Article Abstract Online ISSN: 1099-176X    Print ISSN: 1091-4358 The Journal of Mental Health Policy and Economics Volume 5, Issue 3, 2002. Pages: 103-107 Published Online: 9 Feb 2003 Copyright © 2002 ICMPE.

*Correspondence to: Farrokh Alemi, Ph.D., 1319 Ozkan Street, McLean, Virginia, VA 22101, USA
Tel.:  + 1-703-993 4226        
Fax:  + 1-703-993 1953
E-mail: falemi@gmu.edu

Source of Funding: National Institute of Drug Addiction, Grant n° 9802247300

Abstract

This paper discusses the influence of patient’s length of stay on estimates of unit cost of treatment and provides a procedure for differentiating the cost of treatment services for short and long stay patients.  In a residential treatment program, we show that the cost of an hour of counseling for long stay patients was 2/3 less than the cost of short-stay patients.  Similar changes were observed for cost of an hour of other components of substance abuse treatment.  The paper suggests that methods of studying cost of treatment should be adjusted to reflect case mix of patients and their expected length of stay.    Higher rates should be set for more severely ill patients who are less likely to complete treatment.  Without adjusting the rate for the case mix of patients, health care institutions have an incentive to avoid the difficult cases and concentrate on long stay easier-to-treat cases.

Background: Many published reports on cost of counseling give a fixed cost per hour of service. These estimates may be flawed.  Aims of the Study: The purpose of this study is to show, by way of an example, how cost of an hour of counseling depends on the nature of the patient, in general, and length of the patient’s stay, in particular.  Even though the health care professional provides the same hour of work, the cost of the hour is different for short-stay and long-stay patients.  Methods: We identified 5-short and 5 long stay patients in a residential treatment program. For each group, we asked the counselors to review the medical records and measure the patients’ utilization of various service units. We estimated the cost of a unit of service by dividing cost of an average patient by the program utilization of short and long-stay patients.  Results: The cost of an hour of counseling for long stay patients was 2/3 less than the cost of short-stay patients. Similar large changes in unit cost of treatment were observed for cost of group counseling or other components of substance abuse treatment.  Discussion: Our data was limited to one case study and may not indicate similar patterns in other treatment programs. The paper suggests that methods of studying cost of treatment should be       adjusted to reflect case mix of patients and their expected length of stay.     Implications for Health Policies: Our analysis shows that higher rates should be set for patients at risk for short stays; conversely lower rates should be set for patients likely to complete treatment. Without adjusting the rate for the case mix of patients, health care institutions have an incentive to avoid the difficult cases and concentrate on long stay cases. Implications for Further Research: A number of instruments that measure severity of illness or difficulty of treatment can be used to anticipate patients’ length of stay. Then the rate for units of treatment can be set based on patients’ expected length of stay. This paper presents a questionnaire that can be used to collect cost data and estimate cost per unit of treatment adjusted for expected length of stay.

Received 30 April 2002; accepted 10 October 2002

Copyright © 2002 ICMPE