Capitation financing of public mental health services for the chronically mentally ill

  • T. R. Hadley
  • A. P. Schinnar
  • A. B. Rothbard
  • M. S. Kinosian


In the 30 years since deinstitutionalization began the public mental health system has experimented with a variety of financing and management models in the delivery of care to the chronically mentally ill. Currently, capitation methods of payment for public mental health services to the chronically mentally ill are being tested as an alternative to fee-for-service reimbursement. Proponents suggest that capitation will increase service flexibility and produce a variety of better coordinated, more cost efficient services. Opponents believe that capitation will result in reduced care given the absence of treatment protocols and the financial incentives for cost containment. This paper discussed the impact of financing mechanisms and organizational structure on the delivery of mental health care for the chronically mentally ill, provides a review of the pertinent literature, and describes demonstration projects currently underway. Questions are raised as to the potential impact of capitation on the mental health system.


Public Health Health Care Mental Health Mental Health Service Organizational Structure 
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Copyright information

© Human Sciences Press 1989

Authors and Affiliations

  • T. R. Hadley
    • 1
  • A. P. Schinnar
    • 2
  • A. B. Rothbard
    • 2
  • M. S. Kinosian
    • 3
  1. 1.Department of Psychiatry, School of MedicineUniversity of PennsylvaniaPhiladelphiaUSA
  2. 2.Department of Public Policy and Management, The Wharton SchoolUniversity of PennsylvaniaUSA
  3. 3.Department of Health Policy and Management, School of Hygiene and Public HealthJohns Hopkins UniversityBaltimore

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