Psychiatry's Hottest Niche Markets

April 1, 2003
Volume 20, Issue 4

Inpatient care for the wealthy has arrived--fluffy bath robes, in-room Jacuzzis, a concierge at your beck and call. Do the luxuries of these "resorts" negate the care that is being provided, or can patients have the best of both worlds?

Fluffy bath robes. In-room Jacuzzis. An evening at the theater with your psychiatrist. Welcome to the brave new world of high-end inpatient psychiatry.

Anxious to boost their bottom line, several established psychiatric facilities have opened exclusively self-pay inpatient units that promise to treat patients like royalty while treating them for a wide range of psychiatric and/or substance abuse problems.

In November 2002, Rhode Island's Butler Hospital opened Duncan Lodge, an impeccably furnished, five-patient unit so service-oriented that it would make executives at the Four Seasons hotel chain jumpy. Duncan Lodge joins The Pavilion at McLean Hospital and The Retreat at Sheppard Pratt as the latest entries to what may be psychiatry's hottest new niche market.

ŎI think there has long been a market out there for upscale, upgraded health facilities, just like hotels started to do five-star resorts,Ŏ William E. Callahan Jr., M.D., a San Francisco-based psychiatrist in private practice, told Psychiatric Times. ŎIn health care, when people are under stress and are not feeling well, [and] if they have the means, a lot of them are not going to want to go into a setting that isn't like a hotel or their home that's just another stressor.Ŏ

For rates ranging from $1,500 per day to $2,500 per day, patients can stay in elegantly furnished private rooms that offer high-speed Internet access, fresh flowers and the guarantee that reconstituted mashed potatoes will not be on the menu--unless, of course, the patient requests them. The programs accept patients from a full diagnostic spectrum, provided the patient can manage in an unlocked setting as determined by a thorough intake screening.

Not surprisingly, there are challenges unique to running a small high-end unit. ŎOn one hand, it's kind of cozy and people get a lot of attention, but the interpersonal transference-based things that get stirred up between patients and between staff and patients can get pretty intense,Ŏ Donald R. Ross, M.D., medical director of The Retreat at Sheppard Pratt, told PT. ŎCareful attention to professional boundaries is important.Ŏ

How to figure out where those boundaries lie is another matter. ŎIf you're going to try and treat people in a flexible and creative way, you're going to have to make some difficult decisions around that,Ŏ Alan Gordon, M.D., said in an interview with PT.

Gordon, medical director at Butler Hospital's Duncan Lodge recently made such a decision when he elected to take an elderly, depressed patient to the theater. In her 70s, the woman was considerably older than any of the other patients and was feeling isolated and alienated. ŎGoing to the hairdresser, looking forward to the event, [and] being able to process enjoying herself built a relationship that may not be a traditional doctor-patient relationship but, in her case, had a lot of meaning and was very important to her,Ŏ he said. ŎIt felt right in the situation but is not likely to be something that would have been done if there was any potential for confusion in the transference or in sending a message of favoritism.Ŏ

Atlanta psychiatrist Saundra Maass-Robinson, M.D., is unimpressed. ŎI think it represents a violation of boundaries,Ŏ she told PT. ŎAll of us have attempted to rationalize, intellectualize and pull on our most mature defenses to explain actions that we take as physicians that we know in our heart of hearts violate good therapeutic guidelines.Ŏ

Regardless, the notion of self-pay is hardly novel. Places such as McLean and Sheppard Pratt have an established tradition of caring for patients of means. ŎThe place used to cater very much to a self-pay clientele,Ŏ Alex Vuckovic, M.D., medical director of The Pavilion at McLean, told PT. ŎThat was sort of the McLean image for decades. A lot of literary folks and famous people would come here for months at a time.Ŏ In the '80s, the Belmont, Mass.-based institution moved to a managed care and Medicare/Medicaid model, and Ŏit kind of squeezed out the self-pay business to a significant degree,Ŏ he said. ŎThe amount of money we get from a managed care or Medicaid bed pretty much assures that the level of amenities is not going to include a private bath and single rooms. For some folks, that's an important consideration.Ŏ

Administrators at McLean are hoping that The Pavilion will generate enough profit to cover costs elsewhere in the institution. The program offers comprehensive diagnostic assessment--including neuroimaging--as well as individual, group and family work. Substance abuse treatment and specialized modalities, such as dialectical behavior therapy (DBT), also are available to patients. The daily rate for the eight-person unit is $2,500.

ŎThere is the sense that we're providing an extremely important baselineŎ for patients and their families, said Vuckovic. ŎThey expect you to bring something more to the table. They're paying big bucks for good clinical ser- vices, and that keeps us on our toes.Ŏ

While Vuckovic maintains that The Pavilion hearkens back to the heyday of an affluent, self-pay clientele, the similarities end there. The McLean patients of yesteryear remained in intensive treatment for months or even years. In addition, insurance coverage helped many patients afford care at the facility.

The Austen Riggs Center in Stockbridge, Mass., may in fact be the only program in the United States that has been able to stay afloat while it continues to offer intensive, long-term treatment.

