Psychiatric Annals


John H Houck, MD


1. Grob, G. Mental Institutions in America. New York: The Free Press. 1973.

2. Ibid.. pp. 36-37.

3. Ibid.. p. 39.

4. Grob, G. The State and the Mentally III. Chapel Hill, N. C: University of North Carolina Press. 1966.

5. Ibid.. p. 25.

6. Inventory for Mental Health Facilities. Biometry Branch, NIMH, Jan.. 1974.

7. Ozarin. L., and Taube. C. Psychiatric inpatients: Who. where and future Am. J. Psychiatry 131 (1974). 98-104.

8. Staffing Patterns in Mental Health Facilities, NIMH Series B1 No. 6. 1972.

9. New York Times. March 30. 1975.

10. Reed, L, Myers, E.. and Scheidemandel. P. Health Insurance and Psychiatric Care: Utilization and Cost. Washington, DC: The American Psychiatric Association. 1972.

11. Newhouse. J.. Phelps, C. and Schwartz, W. Policy options and the impact of National Health Insurance. N. Engl. J. Med. 290:24 (1974), 1345-1359.

12. Connecticut State Department of Mental Health. 1974-75.

13. Clayton, T. The changing mental hospital: Emerging alternatives. Hosp. Community Psychiatry 25.6 (1974), 386-392.…

Nobody's perfect in the prediction game.

Jimmy the Greek

Prophecy is basically a neat combination of witchcraft and careful observation. The successful witch doctor might sacrifice a rooster by moonlight, but before making his most important prognostications, he also takes a hard look at the weather and at last year's crops. He realizes, in short, that the future does not float unsupported in midair. It is anchored firmly to historic trends and present conditions, and any prophecy that is not similarly based is mere fantasy.

Predictions about the future of health care are particularly difficult, for many reasons. The number of variables is infinite, the number of uncertainties infinitesimal. Even if one could forecast the complex interrelationship of patient, physician, hospital, and the economy, even if one could chart the effects of technologic breakthroughs not yet achieved, one would be left with the greatest imponderable of all - the massive monolithic nudge of the federal government. We know only that the future WUl be quite different from the past or present.

In the mid-1 700s, the mentally ill, in what was to become the United States, were treated very much as they have been recently in New York. When they became too noticeable or too troublesome, they were consigned to some squalid shelter or escorted out of town. As the population grew, so did their problems. Finally, in 1751, the Pennsylvania Hospital was chartered in Philadelphia.1 Save for Williamsburg, the first "state" facility, it stood alone until 1813, when Friends' Hospital was opened by the Quakers. Then, in rapid succession, came McLean in Boston, Bloomingdale in New York, and the Retreat in Hartford.

The early hospitals viewed their mission in very simple terms. They treated everyone - rich or poor - and got their support wherever they could. They were unencumbered by training grants or catchment areas or accreditation or utilization review. They knew almost nothing about mental disease, but they believed in humane and kindly treatment - and it worked surprisingly well. In fact, the first 50 years in the history of our republic marked the only time when all of the mentally ill were treated exactly alike. Unfortunately, it did not last, for a reason we have come to know very well - too many patients, not enough money.

In 1790, no city in the United States had more than 50,000 residents. By 1850, the largest American city had considerably over half a million, while five others had over 100,000. In Boston, between 1830 and I860, the turnover rate was estimated at about 30 per cent per year. In other words, in each of those three decades, two to six times as many families passed through Boston as lived in it at the beginning of the decade.2

Not all passed through, however. Some were already mentally ill, while others became so under the stresses of pioneering. And McLean Hospital, for all its efforts, could not contain them. "Private philanthropy, " Gerald Grob observes, "while more successful in a general hospital where the average length of stay was measured in days rather than months or even years, proved completely inappropriate insofar as caring for the growing number of mentally ill persons was concerned."3

If they could not get into McLean, the mentally ill had to go elsewhere. The account of their excursions in 1820 could equally well have been dated yesterday. First, they went to jail. When the Boston Prison Discipline Society observed their plight in jail, it proposed that it be made illegal to send any mentally ill person to jail, and that these people be sent instead to the Massachusetts General Hospital!4 Finally, in 1829, Horace Mann was appointed chairman of a committee to ascertain "the practicability and expethency of erecting or procuring, at the expense of the Commonwealth, an asylum for the safekeeping of lunatics and persons furiously mad."5 The result, in 1832, was the Worcester Lunatic Asylum. It was not the first state hospital, but it was the first institution built specifically to meet the growing pressures of the indigent mentally ill.

