Article Abstract Online ISSN: 1099-176X    Print ISSN: 1091-4358 The Journal of Mental Health Policy and Economics Volume 3, Issue 2, 2000. Pages: 61-67 Published Online: 23 Nov 2000 Copyright © 2000 John Wiley & Sons, Ltd.

^*Correspondence to Rani A. Desai, NEPEC/182, VA Connecticut Health Care System, 950 Campbell Avenue, West Haven, CT 06516, USA.

Abstract

Background:

There are relatively few published data on how the financial structures of different health systems affect each other. With increasing financial restrictions in both public and private healthcare systems, it is important to understand how changes in one system (e.g. VA mental healthcare) affect utilization of other systems (e.g. state hospitals).

Aims of Study:

This study utilizes data from state hospitals in eight states to examine the relationship of VA per capita mental health funding and state per capita mental health expenditures to veterans' use of state hospitals, adjusting for other determinants of utilization.

Methods:

This study utilized a large database that included records from all male inpatient admissions to state hospitals between 1984 and 1989 in eight states (n = 152541). Funding levels for state hospitals and VA mental health systems were examined as alternative enabling factors for veterans' use of state hospital care. Logistic regression models were adjusted for other determinants of utilization such as socio-economic status, diagnosis, travel distances to VA and non-VA facilities and the proportion of veterans in the population.

Results:

The single strongest predictor of whether a state hospital patient would be a veteran was the level of VA mental healthcare funding (OR = 0.81 per $10 of funding per veteran in the population, p = 0.0001), with higher VA funding associated with less use of state hospitals by veterans. Higher per capita state funding, reciprocally, increased veterans' use of state hospitals. We also calculated elasticities for state hospital use with respect to VA mental healthcare funding and with respect to state hospital per capita funding. A 50% increase in VA per capita mental health spending was associated with a 30% decrease in veterans' use of state hospitals (elasticity of -0.6). Conversely, a 50% increase in state hospital per capita funding was associated with only an 11% increase in veterans' use of state hospitals (elasticity of 0.06).

Implications for Health Care Provision and Use:

These data indicate that per capita funding for state hospitals and VA mental health systems exerts a significant influence on service use, apparently mediated by the effect on supply of mental health services. Veterans are likely to substitute state hospital care for VA care when funding restrictions limit the availability of VA mental health services. However, due to the relative sizes of the two systems, VA funding has a larger effect than state hospital funding upon state hospital use by veterans.

Implications for Health Policies:

These data indicate that changes in the organizational and/or financial structure of any given healthcare system have the potential to affect surrounding systems, possibly quite substantially. Policy makers should take this into account when making decisions, instead of approaching systems as independent, as has been traditional.

Implications for Further Research:

Further research is needed in two areas. First, these results should be replicated in other systems of care using more recent data. Second, these results are difficult to generalize to individual behavior. Future research should examine the extent and individual determinants of cross-system use. Copyright © 2000 John Wiley & Sons, Ltd.