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A mental health capitation program: II. Cost-benefit analysis
S K Reed1, K D Hennessy, O S Mitchell
1Department of Psychiatry, University of Rochester, New York.
Hospital & Community Psychiatry
|November 1, 1994
Summary
The capitated payment system (CPS) improved community mental health services and reduced state hospital use for individuals with serious mental illness. This system showed cost-effectiveness despite higher per-patient expenses in some cases.
Area of Science:
- Health Services Research
- Mental Health Policy
- Economic Evaluation
Background:
- The Monroe-Livingston demonstration project evaluated a capitated payment system (CPS) for mental health services.
- Understanding the societal costs and benefits of alternative payment models is crucial for healthcare reform.
Purpose of the Study:
- To analyze the total monetized and nonmonetized costs and benefits of the Monroe-Livingston project's CPS.
- To compare the economic and service utilization outcomes of CPS with traditional fee-for-service care.
Main Methods:
- A randomized controlled trial comparing an experimental group (enrolled in CPS) with a control group (fee-for-service).
- Analysis of two-year outcomes for continuous (comprehensive CPS) and intermittent (partial CPS) patients.
- Comparison of costs, benefits, and service utilization between groups.
Main Results:
- All groups showed psychosocial improvements; continuous CPS patients had less hospitalization but higher costs, increased victimization, and more unsupervised living.
- Partial CPS patients showed fewer differences compared to controls, with both groups reporting good case management and social support.
- Annual per-patient costs for continuous CPS patients ranged from $74,000 to over $100,000, primarily due to hospitalization rates.
Conclusions:
- The CPS significantly improved community-based services for serious mental illness.
- The system reduced the reliance on state hospital care.
- While overall costs varied, the CPS demonstrated a positive impact on service delivery and patient outcomes.