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Cost and Cost-effectiveness of Hospital vs Residential Crisis Care for Patients Who Have Serious Mental Illness
Wayne S. Fenton, MD;
Jeffrey S. Hoch, PhD;
James M. Herrell, PhD, MPH;
Loren Mosher, MD;
Lisa Dixon, MD, MPH
Arch Gen Psychiatry. 2002;59:357-364.
ABSTRACT
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Background This study evaluates the cost and cost-effectiveness of a residential
crisis program compared with treatment received in a general hospital psychiatric
unit for patients who have serious mental illness in need of hospital-level
care and who are willing to accept voluntary treatment.
Methods Patients in the Montgomery County, Maryland, public mental health system
(N = 119) willing to accept voluntary acute care were randomized to the psychiatric
ward of a general hospital or a residential crisis program. Unit costs and
service utilization data were used to estimate episode and 6-month treatment
costs from the perspective of government payors. Episodic symptom reduction
and days residing in the community over the 6 months after the episode were
chosen to represent effectiveness.
Results Mean (SD) acute treatment episode costs was $3046 ($2124) in the residential
crisis program, 44% lower than the $5549 ($3668) episode cost for the general
hospital. Total 6-month treatment costs for patients assigned to the 2 programs
were $19 941 ($19 282) and $25 737 ($21 835), respectively.
Treatment groups did not differ significantly in symptom improvement or community
days achieved. Incremental cost-effectiveness ratios indicate that in most
cases, the residential crisis program provides near-equivalent effectiveness
for significantly less cost.
Conclusions Residential crisis programs may be a cost-effective approach to providing
acute care to patients who have serious mental illness and who are willing
to accept voluntary treatment. Where resources are scarce, access to needed
acute care might be extended using a mix of hospital, community-based residential
crisis, and community support services.
INTRODUCTION
MOST PATIENTS with severe mental illness are treated in community settings,
where programs charged with caring for them operate under tight fiscal constraints.1-2 Economic studies of these programs
point to acute care episodes involving hospitalization as the single largest
cost element in the array of services needed to provide community care.3-5 In psychiatry, as in
the rest of medicine, limiting use of costly inpatient services has been a
major strategy for controlling costs.6-7
Concurrently, limitations in services, including acute care services with
very limited lengths of stay, are widely perceived as placing serious burdens
on the patients, community mental health systems, and the society that must
absorb and manage the consequences of inadequately treated mental illness.8-10
Providing acute psychiatric care in specialized treatment homes is one
approach to extending the availability and flexibility of crisis care. Residential
crisis (RC) services are homes in the community organized to provide acute
care for patients who would otherwise be treated in a short-stay psychiatric
inpatient unit.11 Residential crisis programs
operate in lieu of a hospital admission for patients with serious mental illness
during an illness exacerbation.
Two RC models for patients with serious mental illness have recently
been tested. Sledge et al12 describe a model
that used a 4-bed crisis respite apartment combined with day-hospital treatment
for acute patients willing to accept voluntary admission. In a randomized
trial, RC treatment resulted in outcomes comparable to hospital care.12 Cost analysis indicated significantly reduced operating
expenses for the RC model, largely attributable to lower overhead costs.13
In our randomized trial of an RC model, we found that an 8-bed RC group
home that uses community treatment resources rather than a day hospital to
provide medical care and structure also yielded clinical outcomes comparable
to hospital care.14 This model allows patients
to maintain continuity of care with their outpatient clinicians across the
acute care episode.15 In this article we describe
the costs and cost-effectiveness of this RC model relative to "usual" care
provided in an inpatient unit of a general hospital (PH).
SUBJECTS AND METHODS
SUBJECTS
Methodological details of this study, a randomized trial of RC care
for patients enrolled in the Montgomery County, Maryland, Department of Health
and Human Services (DHHS), have been described in detail elsewhere.14 Annually, about 12% of 1600 DHHS patients with severe
mental illness experience 1 or more inpatient care episodes; 90% of these
hospitalizations are voluntary.
Between July 1, 1992, and December 31, 1994, DHHS outpatients were referred
for randomization if they met the following criteria: (1) judged by their
clinician to be in need of hospital-level care, (2) judged not to require
acute general medical care or detoxification, (3) funded by Medicaid or Medicare,
and (4) willing to accept voluntary placement. A computerized randomization
sequence maintained at a central location ensured that patients and referring
clinicians were blind to treatment assignment at the time of patient referral.
