The impact of closing a state psychiatric hospital on the county mental health system and its clients

Objective: This three-year study examined the impact of closing a state psy chiatric hospital in 1991 on service utilization patterns and related costs for clients with and without serious mental illness, Methods: The cohort c onsisted of all individuals discharged from state hospitals and those diver ted from inpatient to community services and enrolled in the unified system s project, a state-county initiative to build up the service capacity of th e community system. The size of the cohort grew from 1,533 enrollees to 2,2 40 over the three years. Information on the types, amounts, and cost of all services received by each enrollee was compiled from multiple administrati ve databases, beginning two years before enrollment and for up to three yea rs after. The data were analyzed to reveal patterns of and changes in servi ce utilization and related costs. Results: Replacement of most inpatient se rvices with residential and ambulatory services resulted in significant cos t reduction. For project enrollees, a 94 percent reduction in state hospita l services resulted in cost savings of more than $45 million during the thr ee-year evaluation period. These savings more than offset the funds used to expand community services. Overall, the net savings to the system for ment al health services for this group was $3.4 million over three years. Conclu sions: The hospital closure and infusion of funds into community services p roduced desired growth of those services, The project reduced reliance on s tate psychiatric hospitalization and demonstrated that persons with serious mental illness can be effectively treated and maintained in the community.