When the System Has No Bed: Addressing the Crisis of Hoteling Foster Children
Written by Mark Davis
A Predictable Pattern
If this year is like those of the past, children across the nation will spend their holidays sleeping in government office buildings or hotels. They might have a bed. They won’t have a family.
Articles will be written, promises will be made, bills will be introduced. There might even be some proposals put into action. And most people will forget about it – at least until Thanksgiving, when it all starts again. But we haven’t forgotten. Because what we see are the same tired solutions that will generate the same predictable outcomes. It’s time for something different.
First, we need to address the topic of funding. Generally speaking, states have the financial means to pay a different approach, because they are already spending above and beyond for these “nontraditional placements.” West Virginia, for example is spending over $60 million a year to send nearly 10% of its kids to out of state group homes. In-state foster care would cost a fraction of that. Similar patterns play out with publicly documented instances of hoteling in other states such as Georgia, Oregon, Texas, and Washington.
It is true that youth coming into care in recent years have become more complex. Child Trends found that 1 in 4 have a diagnosed Special Health Care Need (SHCN). Moreover, that rate doubles for ages 13-21. This is important, as the average age of foster youth in many states has risen since the pandemic. This does not necessarily mean we need to revert to highly institutionalized settings. Research shows a highly effective treatment foster care program produces better outcomes than institutional settings, with that same study showing a cost benefit ratio of $3.15 per $1 dollar spent on the program.
Buying The Wrong Thing
So, why aren’t we doing more of this?
First, there simply isn’t enough long-range planning, or forecasting, being done at state levels to develop sufficient placement capacity for future demand. It takes 6 months, on average, to find, train, and develop a foster home. For specialty homes and staff, it may take longer. Moreover, as mentioned previously, the unique needs of each child are not all the same. Simply setting a goal for X number of homes to place Y number children will always fall short. There needs to be special provisions for large sibling groups, children with complex medical conditions, or neurodivergent youth, and so forth, as these all have specialized needs.
Even with that issue resolved, there is an even more profound market failure here. Simply put, taxpayer funds are purchasing days of care. They aren’t purchasing outcomes. We are buying the wrong thing.
In today’s environment, rates for foster care are typically cost-based and billing is volume-driven. Cost-based is a problem, as this means a setting which has a higher cost rate (such as an out of state group home) will set a higher rate compared to foster care, even if the outcomes are the same or worse. Likewise, the longer a child is held in care, the more a provider is paid. This creates a strong perverse incentive for facility-based services, given the high fixed costs that go into buildings and the need to return capital to lenders.
A Path Forward
We don’t have to keep repeating the same pattern. The shortages of homes are a result of the policies we have lived with for years. Making changes such as the following will get us out of the rut:
• Pay for results instead of volume. Reward providers for building the right kind of homes and specialized staff for delivering better post-discharge results on a quicker timeline.
• Regulate and limit hotel use by policy through statutory caps, court oversight, and public reporting.
• Improve transparency as to where children are placed, how well those placements match the needs of the youth, and expenditures towards “nontraditional placements” to determine how those funds can be better utilized.
• Forecasting and demand planning will get us out of a reactive cycle. Engaging the private sector, or leveraging their tactics, can help break past patterns.
Though there may not be a single silver bullet, there is a path to an alternative future well within reach. We just have to have the courage to operate differently.