earlier in treatment than at 12-month follow-up due to relapse common among existing drug treatment. A methodological limitation of this study is that direct program costs do not measure the societal value of reducing homelessness itself.

Implications for Health Policies: Usual and improved treatment methods offer a cost-effective approach to improving abstinence among addicted homeless persons. Policy makers might reasonably choose to implement enhanced treatment programs that also reduce homelessness because the incremental cost of these programs is within a reasonable range compared to other common societal interventions.

Implications for Further Research: Methods and data need to be developed to better measure the societal benefit to communities of reducing the numbers of homeless persons with addictive drug problems.