The building at 780 Highway 99N could reopen in December as the new home of ShelterCare’s Homeless Medical Respite program, which provides up to 30 days of post hospital care for homeless people who are recovering from illness or injury, said Lucy Vinis, the agency’s development director.

Currently, the medical respite program can tend to 10 people at a time in facilities elsewhere on Highway 99. The move to the hotel building would increase that number to 15 at first, and possibly 19 later on, Vinis said.

“All these pieces are still in motion, but our best bet is the first week in December” for the move to be complete, she said.

ShelterCare had operated its mental health crisis initiative, the Royal Avenue Respite Services program, at the motel building since 1987, after converting the guest rooms into lodging space for up to 19 people needing stability after experiencing a psychiatric crisis. The aim was to keep those patients out of hospital emegency rooms or to transition them out of PeaceHealth’s Johnson Unit, a secure mental health facility.

But as national health care reform shakes up the relationship between government funding and health care nonprofit agencies, some of those agencies’ programs have found their funding sources strained.

ShelterCare officials said last month that the end of several state grants cut the mental health crisis housing program’s $1 million annual budget by one-third.

The problem, Vinis said, is that the mental health housing program catered to “medically indigent” patients — those who did not have health insurance, including the Oregon Health Plan, the state’s Medicaid program.

But with the Oregon Health Plan expansion this year, more indigent patients qualify for OHP, and funding is being directed toward programs that serve covered patients and away from ­programs for the indigent.

The OHP typically does not pay for crisis housing for the mentally ill.

“We’re in this transition period. There are people who do not have coverage, and some of those clients we could no longer support” in the housing program because of the funding changes, she said.

ShelterCare ended its mental health crisis housing program Sept. 15. Some area health care providers, including PeaceHealth, which operates Eugene and Springfield hospitals, already are seeing the impact of ShelterCare closing its mental-health housing.

“We have certainly seen an increase in people suffering from mental health crises returning to our emergency department,” said Pat Norberg, PeaceHealth’s crisis consult team supervisor. “The Royal Avenue program was a huge resource. That level of stability they could provide someone in crisis for seven to 10 days made a huge difference in ­getting someone more stable and connected with the resources they need,” Norberg said.

Norberg said PeaceHealth is working with ShelterCare, Lane County and Trillium Community Health Plan, the region’s coordinated care organization, to replicate the program. But, “to date a soution has not been reached, though we’re very actively working on it,” she said.

Vinis said ShelterCare was working to ease fears from some that its other programs could be in ­jeopardy.

“People don’t understand how large we are. We have multiple relationships with public agencies and many potential funding streams,” she said. “This homeless medical respite program has a strong financial foundation through a partnership between PeaceHealth, Trillium and ShelterCare.”

The medical respite program is a good fit for the motel building because the facility is handicap-accessible and has an on-site kitchen, Vinis said.

Meanwhile, local grants will help ShelterCare convert the soon-to-be vacant medical respite facility into permanent supported housing units for people who complete the respite program.