Voluntary patients experiencing acute psychosis, depression, suicidality,
homicidality, or substance abuse were not excluded from randomization.
A total of 119 subjects (64%) of 185 consecutive referrals screened
as eligible and randomized to PH or RC care were studied. Randomized patients
not studied declined placement (n = 27), withdrew consent for assessment (n
= 11), did not arrive or were discharged within 24 hours (n = 11), or were
dropped for administrative reasons (eg, benefits ineligible) (n = 17). Unsuccessful
placement was more common among PH-assigned (n = 42) than RC-assigned (n =
24) patients. Patients in the intent-to-treat sample who were screened but
not studied did not differ significantly from study patients across 27 prognostic
case-mix variables, including days hospitalized in the prior 6 months.14 Case-mix data also confirmed that patients who received
PH (n = 50) or RC (n = 69) treatment were comparably ill. All patients provided
written informed consent for evaluation interviews and medical record reviews.
The average (SD) patient age was 37 (10) years; 62 (52%) were male and
38 (32%) nonwhite. Patients were diagnosed by master's degree–level
raters using the Structured Clinical Interview for DSM III-R.16 Frequent diagnoses were schizophrenia
(n = 33, 28%), schizoaffective disorder (n = 31, 26%), bipolar disorder (n
= 25, 21%), and other mood disorder (n = 24, 20%). The DSM III-R criteria for co-occuring alcohol or other substance abuse
disorder was met by 31 (26%) of 119 patients. Patients were ill an average
(SD) of 21 (9) years, had an average of 13 (14) lifetime hospitalizations,
and a cumulative average of 43 (70) months of prior hospitalization. In the
6 months preceding admission, 25 subjects (21%) were homeless. Episode length
of stay averaged (SD) 19 (14) days for RC care patients and 12 (8) days for
PH patients.
TREATMENT SITES
Patients were randomized to either McAuliffe House (an 8-bed RC program
located in a residential neighborhood in Rockville, Md) or the PH unit of
Montgomery General Hospital, Olney, Md. Following discharge, whenever possible,
patient readmissions were reassigned to their initial placement facility.
Both programs provided acute care to DHHS patients prior to the study; all
clinical care was provided as usual within each assigned facility.
The McAuliffe House program model is based on Soteria and Crossing Place17, an RC facility operating in Washington, DC, since
1977.18-19 Two bachelor's degree–level
counselors staff the program 24 hours per day under the supervision of a Master's-level
program director. Medical responsibility for each patient is maintained by
the patient's outpatient psychiatrist who prescribes medications and orders
outpatient medical evaluations as indicated. Each newly admitted patient is
also evaluated by a consulting psychiatrist who meets with program staff weekly
to assist in treatment planning. Beyond a supportive environment, including
supervised medication self-administration, one-to-one staff interaction, and
group meetings, formal treatment is not provided in the RC facility. Rather,
participation in ongoing community treatment, rehabilitation, work, school,
or other activities is supported to the extent allowed by the patient's condition.
As needed, program staff provide transportation to appointments or activities.
Emergency backup for the RC facility is provided by a mobile crisis team.
This model strives to provide a small homelike environment that emphasizes
continuity with outpatient treatment providers and community networks.20-21
Hospital care was provided in a 31-bed Joint Comission on Accreditation
of Healthcare Organizations–accredited inpatient psychiatric unit, supported
by a day hospital and outpatient clinic. Hospital care included medical assessment,
individual psychotherapy, group therapy, and pharmacological management. Hospital
physicians attended patients during the acute care episode, and patients were
discharged to their referring clinician and/or to other providers as indicated.
COSTS
Costs were evaluated from the perspective of government as payor for
medical treatment and criminal justice costs of publicly subsidized patients
who have severe mental illness. Nontreatment-related transfer payments were
not included in cost estimates because these costs were not expected to differ
by treatment group. The cost estimation strategy involved computing treatment
costs for each patient (1) during the acute care treatment episode and (2)
for the 6-month period beginning on the first day of the acute care episode.
Costs were aggregated within intervention groups to compute mean treatment
episode and 6-month costs. All costs were adjusted to fiscal year 1995 dollars.
