NAPHS Data Show Closures Slowing and Diversification

November 1, 1999

The pace of psychiatric hospital closings has slowed, and specialty psychiatric hospitals are diversifying their services to include a range of behavioral health treatment settings, according to data recently released by the National Association of Psychiatric Health Systems (NAPHS).

The pace of psychiatric hospital closings has slowed, and specialty psychiatric hospitals are diversifying their services to include a range of behavioral health treatment settings, according to data recently released by the National Association of Psychiatric Health Systems (NAPHS).

This industry snapshot is provided in the NAPHS's 1998 Annual Survey Report-Trends in Psychiatric Health Systems: A Benchmarking Report.The report is based on responses to the association's 1998 survey questionnaire recording 1997 data from 62% (188 of 302) of the psychiatric facilities owned and operated by NAPHS system members. Ninety percent of survey respondents were specialty psychiatric hospitals.

In their analysis of inpatient psychiatric admissions and capacity, investigators found that there were 443,230 inpatient admissions in 254 NAPHS-member hospitals in 1997. A typical hospital averaged admission of 1,745 inpatients, an increase of 15.6% over 1996. Between 1996 and 1997, the average number of beds set up and staffed for use remained stable at 84 beds per facility.

"In past years, some hospitals have closed, particularly in overbedded areas. To meet cost-containment demands, others have reduced bed capacity while increasing emphasis on partial hospitalization, residential treatment, and outpatient care," said the report. "The downsizing (or as some prefer, right-sizing) that has been occurring in recent years may have leveled-off, indicating a stabilization in patient programming."

Information too recent to be documented in the survey, however, indicates that there may now be some bed shortages.

"Anecdotally...we have heard from the field...that, in fact, in some markets it is now very tough to find a hospital bed," said Carole Szpak, NAPHS director of communications. "Many of the facilities are actually at capacity."

The media attention resulting from the Columbine High School tragedy, where two teens killed 12 students and one teacher and then themselves, has lead to increasing placements in child and adolescent inpatient psychiatric programs, Szpak told Psychiatric Times.Most of those programs are at capacity. For example, The Boston Globereported in June that Massachusetts' mental health commissioner Marylou Sudders had warned that the demand for acute psychiatric hospitalization for children and adolescents has reached "near crisis proportions." On one day in Boston alone, Sudders said, eight children who needed psychiatric hospitalization were being held in medical and surgical wards.

More of the Same

Most trends identified in the NAPHS report, Szpak said, "are trends we have seen over the last couple of years-the pressure to move to lower levels of care wherever possible, the evolution and growth of the continuum of care that is now available increasingly in many communities [where it] hadn't even existed a number of years ago."

Mark Covall, NAPHS' executive director, commented in a statement to the press, "In an era of cost-containment and a decline in dollars available for care, behavioral health providers have focused attention on developing treatment approaches that respond to payers' increasing demands for shorter stays, lower costs and expanded access to care. Changes in the mix and intensity of services, documented in the survey, are all part of this response."

In 1997, hospitalization remained a core service, representing 76.4% of all admissions. However, nearly one of every four admissions (23.6%) in 1997 was to a service other than inpatient hospitalization, compared to one in ten such admissions (10.9%) in 1992.

Significant numbers of NAPHS-member organizations offer services along the continuum of care. In 1997, for instance, the vast majority of survey respondents (91%) provided partial hospital services, 82.4% offered outpatient care and more than half (54.8%) offered residential treatment.

The average number of regular outpatient admissions seen by a typical facility grew 75% from 1,084 in 1996 to 1,897 in 1997. Similarly, the average number of intensive outpatient admissions grew 24.4% from 147 in 1996 to 183 in 1997. (Intensive outpatient services are generally provided for a longer than 50-minute office visit or for three or more times per week.)

The NAPHS report explained that more patients served in outpatient settings "is made possible in part by improved medication management. [This] also reflects the influence of intensified management of care in encouraging briefer treatment-both in and out of the hospital."

The average inpatient length of stay in 1997 declined 11.3%, from 11.5 days in 1996 to 10.2 days for all age groups. Viewed over time, the average length of stay has declined by 66.5% since 1987, when the average length of stay was 30.5 days.

A typical outpatient in 1997 averaged 7.97 outpatient visits, compared to 1996 when a typical outpatient averaged 8.7 visits. In 1994 a typical outpatient averaged 23.5 visits.

