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The Fate of the Public Psychiatric System
John A. Talbott, M.D.
Psychiatric Services 2004; doi: 10.1176/appi.ps.55.10.1136
Abstract

Psychiatry faces a vast array of problems today, including its inability to implement programs for the chronic mentally ill and to apply principles of differential therapeutics, the lack of funds for community services, and the continuing severe fragmentation of the psychiatric delivery nonsystem. Old solutions will not suffice. If the public mental health system is to survive, it must first be defined as comprising all settings, services, and funding for the severely and chronically mentally ill. And it must shift the balance of resources and services from institutional to community-based care. A range of financial and administrative mechanisms, such as various kinds of aggregate funding and a division of responsibility among levels of government, are available to accomplish that shift.

Abstract Teaser
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The problems facing us in psychiatry today seem overwhelming. Millions of Americans receive very poor quality care or none at all. Thousands of severely and mentally ill persons walk aimlessly through our cities' streets. Countless others suffering from mental illness are extruded from psychiatric settings into nursing homes and prisons, where their psychiatric needs are totally unmet.

On the other hand in 1980 as a nation we spent more than $30 billion on psychiatric services; almost $20 billion of that could be considered public dollars, or money spent on public mental health programs (1). The total sum represents 1.38 percent of our gross national product. But what did we spend it for? An antiquated, unresponsive, scandal-ridden mental health "nonsystem." How can this gap between so much money spent and so many people unserved exist? It exists largely because of unplanned historical developments, compounded by fiscal inefficiencies, aggravated by administrative incompetence. To close this gap, so that this awesome amount of money is put to better use to care for the monumental numbers of seriously and chronically mentally ill persons, some drastic changes must be made. And they must be made soon, before the situation, already so disastrous in so many parts of the country, deteriorates even more.

In this contribution I will attempt to spell out the problems now facing us, how we have traditionally tried to solve them, what changes we must make to deal with them now, and how the public system can survive, given the existing problems and the changes needed. It should be noted that while the situation I describe is true for much of the nation, there are isolated programs with exemplary conditions. The very fact that they do exist gives us cause for optimism, but their small number, and the relatively few people they serve, is cause for concern.

To make discussion of the problems we face more manageable, I have divided them into the three categories of patient care, economic factors, and systems issues. The distinctions are arbitrary since each factor interacts so directly with each of the others.

Patient care. The primary problem we face in the area of patient care is our inability to translate into action what we know works for the chronic mentally ill (2). This includes combining medication and psychotherapy, using psychoeducational approaches with patients and their families, providing a comprehensive stepwise range of settings and services, ensuring continuity of care, using hospitals primarily for brief admissions to restabilize patients' medication and reevaluate their treatment plans, and providing asylum or sanctuary for the 2 to 3 percent of the population who require it.

The second problem is our inability to segment and individualize our treatment so that we provide each mentally ill person with what works best for him or her. An adult patient who is violently mentally ill should receive dramatically different treatment, structure, and follow-up than an adolescent in the early phases of a schizophrenic illness or an elderly person suffering from reversible dementia. Even though the field of differential therapeutics is still in its infancy (3), it could be more effectively used than it is. We must change our practices, procedures, and laws so that each individual receives the services he or she needs, in the most optimal setting.

Third, the quality of care of the mentally ill nationwide remains very spotty. While there are exemplary programs and practitioners, we still provide, as a recent visitor to our country commented, very good care for a few and abysmal care for the many.

Fourth, while care in some mental health settings is spotty, in other places it is nonexistent. Thirty years of depopulation of our state hospitals has resulted in the massive transinstitutionalization of many of their inhabitants to nursing homes and prisons, and the heartless deinstitutionalization of countless others to our cities' streets. In none of those settings are we really equipped to provide psychiatric treatment and care.

Fifth, despite years of avowing the need to provide continuity of care, there simply is no such thing in most communities. Instead patients wander around the landscape as if in a Russian supermarket, past aisles of empty shelves.

Finally, in moving treatment from one single institution—the state hospital—to many community facilities and agencies, we have lost the element of "point responsibility" for treatment and care of the mentally ill. It is by now abundantly clear that no longer is any single person in charge of the psychiatric "system," or responsible for the entire patient population, or any segment of it, or indeed even any individual patient.

Economics. As trite as it is to repeat an overworked cliche once again, it is still necessary to begin with the economic reality that over the last three decades "the money has not followed the patients." It has not followed them from state hospitals into community mental health services or community residences or outside systems such as nursing homes and prisons, and it has certainly not followed them into the streets, where thousands of homeless mentally ill are currently living.

