Differences in the direct costs of public and private acute inpatient psychiatric services

This exploratory study examined differences in the direct costs of acute inpatient psychiatric services in seven public county-operated specialty hospital units and six private community general hospital units in Wisconsin. There were no significant or substantial differences in measures of severity of patients between the public and private systems. Direct costs per stay and per day were significantly lower in the private units, although charges may have been higher in the private units. These differences in costs appear to be the result of private units having a significantly higher average daily census, more goal emphasis for cost containment, and more psychiatrist influence on how the unit was run. Our findings suggest that mental health system managers examine opportunities for achieving economies of scale and that they set and manage goals for efficiency.