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 s ervice utilization and cost of treating individuals with serious menta l illness in a community-based care system in which the state hospital was replaced with 60 extended acute care beds in general hospitals an d 583 residential beds. Method: A pre-post study design was used to de termine the utilization and cost differences before and after the stat e hospital closed for individuals with a diagnosis of schizophrenia wh o required extended psychiatric hospitalization following an acute car e crisis episode in a general hospital. The number and cost of days sp ent in general and in extended hospital and residential treatment were compared on an episode and an annual basis. Results: The result of th is analysis showed that after the state hospital closed, the direct tr eatment 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. Conc lusions: 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. Determ ining the appropriate allocation and supply of beds in different setti ngs is essential if community mental health systems are to manage the care of individuals with serious mental illness outside of institution al settings.