Second, the rank economic discrimination against the mentally ill, and especially the chronic mentally ill, continues to exist, as is readily revealed by most reimbursement schemes. An example is Medicare's limited contribution of $250 per year toward outpatient psychiatric care. Current inefficient reimbursement practices favor funding of inpatient over outpatient treatment, hospitalization over prevention of hospitalization, direct over indirect services, acute treatment over chronic care, and more restrictive alternatives over less restrictive ones.

To make matters worse, it is impossible for those involved with treating mentally ill individuals to get a handle on much of the funding that is intended for the mentally ill—to know where to go to get it, what rules to follow, and how to put various categorical monies together. This includes monies provided by Medicaid, Medicare, and Supplemental Security Income as well as financing for housing (for example, section 8 monies from the Department of Housing and Urban Development), vocational rehabilitation, and education.

Finally, all of the current national plans to cut medical costs through curtailment of reimbursement, prospective pricing (such as diagnosis-related groups), and encouragement of competition pose serious problems for the mentally ill. Reimbursement curtailment discriminates against those in need of long-term, intensive, comprehensive services; prospective pricing discriminates against those whose illnesses are complex and multiple and whose treatment courses are unpredictable, episodic, or continuous; and procompetion initiatives discriminate against those afflicted with chronic or severe episodic illnesses.

Systems. The most important systems problem is the continuing severe fragmentation of the psychiatric delivery nonsystem. Despite our long-standing awareness of the problem, heightened by the report of the President's Commission on Mental Health (9), we remain burdened by a plethora of federal, state, and city-county programs and services. We have federally funded Veterans Administration, Public Health Service, and Armed Forces hospitals and clinics; we have federally initiated community mental health centers; we have state hospitals, clinics, children's services, and alcoholism and drug treatment programs; we have city-county hospitals, clinics, and other programs; and we have community general hospitals, free-standing clinics, and psychosocial rehabilitation centers—all of which coexist without any comprehensive planning or coordination.

The net result is the lack of a system of care, which in the wake of the depopulation of the state hospitals has resulted in the dispersal of patients to the winds, without adequate community mental health services, supervised and independent housing opportunities, programs offering alternatives to hospitalization, and any form of asylum or sanctuary. While this statement has been made so many times before that we no longer hear it clearly, let me repeat it: we do not have a system that works as a system should, automatically responding to internal changes (that is, patient movement) or external changes (that is, shifts in funding) by shifting resources from one area to the other, without losing any. Rather, we empty some very inflexible concrete boxes and overfill others. Our crazy-quilt of services has absolutely no capacity to act as a system.

Finally, a major systems issue facing us today involves the markedly and rapidly changing demography of this country. The young adults who are now maturing into the age range during which they become afflicted with serious mental illnesses and come into contact with psychiatric services continue to be very much more of a problem than their older, more passive, and institution-dependent predecessors. In addition, the elderly, whose numbers will double in the next 40 years, will undoubtedly demonstrate the same higher incidence and prevalence of mental illness that elderly persons have in the past. Without adequate state hospitals, nursing home beds, or funding for home care programs, this rapidly growing population will constitute another tragically vulnerable group.

In Colonial times, we faced some of the same problems we have now: hordes of mentally ill persons wandering ill-kempt from village to village without shelter, food, or care or, alternatively, housed in scandalous nonpsychiatric settings (poorhouses, workhouses, and almshouses); lack of funding for mental health services; lack of a definitive "cure" for the serious mental illnesses; and lack of public sympathy or understanding for those so afflicted.

What was our forebears' solution to these problems? The establishment of governmentally funded mental hospitals designed to treat and care for the seriously and chronically mentally ill. And over the last two centuries, as the number of such individuals increased, so did the number of institutions and their capacity.

Now, however, we have a problem not of too few institutions coupled with the will and the monies to build more, but the problem of too many institutions consuming too much of the total mental health pie, with not enough money to support the care of the bulk of the mentally ill population elsewhere. Instead of institutions, today we need more alternatives to institutions, more coordination of all services and settings, and assignment of defined, fixed responsibility for each patient.

To argue that we should repeat the solution of our predecessors two centuries ago—the establishment or reestablishment of state hospitals—seems anachronistic, although I'm aware that some of my colleagues, as well as some community leaders, argue just that. In my opinion, it is also scientifically unsupportable, clinically unconscionable, and economically unfeasible.