The cost estimations followed this general equation:
where i indexes individual services used.
Volume of Service
Consistent with recommendations for economic analyses, a variety of
data sources were used to estimate service utilization.22-23
Client and staff interview data, computerized state Medicaid service claims,
and medical record source documents were used as described below.
Treatment episode service use for PH-treated and RC-treated patients
includes both bed occupancy and variable (patient-specific) service utilization.
During the acute care episode, all services consumed by patients in PH were
generated within the hospital program. Hospital billing summaries were used
to obtain patient-specific hospital service use, for example, emergency department
services, physicians' visits, individual psychotherapy, occupational therapy,
laboratory services, medical supplies, radiologic assessments (ie, computed
tomographic scan, electroencephalogram, and/or magnetic resonance imaging),
electrocardiogram, and medications.
In addition to services intrinsic to the program, patients treated in
the RC facility received medical and psychiatric care from clinicians in the
community. Residental crisis facility medical records that include documentation
of all on-site, off-site, and telephone contacts between patients and their
community providers were used to record the volume of community-based services
used by each patient during the RC treatment episode (Table 1).
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Table 1. Index Episode Service Utilization and Costs for Patients in
Residential Crisis (RC) Care Program*
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To estimate 6-month volume of service, patients were administered a
structured interview at index episode admission, at index episode discharge,
and at 6-month follow-up. To compare the validity of patient report to service
volume estimates derived from other sources, we comprehensively reviewed all
Medicaid claims data, client self-report, and medical record source documentation
to construct a "gold standard" 6-month service volume estimate for 10% of
these patients. Like Lehman et al,24 we found
Maryland Medicaid data grossly underestimated service use for most patients.
In contrast, patient self-report correlated highly (mean intraclass correlation
coefficient,  = 0.82) with gold standard volume estimates for 9 medical
and psychiatric services: PH or RC psychiatric days, partial hospitalization
days, psychosocial rehabilitation days, residential rehabilitation days, psychiatrist
visits, other therapist visits, emergency department psychiatric and general
medical visits, and ambulance rides. For this reason, patient self-report
was used as the primary data source for 6-month service volume estimates.
Medical and administrative records were used to estimate medication use, type
of crisis, police intervention, and criminal justice service use.
Unit Costs
Treatment episode costs in each setting includes fixed and variable
components. Unit costs for hospital days were developed from cost-based rates
established by the Maryland Health Services Cost Review Commission. The Health
Services Cost Review Commission uses a Health Care Financing Administration–like
method to generate a facility-specific regulated cost that includes indirect
and amortized capital costs.25 The costs of
hospital procedures and professional services were derived from hospital accounting
records to reflect the amounts paid for each service unit by government payors.
The RC facility bed cost is based on payments from local government
using a cost-based reimbursement method. Unit costs for community-based, fee-for-service
treatments used during the RC treatment episode were estimated based on Maryland
Title XIX schedules. To estimate nonreimbursed costs to local government,
unit costs for community services (eg, physician telephone contacts, treatment
team meetings, crisis calls, police intervention, and judicial costs) were
based on estimates developed by relevant municipal departments (Table 1).
For the 6-month period, total costs include 4 components: (1) cost of
index admission; (2) cost of subsequent acute care at a PH or RC center; (3)
cost of outpatient treatment services and general medical care; and (4) criminal
justice costs (Table 2).
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Table 2. Six-Month Service Utilization and Costs for Patients Treated
in Residential Crisis (RC) Care Program and General Hospital (PH) During the
Index Episode*
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EFFECTIVENESS
Because symptom reduction, restoration of precrisis level of function,
and durable return to the community are the major goals of acute psychiatric
care, episode symptom reduction and total days living in the community over
the 6 months following admission were selected as effectiveness measures.
Symptom reduction was measured using the Positive and Negative Syndrome Scale
(PANSS)26 administered at admission, discharge,
and 6-month follow-up. Mean reliability achieved by research interviewers
for total PANSS score was 0.80 (intraclass correlation coefficient). Administrative
and medical records were used to validate patient-reported days living in
the community.
DATA ANALYSES
Mean costs per patient between treatment conditions were compared using
2-tailed t tests for individual service categories
and total costs. Because cost distributions were skewed, the significance
of t tests was confirmed with log-transformed data.
