Containing mental health treatment costs through program design: a Massachusetts study

A single site pre-post study of seriously mentally ill patients treated in a public mental health system shows that annual treatment costs can be substantially reduced with the use of day hospital treatment. Two cohorts of psychiatric patients--282 consecutive admissions to a traditional public inpatient unit in 1980, and 340 consecutive admissions to a combination of inpatient and day hospital care in 1984--were followed 12 months after admission. The substitution of the day hospital is made possible because the facility provided a dormitory residence for those who could not go home at night. Cost savings per hospital episode are about 31 per cent when the additional costs of day hospital and residence are considered. Cost shifting from inpatient to residential sites is noted, but overall mean annual costs, when all other treatment (including additional admissions), residential and family costs were included, are reduced. Readmission rates did not rise. The generalizability of the findings is limited to public mental health centers and state hospitals.