It is scientifically unsupportable because we have ample evidence that alternatives to customary mental treatment of the chronic mentally ill are as good as, if not better than, standard hospital treatment and aftercare (5,6,7). It is clinically unconscionable because even with the vast drop-off in the nationwide state hospital census, from almost 560,000 in 1955 to approximately 120,000 now, and the resultant improvement in staffing ratios, scandals continue to occur in state hospitals as well as in community residences, nursing homes, and prisons and on our cities' streets, where the homeless mentally ill sleep in cardboard boxes. Finally, it is economically unfeasible, not only because rebuilding the state hospitals nationally would be a monstrously expensive undertaking, given their current physical deterioration, but also because with the continuing shrinkage of the mental health pie, only the most cost-effective services will survive future funding constraints.

No, this is one time when we cannot repeat, and probably should not even invoke, the good or bad old days. We are where we are now, and now is the time to press ahead, not look behind.

What does that really mean, though? In many ways nothing substantially new. For until we discover the etiology and definitive treatment of schizophrenia, the major affective disorders, and other severe and chronic mental illnesses, we still have to make better use of our current knowledge, our current treatment services, and our current housing settings.

On the other hand, while what I am proposing is not new, it is certainly different from our current situation. I believe that it is critical to take the existing types of services and settings and shift their relative importance, size, and responsibilities. Such a shift would clearly lead to less dependence on institutional and more on community treatment, services, and housing. One would think that it would be far more difficult to establish something new than merely shift around what is already there. But nothing could be further from the truth; at least in this country, we hold on to the past tenaciously, and we resist change with tremendous force.

Scores of experts have suggested this sort of shift in the balance of resources and services, and yet nothing much has happened. What is needed now is not more study, discussion, or debate, but the fiscal and administrative means to accomplish what we know is scientifically, clinically, and economically right. What is needed is not a new structure or service, but some new financial and administrative mechanisms.

The financial mechanisms to change the system exist, at least in theory. There are numerous funding schemes that move away from fee-for-service funding for outpatient services and per diem reimbursement for inpatient services. Alternative funding mechanisms include the following:

• Capitation funding that pools public monies for the mentally ill into a single pot and thus allows local program directors the flexibility of using less expensive outpatient services instead of more expensive inpatient ones (8).

• Unified services systems that pool funding streams and, in addition, shape the services provided into a coherent and real system (9).

• A national health system that, at least in respect to the psychiatrically ill, pools all funds targeted for them, such as medical, social services, rehabilitation, housing, education, and other monies, into a flexible, responsive system.

• Health maintenance organization systems (HMOs)— so long as they provide adequate psychiatric services—that encourage prevention of and alternatives to hospitalization.

• Voucher systems, protected by some sort of fiduciary cosigners, that enable patients to purchase services from entrepreneurs.

• Prospective pricing systems that allow those who deliver psychiatric services the opportunity to adjust and shift from more expensive to less expensive services when clinically indicated.

What is common to all these proposals is their potential to encourage flexibility, cost savings, and responsiveness to environmental changes—so long as they are not used merely as cost-cutting maneuvers. If designed, funded, and used appropriately, almost any one will work. If they are misused, none will.

As an aside, let me note that in the midst of our anxiety over what form of prospective pricing we will live with in the future—diagnosis-related groups or something else like critical episodes of care—we should not allow psychiatry to be cut off from mainstream funding and receive "special treatment" as it did under Medicare.

In regard to administrative mechanisms, there are several available models that will move us in the desired direction:

• Again, a unified system in which administration is consolidated, monies are pooled, and services are unified into a single system responsible for a defined population of patients and others at risk.

• A defined division of labor for all the current types and levels of psychiatric service. The general health field has more clearly defined primary and tertiary settings, and in many regions of the country regulatory agencies have asked or required tertiary health facilities to limit themselves to performing liver transplants or providing burn care or neonatal intensive care, but not doing all three.

• A division of responsibility for each level of government, to move away from the current situation in which all levels do all things for all people, and all levels both operate and contract for services at the local level. The move should be toward a governmental division of labor in which broad policymaking and funding remain federal responsibilities, regulation and monitoring are state functions, and service provision and integration are local tasks.

Which funding scheme or administrative mechanism do I recommend? I would urge that no one plan be chosen until all have been tested in one region of the country or another. We already have abundant evidence of the problems created by government when it prematurely selects one of many possible options and thus solidifies into concrete one solution—for example, the catchment-area concept, CMHC requirements and structure, case management services, and the prospective pricing strategy of diagnosis-related groups. Let us critically examine the alternatives and then select the best rather than once again go for what is politically or economically expedient.