To examine cost-effectiveness we used incremental cost-effectiveness ratios
(ICERs).24, 27-29
Three analyses were conducted: (1) the incremental episode cost per additional
PANSS point of episode symptom improvement; (2) the incremental episode cost
per additional day residing in the community over the next 6 months; and (3)
the incremental 6-month cost per additional day of community residence. Incremental
cost-effectiveness ratios were computed by dividing the difference in cost
(RC - PH) by the difference in effectiveness. To characterize the uncertainty
of the ICER calculations, we used a "bootstrapping" procedure.30
Each of 5000 bootstrap replications was plotted as a point on the cost-effectiveness
plane. The resulting cluster of points reveals the sampling distribution of
the ICERs.
RESULTS
EPISODE COSTS
The mean (SD) acute care episode cost for 50 PH-treated patients was
$5549 ($3668) of which $4167 ($2893) (77%) were boarding costs; the remainder
was expended on hospital professional services, supplies, and procedures.
The mean (SD) episode cost for 69 RC-treated patients was $3046 ($2124); $2453
($1798) (81%) were boarding costs, while the remainder was expended on community
services accessed during the crisis episode (Table 1). The RC services costs averaged $2403 (45%) less than PH
acute care costs (t72.61 = -4.15,
effect size = 0.78; P<.001).
SIX-MONTH COSTS
Six-month costs were calculated for 109 (92%) of the 119 randomized
patients on whom follow-up data were collected. Mean 6-month costs for patients
randomized to PH and RC facilities were $25 737 ($21 835) and $19 941
($19 282), respectively. Mean 6-month costs for RC-treated patients were
$5796 or 23% less than PH-treated patients; this difference was statistically
significant for log-transformed but not untransformed data (t107 = -1.47, effect size = 0.28; P = .15). Residential crisis–treated patients' total 6-month
hospital costs were reduced by 50% compared with PH-treated patients ($9107
vs $1816.10; t107 = -2.42, effect
size = 0.51; P = .02). Patient groups did not differ
significantly in the 6-month costs for any outpatient or community services
(Table 2).
EFFECTIVENESS
Mean (SD) PANSS scores for RC-treated patients were 87 (24) points at
admission and 72 (27) points at discharge and for PH-treated patients 89 (25)
points at admission and 69 (16) points at discharge. Repeated measures (analysis
of variance) indicated a statistically significant time effect (F2220 = 52.94, P<.001) but no significant treatment
site (F1110 = 0.23, P = .64) or treatment
site x time interaction (F2220 = 1.18, P = .31). Episodic symptom improvement averaged 14 (18) PANSS points
for RC-treated patients and 20 (16) PANSS points for PH-treated patients.
Mean 6-month community days for PH- and RC-treated patients were 142 (45)
and 137 (46), respectively (t117 = 0.64,
effect size = 0.05; P = .50).
COST-EFFECTIVENESS
Although compared with usual care, the RC intervention was less expensive
for both the episode and 6-month follow-up over the treatment episode, the
intervention was associated with a reduction of 6 fewer PANSS points and over
6 months, 5 fewer community days. When a treatment yields less effect at a
lower cost, the ICER indicates the cost saved for each unit of effectiveness
not achieved.31 The RC episode ICERs were $395
saved per PANSS point (-$2403/-6 points) and $446 per community
day (-$2403/-5 points); the 6-month ICER was $1070 per community
day (-$5796/-5 points).
For episode symptom reduction, of the 5000 bootstrap replicates, 3%
of the ICER estimates are consistent with RC care costing less and providing
greater effectiveness, while 97% are consistent with the program costing less
and providing less episode symptom reduction (Figure 1). For episode cost and 6-month community days (Figure 2), 26% of the ICER estimates are
consistent with the RC program costing less and providing more. The remaining
74% correspond to the RC program costing less and providing fewer community
days than usual care. Finally, evaluating 6-month cost and community days,
28% of bootstrap replicates correspond to the RC program costing less and
providing more community days than usual care; 64% are consistent with the
RC program costing less and providing less, and the remaining 8% are consistent
with the program costing more and providing less (Figure 3).
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Figure 1. The origin on the y-axis represents
the difference in mean episode cost (in fiscal year 1995 US dollars) for residential
crisis (RC) care– vs hospital-treated patients; the origin on the x-axis
represents the difference in mean effect (Positive and Negative Syndrome Scale
[PANSS] point reduction) for RC care– vs hospital-treated patients.
