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Taking Issue | December 01, 1998

The High Cost of Spending Less on Care

Steven S. Sharfstein, M.D.,

Psychiatric Services 1998; doi:

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Managed behavioral health care has succeeded in reducing the direct cost of treatment for people with mental illness and substance abuse. Are these reductions in spending evidence of greater efficiency and less waste, or is this defunding of care merely cost-shifting from necessary behavioral health treatment to other sectors of the U.S. health and welfare economy? Who is ultimately accountable for the direct and indirect costs generated by persons with severe and persistent mental illness, that group within any given community who are most at risk for unemployment, homelessness, and incarceration in our penal system?

In the pre-managed-care era, within our recent memory, both private and public insurance offered strong incentives for providing inpatient care. Coverage was generous for those who crossed the threshold from outpatient to inpatient status, and extremely stingy for any day, outpatient, or residential care. It's not surprising that even weak incentives through managed care to move patients out of hospital beds would reduce costs. These incentives should provide greater access to cost-efficient and effective alternative approaches, especially for patients with severe and persistent mental illness with a dual diagnoses of substance abuse.

But what if reductions in care occur not only for inpatient care but also for outpatient care, as shown in Dr. Huskamp's study on page 1559? To me such reductions are evidence that although inpatient care may have been overused in pre-managed-care times, this new era of managing costs may be a more mindless defunding of inpatient and outpatient treatment, effective as well as ineffective, efficient as well as inefficient, especially for individuals who require the most attention.

Accountability for outcomes must now inform public policy as well as private, employer-based health coverage. Many managed behavioral health care companies consider the gold standards to be accessibility (for example, the number of rings it takes to answer the phone), rapid disposition, and short-term treatment. Although short-term approaches are appropriate for many patients, others with serious and persistent mental illness who are the greatest burden for families and society are ill served by such an approach. As in prior eras of seconomies of scale—those of large asylums, and then of deinstitutionalization—the current era of private and public managed care is at risk ethically if it focuses primarily on cost reductions and the effectiveness of short-term approaches for acute illness. Many people suffer at a time when effective care is at hand.

Someone must pay for the consequences of untreated, undertreated, or treatment-resistant patients who have psychotic disorders often complicated by substance abuse. Who will pay?

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Steven S. Sharfstein; The High Cost of Spending Less on Care. Psychiatric Services. 1998 Dec;49(12):1523-1523.

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