The first task is to decide exactly what constitutes what I've been calling the public system. Otherwise I may be vulnerable to the same criticism I'm about to level at many of our governmental mental health leaders. We can try to define the public setting using three measures—setting, funding, and people.

Settings. Traditionally we've spoken of the public mental health system as if it represents only state mental hospitals. While this was true in the 19th century, it is certainly a rather narrow view now. For, as was mentioned above, each level of government—federal, state, and city or county—has its own psychiatric hospitals and outpatient services, and all can justifiably lay claim to being public. But more recently people have begun to define the word public differently, in a financial context.

Funding. Two federal medical entitlement programs, Medicaid and Medicare, radically changed the definition of what is private and what public, since under these programs private not-for-profit and private for-profit facilities could be reimbursed with public dollars. Thus psychiatric units of general hospitals as well as free-standing private psychiatric hospitals can be considered part of the public system. But even this elaboration does not begin to define the public system, since it leaves out the more than three-fourths of the severely and chronically mentally ill who reside in nursing homes, community residences, correctional facilities, and similar settings as well as those covered by such funding as Supplemental Security Income and public assistance.

People. To define the public system adequately, we must turn to a population description, much as Leona Bachrach did in defining the chronic mentally ill in her classic monograph (10). For in the wake of deinstitutionalization, the people no longer cared for in long-term mental institutions, especially state hospitals, still remain for the most part public charges. At this point, therefore, I would put forth a definition of the public system as the entire array of services, settings, and funding mechanisms used to house, care for, and finance the severely and chronically mentally ill. States originally wrote their mental health laws to reflect just this view, implying responsibility for the care of the severely mentally ill without specifically tying that responsibility only to state hospitals.

All right, where does this little bit of definitional discourse get us? Right back to the point. For if we ask the question of how the public system will survive in the future, the answer will be different if we take as our reference point public settings, public dollars, or public charges.

For public settings, their future depends on their ability to compete on the same footing as all other facilities, to "target a specific market" (to use an awful phrase), and to move toward more differentiated levels of care. These levels would involve hotel-hostel operations, coupled with day treatment, for many patients; acute intensive (traditional inpatient) treatment for some; some form of community asylum or sanctuary for others; and the establishment of active rehabilitation units, staffed differently than acute treatment units, for still others.

In the worst-case scenario, promotion of such a competitive environment may further exclude some patient groups, such as the elderly, passive psychotic patients, and multiproblem patients. But in the best case, it may mean providing the right treatment and care for the right patient in the right setting.

Regarding public funding, the future lies in its continued support and understanding by the public. If either private or governmental third-party reimbursers utilize unrealistic lengths of stay, numbers of visits, or eligibility criteria, further scandals and poor-quality care will result. It is all too clear that for patients too psychotic to complain, too disorganized to vote, and too passive to find alternatives, reimbursement curtailment, prospective pricing, insurance caps, competitive initiatives, and diminution of federal safety nets may well bring new and even more horrendous disasters.

For the survival of the people who are afflicted with severe or chronic mental illness, a true systems approach must be applied, one that sees the public system as encompassing the complete range of public and quasi-public settings and services, funded with public dollars, to serve public charges. With such a conceptualization, settings would find themselves shifting their mix of services toward more clinically effective and cost-efficient mixes; funding would change to further encourage this shift through capitation, vouchers, or prepaid psychiatric HMOs that would not exclude or extrude the most difficult patients; and the public charges would truly be served by public dollars, as was intended by state legislators many decades ago.

In this contribution I have argued that to see the public system as comprising only public psychiatric settings such as state hospitals, or comprising only those services funded with public dollars, is a profoundly flawed as well as an extremely limiting view. Instead we must define it as comprising all the settings, services, and funding for its recipients, the severely and chronically mentally ill. I believe that the survival of the "public system" depends first and foremost on this change in orientation—by legislators, commissioners of mental health, and all who work in the field.

But I also think that for the public system to survive there must be a realignment of the mix of services and settings from institutional to community-based care; a move from separate, uncoordinated, categorical funding to an aggregate funding system such as capitation, which would allow this shift to occur in an orderly fashion; an adoption of the administrative means to provide differing treatment, care, and rehabilitation services for different populations by all the various players in the system; and a rejoining of the health funding mainstream through participation in any agreed-upon future national funding system.