The axes define 4 quadrants: 1, greater cost, less effect; 2, greater cost,
more effect; 3, less cost, less effect; and 4, less cost, more effect. The
values are expressed as 5000 bootstrap estimates of episode symptom reduction
incremental cost-effectiveness ratios (percentage of the bootstrapped sample).
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Figure 2. The origin on the y-axis represents
the difference in mean episode cost (in fiscal year 1995 dollars) for residential
crisis (RC) care– vs hospital-treated patients; the origin on the x-axis
represents the difference in mean effect (days in the community over 6 months)
for RC care– vs hospital-treated patients. The axes define 4 quadrants:
1, greater cost, less effect; 2, greater cost, more effect; 3, less cost,
less effect; and 4, less cost, more effect. The values are expressed as 5000
estimates of episode days in community incremental cost-effectiveness ratios
(percentage of the bootstrapped sample).
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Figure 3. The origin on the y-axis represents
the difference in mean 6-month cost (in fiscal year 1995 dollars) for residential
crisis (RC) care– vs hospital-treated patients; the origin on the x-axis
represents the difference in mean effect (days in the community over 6 months)
for RC care– vs hospital-treated patients. The axes define 4 quadrants:
1, greater cost, less effect; 2, greater cost, more effect; 3, less cost,
less effect; and 4, less cost, more effect. The values are expressed as 5000
bootstrap estimates of 6-month days in community incremental cost-effectiveness
ratios (percentage of the bootstrapped sample).
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COMMENT
Because resources to meet the clinical needs of mentally ill persons
living in the community are limited, cost and cost-effectiveness analyses
assume greater importance in assessing options for provision of service.3-4,32 In this report we evaluated
the cost and cost-effectiveness of RC care for patients with serious mental
illness willing to accept voluntary treatment during an illness exacerbation
requiring hospitalization. Relative to treatment in a PH, the RC model reduced
episode acute care cost by 45%; total 6-month cost by 23%, and total 6-month
hospital cost by 50%.
The cost savings achieved by the RC model studied here are similar to
those described by Sledge et al13 who reported
a cost of $501/d for crisis respite/day-hospital care and $646/d for hospital
care. These data suggest that cost savings can be achieved by providing acute
care to voluntary patients in nonhospital settings using either model. Although
the use of different cost estimation strategies precludes a direct cost comparison
of the 2 models, our use of an 8-bed instead of 4-bed residence, and reliance
on community resources rather than a day hospital, likely explains our lower
absolute per day treatment costs.
Although our RC model generated large reductions in costs, effectiveness
(as measured by episode symptom reduction and total 6-month community days)
was nonsignificantly less than PH care. When a technology provides more effectiveness
at a lower cost (such as screening for phenylketonuria),33
it is a dominant choice; likewise, a technology providing less effectiveness
at a higher cost can be summarily rejected. When technologies provide more
at a higher cost (neonatal intensive care unit, new antipsychotic drugs) or,
less at a lower cost, a judgment must be made about whether extra costs or
savings are worth the resulting addition or loss in effectiveness.
Is the large cost savings of the RC model worth the observed decrement
in outcome? The ICER examines this question from an economic perspective.
Our ICER calculation indicates that the more expensive PH model of acute care
achieves 6 additional PANSS points of episode symptom reduction at an incremental
cost of $395 per PANSS point. Likewise the hospital achieves each of 6 additional
community days over 6 months at an incremental cost of $1070 per community
day. Whether "the cost savings is worth it" depends on the value of other
services that might be purchased with these savings. Savings generated by
the 6-month cost differential between the RC and PH models would allow purchase
of 6-months' treatment with a new-generation antipsychotic,34
6 months of residential rehabilitation service for a patient who had severe
mental illness (Table 2), or 9
months of an apartment for a homeless mentally ill person.35
It is also important to evaluate whether the decrement in effectiveness
for the RC program has meaningful clinical consequences. While RC-treated
patients' mean PANSS score at discharge was 3 points greater than PH-treated
patients, at 6 months no group differences in social functioning, work, acute
care days, patient satisfaction, or symptom severity were found.14
The 6-day difference in community days over 6 months for the RC-treated group
was entirely due to a longer index length of stay. Although RC-treated patients
maintained participation in community activities, were seen by their community
clinicians, and generally had freedom of movement in and out of the facility
during the index episode, our analyses did not count days in RC as community
days. Using a less conservative "days not hospitalized" over 6 months as an
effectiveness measure would yield a 19-day (162 vs 143 days) advantage for
the RC model.
