The authors describe a model for an effective partnership between a la
rge health maintenance organization and a fee-for-service acute inpati
ent psychiatric unit. They present data from five years of experience
with the model on a unit serving a catchment area of one million plan
members. The model, which is based on ''facilitated'' care rather than
managed care, emphasizes crisis intervention and a strong medical ori
entation. The HMO contracted with seven psychiatrists to provide treat
ment and helped develop a value system shared by the physicians and ho
spital staff. A clinician represented the HMO on the unit and played a
key decision-making role in patient care. A total of 4,945 patients w
ere admitted over five years. Costs per admission were reduced 47 perc
ent during this period; the readmission rate was 16.9 percent. Impleme
ntation of the model resulted in the delivety of high-quality cost-eff
ective care.