Article Abstract

Article Abstract

Online ISSN: 1099-176X Print ISSN: 1091-4358
The Journal of Mental Health Policy and Economics
Volume 13, Issue 3, 2010. Pages: 121-126
Published Online: 30 September 2010

Contracting for Outpatient Mental Health Services: Effects on Services Use, Quality, and Costs

Todd Gilmer*

Ph.D., Associate Professor, Department of Family and Preventive Medicine, University of California, San Diego, La Jolla, CA, USA

* Correspondence to: Todd Gilmer, Ph.D., Associate Professor, Department of Family and Preventive Medicine, University of California, San Diego, 9500 Gilman Drive, La Jolla, CA 92093-0622, USA.
Tel.: +1-858-534 759
Fax: +1-858-534 4642
E-mail: tgilmer@ucsd.edu

Source of Funding: This paper was presented at the second biannual conference of the American Society of Health Economists, `Equity and Efficiency in Health and Healthcare,' June 22-25, 2008, Durham, NC, and at the 14th NIMH Biennial Research Conference on the Economics of Mental Health, September 25-26, 2008, Bethesda, MD. I gratefully acknowledge the County of San Diego, Health and Human Services Agency, Adult and Older Adult Mental Health Services for both access to their management information systems and financial support.

Abstract

This paper examines the changes in mental health service utilization and costs that resulted when San Diego County engaged in a contracting process whereby non-profit mental health providers were allowed to bid on the outpatient services provided by five County owned and operated mental health clinics. As a result of this process, the services of two outpatient clinics were contracted to non-profit providers; three clinics remained operated by the County, although existing as reengineered organizations under revised budgets. Analyses were performed at the person level, using generalized linear models embedded in a quasi-experimental difference-in-difference design. Contracting for outpatient mental health services achieved a primary objective, reducing outpatient costs by 31%. There was some indication of reduction in service quality among contracting clinics, as evidenced by an increase in the probability of using inpatient / emergency services among clients who intermittently used services.

Background: During the fiscal year 2004-2005, the County of San Diego engaged in a contracting process whereby non-profit mental health (MH) providers were allowed to bid on the outpatient services provided by five County owned and operated mental health clinics. As a result of this process, the services of two outpatient clinics were contracted to non-profit providers; three clinics remained operated by the County, although existing as reengineered organizations under revised budgets. This study describes changes in service utilization and costs among five outpatient MH programs involved in the contracting process.

Methods: Analyses were performed at the person level, using generalized linear models embedded in a quasi-experimental difference-in-difference design. Twelve non-profit providers not participating in the contracting process served as a comparison group. Service utilization data was obtained from an encounter-based management information system; cost data were determined from a detailed examination of cost reports. Service hours, costs, and the probability of inpatient or emergency service admission were compared pre and post contracting. Multivariate models were used to adjust for a number of socio-demographic and clinical characteristics expected to affect service use.

Results: Difference-in-difference estimates showed a 10% increase in outpatient mental health service hours and a 31% decline in outpatient service costs among the five clinics participating in the contracting process, in comparison to clients in twelve non- contracting clinics. Use of inpatient / emergency MH services increased among clients who intermittently used services.

Discussion: Contracting for outpatient mental health services achieved a primary objective, reducing outpatient costs by 31%. There was some indication of reduction in service quality among contracting clinics, as evidenced by an increase in the probability of using inpatient / emergency services. Staff reductions may have led to longer wait times and fewer walk-in appointments; clients with immediate needs may have discovered easier access to care in the emergency psychiatric unit. Limitations of this study include a lack of detailed information on illness severity and outcomes.

Implications for Health Care Provision and Use: The explicit consideration of quality measurement coupled with structured evaluation of implemented programs may inform the adoption of the most cost-effective programs.

Received 19 February 2009; accepted 22 May 2010