Fiscal outcomes of the closing of Central State Hospital: An analysis of the costs to state government

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Abstract

This study reports estimates of the preclosure and postclosure costs of mental health services for patients directly affected by the closing of Central State Hospital. The data come from state budget documents and from the billing records of the community mental health centers serving the discharged clients. On average, it cost Indiana approximately $68,347 (in 1995 dollars) to provide 12 months of state hospital care for this client cohort in fiscal year 1993. In contrast, during the first year following the closure, the average per patient cost to the state was $55,417. When clients were served exclusively in community care settings, the average annual per patient cost was $40,618. The analyses suggest that the closing reduced the costs of caring for this cohort of patients by approximately 18.9%. A significant portion of the cost savings to the state mental health budget was achieved by shifting some of the direct patient care costs to Medicaid/Medicare.
The analyses and conclusions reported here are the sole responsibility of the author and do not necessarily reflect the position or opinions of the funding institutions, the individuals named in the acknowledgments section, the agencies that participated in this study, or Indiana University.
He is also with the Indiana Consortium for Mental Health Services Research in Bloominton.