Service utilization and cost of community care for discharged state hospital patients: a 3-year follow-up study.

OBJECTIVE: This study examined the mental health service utilization and costs of 321 discharged state hospital patients during a 3-year follow-up period compared with costs if the patients had remained in the hospital. METHOD: The study subjects were long-stay patients discharged from Philadelphia State Hospital after 1988. A longitudinal integrated database on all mental health and medical services reimbursed by Medicaid and Medicare as well as state- and county-funded services was used to construct service utilization and unit cost measures. RESULTS: During the 3-year period after discharge, 20%-30% of the patients required rehospitalization an average of 76-91 days per year. The percentage of rehospitalized patients decreased over time, but the number of hospital days increased. All of the discharged patients received case management services, and a majority also received outpatient mental health care (66%-70%) and residential services (75%) throughout the follow-up period. The total treatment cost per person was approximately $60,000 a year after controlling for inflation, with costs rising slightly over the 3-year period. The estimated cost of state hospitalization, with the use of 1992 estimates, would have been $130,000 per year if the patients had remained institutionalized. CONCLUSIONS: This analysis suggests that most former long-stay patients are able to live in residential settings while receiving community outpatient treatment and intensive case management services at a reduced cost. There is no indication of cost shifting from the psychiatric to the health care sector; however, some cost shifting from the state mental health agency to the Medicaid program has occurred, since most psychiatric hospital care now takes place in community hospitals.

Cost comparison of state hospital and community-based care for seriously mentally ill adults.

OBJECTIVE: In 1989, Philadelphia began a bold experiment involving the total shutdown of a 500-bed state hospital. This study examines the service utilization and cost of treating individuals with serious mental illness in a community-based care system in which the state hospital was replaced with 60 extended acute care beds in general hospitals and 583 residential beds. METHOD: A pre-post study design was used to determine the utilization and cost differences before and after the state hospital closed for individuals with a diagnosis of schizophrenia who required extended psychiatric hospitalization following an acute care crisis episode in a general hospital. The number and cost of days spent in general and in extended hospital and residential treatment were compared on an episode and an annual basis. RESULTS: The results of this analysis showed that after the state hospital closed, the direct treatment cost of an episode of care increased from $68,446 to $78,929, and the average annual cost of care per patient increased from $48,631 to $66,794 because of an increase in acute care hospitalization. CONCLUSIONS: This study suggests that an "admission" cohort of seriously mentally ill patients requires an optimal mix of acute care, extended care, and residential beds, as well as ambulatory services, in order for cost-efficient care to be delivered during a crisis period. Determining the appropriate allocation and supply of beds in different settings is essential if community mental health systems are to manage the care of individuals with serious mental illness outside of institutional settings.

High-risk clients and mental health care management.

A framework characterizing high-risk psychiatric patients by their probability of hospitalization and lengthy stay is introduced. Risk curves are then developed for each patient showing the potential impact of mental health case management on patient risk. Preliminary empirical analysis reveals that although most patients benefit from the case management intervention, some 30% of the client population may face an increase in risk of hospitalization and lengthy stay.

An empirical literature review of definitions of severe and persistent mental illness.

Seventeen definitions of the severely and persistently mentally ill have appeared in the literature over the past decade. These definitions have been used by 13 authors to formulate service programs and to estimate the prevalence of serious mental illness in the population. To test the applicability of these definitions, the authors operationalized each definition and applied it to a representative sample of 222 patients receiving services in one of Philadelphia's inner-city neighborhoods. The analysis showed estimates of prevalence of serious mental illness ranging from 4% to 88% of the treated population, depending on the definition applied. The NIMH (1987) definition was representative of the middle-range estimates of 45% to 55% arrived at by eight authors.

Crossing state lines of chronic mental illness.

A federal law passed in 1986 required states to develop service plans incorporating each state's own definition of chronic mental illness. This study considered whether the state definitions can be used to identify comparable populations of chronic mentally ill patients and to obtain a meaningful national estimate of the number of such patients. The study applied definitions of chronic mental illness used in ten states to a representative sample of patients receiving public mental health services in West Philadelphia over a two-year period. The prevalence estimates of patients defined as chronically mentally ill ranged from 38 percent using the Hawaii definition to 72 percent using the Ohio definition. The National Institute of Mental Health definition, used as a reference point, produced a prevalence estimate of 55 percent. The authors conclude that the considerable variance among the states in prevalence estimates renders the sum of state counts of chronic mentally ill patients of limited use.

Organizational determinants of efficiency and effectiveness in mental health partial care programs.

The use of partial care as a treatment modality for mentally ill patients, particularly the chronically mentally ill, has greatly increased. However, research into what constitutes a "good" program has been scant. This article reports on an evaluation study of staff productivity, cost efficiency, and service effectiveness of adult partial care programs carried out in New Jersey in fiscal year 1984/1985. Five program performance indexes are developed based on comparisons of multiple measures of resources, service activities, and client outcomes. These are used to test various hypotheses regarding the effect of organizational and fiscal variables on partial care program efficiency and effectiveness. The four issues explored are: auspices, organizational complexity, service mix, and fiscal control by the state. These were found to explain about half of the variance in program performance. In addition, partial care programs demonstrating midlevel performance with regard to productivity and efficiency were observed to be the most effective, implying a possible optimal level of efficiency at which effectiveness is maximized.

Evaluation questions for Philadelphia's capitation plan for mental health services.

Public policy should be guided by sound data emerging from quality research. A shift in the financing of medical and psychiatric care toward capitation models represents a major change, and the Philadelphia capitation experiment described in the April column is one pioneering effort. The answers to the following evaluation questions about the Philadelphia experiment will help decision makers across the country as they contemplate a policy shift from retrospective to prospective payment.

Philadelphia's capitation plan for mental health services.

Dr. Sharfstein's Introduction: Prospective payment is the major economic change that is reshaping the delivery of medical care. Capitation financing for the chronic mentally ill is an innovative and promising alternative to underfunded and bureaucratically rigid public programs on the one hand and underfunded retrospective cost-based Medicaid programs on the other. This month's column describes one such capitation plan. Its impact on the target population as well as on the use of resources by persons with long-term and severe mental illnesses will require close evaluation.

Opportunities and risks in Philadelphia's capitation financing of public psychiatric services.

The city of Philadelphia was one of nine sites selected by the Robert Wood Johnson (RWJ) Foundation and the U.S. Department of Housing and Urban Development (HUD) to receive five-year funding to improve the delivery, quality and cost efficiency of public mental health services to its chronically mentally ill population. As part of the RWJ project, the city plans to restructure its delivery and reimbursement system, creating a not-for-profit central authority which will function as a health insurance organization (HIO) responsible for coordinating and managing psychiatric care to Medicaid clients. Operating under a model of capitation, the central authority will employ diverse funding mechanisms to finance and manage service delivery. This paper examines the benefits and risks inherent in the reorganization of Philadelphia's mental health service system under a capitation financing model. Issues considered include cost and utilization patterns, treatment outcomes, providers and their staffing patterns, service mix and the overall impact of capitation on clients.

A theorem on homogeneous functions and extended Cobb-Douglas forms.

A form for homogeneous functions is presented which shows them to be a very simple extension of the wellknown Cobb-Douglas functions with similar properties in production (and distribution) economics. This form thus suggests new possibilities for interpreting a wide variety of empirical and theoretical results in economics; it also provides contact with developments in other fields, such as information theory and geometric programming.