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

Area of Science:

• Mental Health Services Research
• Health Economics
• Psychiatric Care Delivery

Background:

• Public mental health systems face challenges in managing treatment costs for seriously mentally ill patients.
• Traditional inpatient care models can be resource-intensive.

Purpose of the Study:

• To evaluate the cost-effectiveness of integrating day hospital treatment within a public mental health system.
• To compare annual treatment costs and readmission rates between traditional inpatient care and a combined inpatient/day hospital model.

Main Methods:

• A pre-post study design comparing two cohorts of psychiatric patients admitted in 1980 (inpatient only) and 1984 (inpatient and day hospital).
• Follow-up of 282 inpatient admissions and 340 combined care admissions for 12 months post-admission.
• Inclusion of costs for day hospital, residential care, other treatments, and family expenses in the analysis.

Main Results:

• Annual treatment costs were substantially reduced with the use of day hospital treatment, even when accounting for additional residential costs.
• Cost savings per hospital episode were approximately 31% when comparing the two models.
• Overall mean annual costs decreased, with a noted shift from inpatient to residential spending, and readmission rates did not increase.

Conclusions:

• Day hospital treatment, supported by residential facilities, offers a cost-effective alternative for managing seriously mentally ill patients in public mental health settings.
• The findings suggest that integrated care models can reduce overall healthcare expenditure without compromising patient outcomes, such as readmission rates.
• Generalizability is primarily to public mental health centers and state hospitals.