At the same time, though, there was an increase in the average number of intensive outpatient visits (up to 21 days on average in 1997 compared to 17.1 days in 1996).

"[This] may be an indication of the severity of the patients who are now being managed in outpatient settings," the report said. "Inpatient services are being used for acute stabilization."

Partial hospital admissions and visits have increased, but not as fast or as much as outpatient admissions or visits. The average number of admissions to a typical facility grew 17.7%, from 428 in 1996 to 504 in 1997. The average number of partial hospital visits increased by 18%, from 5,642 in 1996 to 6,658 in 1997. A typical partial hospitalization patient averaged 13.2 visits in 1997 and the same in 1996.

The survey reported that partial hospital admissions to individual facilities are strong, (10.6% of all admissions in 1997), but partial hospitalization admissions as a percentage of overall admissions dropped 16.9% from 1996 to 1997. "This may reflect the pressure to move toward the development of intensive outpatient services in lieu of partial hospitalization," the report noted.

Residential treatment, which the report defined as overnight care in conjunction with an intensive treatment program in a setting other than a hospital, was provided by 103 facilities (54.8% of respondents) in 1997.

"Many of these programs have contracted with the public sector to provide a variety of services, including management of state hospitals, juvenile justice programs and programs for welfare recipients," the report said. "Many of these populations, such as juvenile offenders, have very complex and severe problems requiring a high intensity of services and relatively longer lengths of stay, which accounts for the growth in residential care as a proportion of total net revenue, even though total net revenue for residential treatment has declined."

Payers

According to the report, NAPHS members are providing significant care for Medicare and Medicaid populations. Together, these government programs accounted for 40.7% of all inpatient admissions in 1997 (Medicare, 22.3% and Medicaid, 18.4%). Both Medicare and Medicaid inpatient admissions are likely to increase.

"As the U.S. population ages, the proportion of older adults in treatment-including those covered by Medicare-is likely to increase. At the same time, a large number of Medicare beneficiaries is eligible due to psychiatric disability and will need inpatient as well as outpatient services."

Medicaid inpatient admissions rose by 3.3% in 1997. Since federal Medicaid rules, known as the Institutions for Mental Diseases (IMD) exclusion, prohibit coverage for persons between ages 22 and 64 in private hospitals, the portion of admissions from Medicaid is primarily for patients 21 years of age or under and 65 years or older. However, in restructuring their Medicaid programs, many states are applying for federal waivers to IMD exclusion. These waivers could contribute to a further increase in Medicaid-covered admissions.

Looking at inpatient admissions covered by other payers, commercial insurers (including Blue Cross and Blue Shield) covered 16.2%; CHAMPUS (Civilian Health and Medical Program of the Uniformed Services), 1.2%; other government organizations and state health departments, 1.5%; employer contracts, 1.7%; and self-pay, 4.0%. In addition, the proportion of inpatient care covered by health maintenance organizations, preferred provider organizations (PPOs) and other at-risk contracts, grew 18.2% between 1996 and 1997, covering 24.7% of inpatient admissions in 1996 and 29.2% by 1997.

Recent analyses indicate that over 72% of insured Americans (approximately 176.8 million people) are enrolled in some type of managed behavioral health program, according to an article on such programs in Open Minds (July, 1999).

The number of contracts between psychiatric hospitals and payers is significant. Among the facilities responding to the survey, 92.3% had contracts with HMOs, 90.4% with PPOs, 68.2% with specialty managed care organizations and 57.1% with Employee Assistance Programs.

"Public/private partnerships are also evolving," the report said. "In total, three contracts were in place among the responding NAPHS members with state psychiatric hospitals. Seven respondents had arrangements to manage state mental health organizations. Seventeen respondents had community public program contracts and three had community private program contracts."

The number of insurers and hospitals negotiating rates was significant in 1997. Most (86.3%) of the hospitals responding in the survey negotiated rates. Global rate contracting (flat fee per episode of care) was used by 77.3% of the respondents and at-risk arrangements, including capitation, were used by 34.1% of the respondents.

"As organizations develop the full continuum of services and integrated delivery systems," the report said, "these providers will become the networks providing the behavioral health care of the future."

(Copies of the report can be obtained from NAPHS, (202)393-6700, ext. 15-Ed.)