The Health Foundation of Central Massachusetts has taken a noteworthy step in addressing the needs of chronically homeless people in Worcester by committing more than $1 million to launch a “Home Again” model program and housing loan fund.

The action is the latest step in a process that began two years ago when a coalition of social service agencies formed to plan a local strategy for helping individuals and families break the cycle of homelessness. The agencies have adopted the Housing First philosophy that “only a home ends homelessness” — an approach that is consistent with recent local and state recommendations.

The Worcester plan aims initially to help up to 30 city residents who are either chronically homeless or at risk of being so. Chronic homelessness is defined as being homeless for more than one year, or having had four or more episodes of homelessness over three years.

First, the Health Foundation is awarding $587,655 to a partnership of agencies, led by Community Healthlink, that will provide case management and individualized support services. The foundation also has committed $500,000 to Worcester Community Housing Resources to create a housing loan fund to provide below-market-rate loans so that local nonprofits can purchase and renovate properties to house the homeless.

Project proponents hope to expand the loan fund to $3 million over the next few years so as to meet the housing needs of the approximately 120 chronically homeless residents of Worcester.

Housing First has worked well elsewhere, the foundation said. A program in Denver provided 100 chronically homeless individuals with housing and comprehensive health care services, including mental health and drug-abuse treatment components when necessary. A cost-benefit analysis found that after two years in the program, the cost of emergency services for the participants declined by 73 percent compared with the two years prior to the program — a savings averaging $31,545 per participant.

Money doesn’t tell the whole story, of course. The billions of dollars Americans have spent annually on housing and health care over the last half-century often have missed the mark, either because of bureaucratic inefficiency, corruption or a failure to tailor available resources to local needs.

The Housing First approach, in the hands of local agencies with proven records of success and commitment to the community, approaches one of the city’s most stubborn problems in a manner both fiscally sound and respectful of the dignity of the homeless. Bringing stability and hope to the lives of the society’s most at-risk residents is a constant challenge. Empowering those who know the city best to get the job done appears to be the right move.