These findings must be interpreted in light of this study's strengths
and limitations. This investigation occurred in a mental health system where
both service models were operating prior to the study's inception. Patients
were limited to Medicaid and Medicare beneficiaries with multiple hospitalizations
over many years. For these reasons, findings should be generalizable to a
range of public mental health system patients throughout the United States.
At the same time, results are restricted to voluntary patients not requiring
detoxification or acute general medical intervention, and generalizability
to patients with private third-party insurance is untested.
While the naturalistic setting of this study allowed testing of program
model effectiveness, it also imposed limitations. Although we found no difference
across 27 case-mix variables between patients randomized to the 2 programs,
an unmeasured self-selection bias cannot be ruled out. The necessity of obtaining
patient consent may also introduce unmeasured bias.
The economic analyses reported here benefit from our measurement of
cost and utilization of a wide range of community services and a high (92%)
6-month retention rate. At the same time, these analyses do not capture all
societal costs, but rather measure cost solely from the perspective of government
payors. Time costs to patients and families associated with the different
care models, for example, remains unexplored and should be considered in evaluating
the desirability of disseminating the RC model. Since the focus of this study
is the cost differential between 2 acute care programs, however, the costing
perspective chosen likely has a scaler effect on results, but should not distort
the cost differential between the 2 tested program models.36
Similarly, while our findings might be limited by the accuracy of our cost
estimation procedures (both service volume and cost), this should not differentially
affect one or the other treatment setting.
The treatment of patients outside of large long-term institutions is
a fundamental value of community psychiatry that creates the need for adequate
community-based acute care as part of an optimal mix of acute care, extended
care, and residential beds.8, 37
Residential crisis care programs have been implemented in service systems
in the United States,38 United Kingdom,39 Scandinavia, 40-41
and elsewhere42 as part of a treatment approach
that permits retention in the community and supports continuity of care. From
a clinical and policy perspective, the RC model comports with community mental
health practice that values the provision of needed care in a least restrictive
or most integrated treatment setting.43-44
Effectiveness data from at least 2 randomized controlled trials12-14
suggest that where resources are scarce, critically needed acute care might
be extended by providing a mix of PH and RC acute care beds.
Replication of RC models in the United States has been limited by the
absence of reliable public-funding streams.11
Based in part on the program model described herein, the State of Maryland
recently defined funding (and model governing regulations) for RC care within
its public mental health system.45
AUTHOR INFORMATION
Submitted for publication January 22, 2001; final revision received
June 28, 2001; accepted August 13, 2001.
This work was funded in part by grants SM-49102 from the Community Support
Program, Center for Mental Health Services, Substance Abuse, and Mental Health
Services Administration (Dr Mosher) and R3034A01 from the Natural Sciences
and Engineering Council of Canada, Ottawa, Ontario (Dr Hoch).
We gratefully acknowledge the assistance of St Luke's House, Inc (McAuliffe
House), Montgomery General Hospital, and the Montgomery (Maryland) County,
Maryland DHHS. Dr Fenton acknowledges the professional contributions of Crystal
Blyler, PhD, Dexter M. Bullard, Jr, MD, and Pat Schwieterman.
Corresponding author and reprints: Wayne S. Fenton, MD, National
Institute of Mental Health, 6001 Executive Blvd, Room 8029, MSC 9669, Bethesda,
MD 20892-9619 (e-mail: wfenton{at}mail.nih.gov).
From the National Institute of Mental Health, Bethesda, Md (Dr Fenton);
Department of Epidemiology and Biostatistics and the Department of Family
Medicine University of Western Ontario School of Medicine and Dentistry, London
(Dr Hoch); Center for Substance Abuse Treatment, Division of Practice and
Systems Development, Substance Abuse and Mental Health Services Administration,
Rockville, Md (Dr Herrell); Soteria Associates, San Diego, Calif (Dr Mosher);
and the University of Maryland, Baltimore (Dr Dixon).
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