Rather than going to an exclusively self-pay system in the 1990s, the now 83-year-old institution instead chose to diversify. Once a program that offered inpatient treatment exclusively, Riggs implemented a series of painful budget cuts in order to create a wide array of treatment options with corresponding financial flexibility. Medical director Edward R. Shapiro, M.D., told PT that the institution never considered another option and was prepared to gamble on its survival in the service of maintaining their chosen clinical focus. ŎWe were mission driven, interested in responding to a particular clinical need,Ŏ he said. ŎThe adaptation to the world around us was an adaptation to where limited resources were the prevailing concern.Ŏ Given the quickly changing landscape of health care, Shapiro said the pressing question became: ŎCould we help people with limited resources have the longest shot they possibly could at a period of intensive psychotherapy in a community of examined living?Ŏ

In 2002, roughly 60% of patients at the Austin Riggs Center paid for treatment out of pocket, with the remaining 40% having relied partially or entirely on insurance. Finances are candidly discussed with patients and/or their families at admission and beyond to help figure out how to make the most of their resources. Said Shapiro, ŎThis is the place where Riggs has met the realities of the outside world.Ŏ The most intensive level of care at Riggs--in-hospital care--costs $870 per day, while the least intensive--aftercare--costs $105 per day. Patients see their individual therapist four times per week regardless of treatment level and are followed by the same clinical team through the entire stay at the program. When Maryland's Chestnut Lodge (an intensive, long-term, psychodynamically oriented treatment institution) closed its doors in April 2000, it left a vacuum. In Montgomery County, Md., administrators at Sheppard Pratt Health System began receiving inquiries from patients and family members who had been treated at Chestnut Lodge. ŎWe realized the only way we could do that was to make it a private-pay situation,Ŏ said Bonnie Katz, vice president of corporate business development for Sheppard Pratt, in an interview with PT. ŎThe milieu on any of the units is geared toward the majority of the patients, which is one of crisis stabilization--that's all insurance will really pay for. We had heard from folks that if they were paying, they would be looking for something that offered more privacy and more amenities. We decided to blend those two needs--longer-term psychodynamic milieu and an environment [where] people would feel they were getting the physical setting their payment provided.Ŏ

Ironically, not a single former Chestnut Lodge patient has been treated at The Retreat since it opened, said Katz.

Inpatients on the six-bed unit are expected to stay a minimum of 20 days, compared to the average three- to five-day stay for patients being treated on other Sheppard Pratt units. The cost is $1,500 per day. The hospital hopes to generate profits of $350,000 to $400,000, which Katz said will go to subsidize less profitable hospital programs.

The $750,000 spent on renovating and furnishing the 19th-century building has resulted in a tasteful, comfortable environment that Katz said, Ŏlooks more like a bed and breakfast than an inpatient unit.Ŏ She added, ŎI don't think we've gone to extremes in terms of the decor. The focus, regardless of the decor, was to create a safe environment. We still had to pay attention to issues that might interfere with a patient's safety.Ŏ Consequently, draperies, as well as plumbing and electrical fixtures, have been modified, and patients staying in the tastefully decorated rooms will see themselves reflected in mirrors made of safety glass.

The benefits of a self-pay unit may be more than skin deep, according to Michael C. Miller, M.D., editor in chief of The Harvard Mental Health Letter. The longer lengths of stay on such units afford the clinical team extra time to put together a better aftercare plan, not an insignificant consideration given the ever-increasing limits on both inpatient and outpatient treatment imposed by third-party payers. ŎIf the clinicians have a free hand to do everything in their power to figure out what the person's problem is and how to be most helpful, that seems to be money [well] spent,Ŏ he told PT.

In addition, the personalized care offered by high-end units enables clinicians to spend more time talking to patients and their families about clinical issues, time that isn't reimbursable on ordinary units. ŎClinicians, whether doctors, nurses or other mental health professionals, are all very busy, and there is very little time for the kind of supportive interactions that any family or individual might like as part of their treatment,Ŏ said Miller. ŎThe shame is that it's not just rich people who deserve that attention, but the way the system is set up, money and time need to be rationed out.Ŏ

Personalized attention is the raison d'etre at Butler Hospital's Duncan Lodge, where patients stay for about 14 days at an average cost of $2,100 per day. The Lodge includes five suites, all of which have the amenities of a luxury hotel room. According to Anne Powers, vice president of marketing and public affairs at Butler Hospital, no modifications related to safety concerns were made in the design or decor of Duncan Lodge, as patients are expected to be able to safely manage in an unlocked setting.

There are no dog-eared issues of magazines lying around common areas. The Wall Street Journal is delivered daily and patients can leaf through current issues of Architectural Digest, National Geographic and The New Yorker, the last of which happens to be a popular and fertile source of inquiries for all three programs.

A private chef prepares all meals, and patients are encouraged to take advantage of the on-site nutritionist and exercise physiologist. The Lodge also employs a concierge, whose duties range from making restaurant reservations to arranging transportation for patients who may also happen to be executives required at a board meeting.

ŎCome into this warm and healing environment, and we'll take care of everything,Ŏ Powers explained. ŎWe'll prepare your meals. If you want to get to the hairdresser, you just mention it, and it's taken care of. It's really a very focused clinical program; you won't have to worry about anything.Ŏ

The emphasis on creature comforts greatly worries Atlanta psychiatrist Maass-Robinson. ŎMy concern is that we've made it too comfortable to get work done,Ŏ she said. ŎBy over-emphasizing the environment of comfort and luxury, I wonder if the reasons for going there in the first place--developing the ability to resolve psychiatric issues--is diminished by the environment itself. Is it care or [are they] just customized spas with a different name?Ŏ

However, Duncan Lodge's Gordon is unequivocal about his conviction in the program's clinical integrity. ŎThis is not a spa or a place just to hang out,Ŏ he said. ŎIt's a place where a legitimate plan will be put in place, and you'll be expected to participate in that.Ŏ Individual therapy is offered nearly every day and patients are expected to attend community meetings daily. Patients can also participate in DBT and substance abuse treatment available at the main hospital.

Gordon said that a few patients have arrived unprepared for the clinical expectations of an inpatient stay. ŎWe have had the experience of patients coming in and, out of na