To answer the question implied by the title of this presentation, although the public system is defined in different ways, its future will be determined by how well it adapts to the environment and future realities; how well it changes its allocation of resources and mix of services; and how well it begins to see itself as, and indeed becomes, a true "system."

However, I believe strongly that the future of the public system of care and treatment of the severely and chronically mentally ill will be ensured only if we take as our primary focus the recipients of all of our treatment activity and energies—our patients (11). We cannot allow government's fixation on the bricks and mortar, or third-party reimbursers' obsession with cutting, to override what is right for the mentally ill. We must insist that patients come first, and that the administrative and fiscal mechanisms to care for them follow. To do otherwise is to continue America's long-standing abandonment of its most underserved and vulnerable mentally ill population and consign one more generation of the mentally ill to oblivion.

This article was originally published in Hospital and Community Psychiatry in 1985, pages 46-50.

Economic Fact Book for Psychiatry. Washington, DC, American Psychiatric Association, 1983
 
Talbott JA: Why we're not doing what we know is right for the chronic mentally ill, in The Chronic Mental Patient: A Follow-up Appraisal. Edited by Menninger WW. Washington, DC, American Psychiatric Press (in press)
 
Frances A, Clarkin J, Perry S: Differential Therapeutics in Psychiatry: The Art and Science of Treatment Selection. New York, 1984
 
Report to the President From the President's Commission on Mental Health. Washington, DC, 1978
 
Talbott JA: Psychiatric care in the United States: past, present, and future, in Proceedings of the Congress in Honor of the 25th Anniversary of the Pavilion Albert Prevost, University of Montreal. Edited by Amyot A, Leblanc J, Reid W. Chicoutimi, Quebec, Graetan Morin (in press)
 
Braun P, Kochansky G, Shapiro R, et al: Overview: deinstitutionalization of psychiatric patients: a critical review of outcome studies. American Journal of Psychiatry 138:736—749,  1981
[PubMed]
 
Kiesler C: Mental hospitals and alternative care: noninstitutionalization as potential public policy for mental patients. American Psychologist 37:349—360,  1982
[PubMed]
[CrossRef]
 
Stein LI, Ganser LJ: Wisconsin's system for funding mental health services. New Directions for Mental Health Services, no 18:25—32,  1983
 
Talbott JA: The future of unified mental health services. New Directions for Mental Health Services, no 18:107—111,  1983
 
Bachrach LL: Deinstitutionalization: an analytical review and sociological perspective. Rockville, Md, National Institute of Mental Health, 1976
 
Talbott JA: The patient: first or last? Hospital and Community Psychiatry 35:341—344,  1984
 
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References

Economic Fact Book for Psychiatry. Washington, DC, American Psychiatric Association, 1983
 
Talbott JA: Why we're not doing what we know is right for the chronic mentally ill, in The Chronic Mental Patient: A Follow-up Appraisal. Edited by Menninger WW. Washington, DC, American Psychiatric Press (in press)
 
Frances A, Clarkin J, Perry S: Differential Therapeutics in Psychiatry: The Art and Science of Treatment Selection. New York, 1984
 
Report to the President From the President's Commission on Mental Health. Washington, DC, 1978
 
Talbott JA: Psychiatric care in the United States: past, present, and future, in Proceedings of the Congress in Honor of the 25th Anniversary of the Pavilion Albert Prevost, University of Montreal. Edited by Amyot A, Leblanc J, Reid W. Chicoutimi, Quebec, Graetan Morin (in press)
 
Braun P, Kochansky G, Shapiro R, et al: Overview: deinstitutionalization of psychiatric patients: a critical review of outcome studies. American Journal of Psychiatry 138:736—749,  1981
[PubMed]
 
Kiesler C: Mental hospitals and alternative care: noninstitutionalization as potential public policy for mental patients. American Psychologist 37:349—360,  1982
[PubMed]
[CrossRef]
 
Stein LI, Ganser LJ: Wisconsin's system for funding mental health services. New Directions for Mental Health Services, no 18:25—32,  1983
 
Talbott JA: The future of unified mental health services. New Directions for Mental Health Services, no 18:107—111,  1983
 
Bachrach LL: Deinstitutionalization: an analytical review and sociological perspective. Rockville, Md, National Institute of Mental Health, 1976
 
Talbott JA: The patient: first or last? Hospital and Community Psychiatry 35:341—344,  1984
 
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