Horace Mann had high hopes for Worcester. It was modeled after McLean and the Retreat, and it was intended to be just as humane, just as skilled, and just as excellent in every way. In the beginning it was. But the population grew faster than the Commonwealth's treasury. As immigration increased, the stream of the mentally ill became a flood inundating the public hospitals as fast as they were opened.

The private psychiatric hospitals, for their part, had to look to their limitations. They could treat humanely and well, but they could not treat everybody and survive. What they could do and how they could do it depended on their supply of patients, their resources, and the provision of alternative facilities for care by the state or by other private hospitals. They survived because they could still provide what most people wanted - humane, individualized care and more breathing space.

By 1850, the basic patterns of care for the mentally ill had already been laid down. There were always more sick people than beds to care for them, always more expenses than the budget provided, always needs to support those who could not support themselves. More than a century later, we are still trying to solve the same problems with about the same degree of success.

There are currently about 180 private psychiatric hospitals in the United States, with a total bed capacity of about 15,300. They are not evenly distributed throughout the country. Eighteen states have none at all, while the majority are found in the heavily populated areas on the East and West coasts.8

They are not alike, though they have qualities in common. About half are classified as nonprofit institutions, while the other half are proprietary, or for-profit, hospitals. Many, particularly the smaller ones, are very like general-hospital psychiatric units. Usually they maintain an open staff arrangement in which local pyschiatrists admit and treat their own patients, as an attending physician would do in a general hospital. They plan for a short-term stay, with a rapid return to the community.

A smaller group of comparatively large private hospitals presents a different pattern of patients, staffing, treatment, and objectives. In varying degrees, these institutions operate with a closed staff, providing all hospital treatment by full-time psychiatrists. Generally, they anticipate more difficult patient problems that have been resistant to short-term treatment. The average length of stay in such institutions is, therefore, proportionately longer.

Private psychiatric facilities provide a much smaller service volume than either generalhospital units or state facilities. In 1971, according to Ozarin and Taube, they accounted for about 6 per cent of inpatient-care episodes in the United States (as contrasted to 31 per cent for general-hospital psychiatric units and 42 per cent in public mental hospitals).7

Nearly all patients who go there pay their own bills, either directly or through insurance. They are likely to be white, better educated, and of middle or upper socioeconomic status. By contrast, the person who enters the public mental hospital system is more often black, poorly educated, and more or less medically indigent. He receives less psychiatric care before he enters the public mental hospital, and he is less likely to be referred to psychiatric care when he leaves.

The cost per day in a private psychiatric hospital is higher than in a state institution, and it is assumed that the quality of care is superior. We are not sure, however, whether this assumption is valid, because we do not know what to measure or how to measure it.

Outcome figures (whether the patient is much improved, unchanged, or worse at discharge), for example, are not only badly standardized from one hospital to another but also obviously related both to the kind of patient the facility admits and to the conditions to which he will return on departure. The surgeon who operates only on low-risk patients may compile impressive operative statistics and still be a terrible surgeon. Similarly, the psychiatric hospital that admits only patients with acute first episodes may anticipate excellent outcome statistics. On the other hand, a hospital that admits many patients with lengthy and repeated previous episodes of illness is certain to keep them longer.

Length-of-stay data have many other variables to muddy the water. Some institutions can choose their patients; others must take everyone, including the human flotsam from the courts. Some have policies that impose an arbitrary limit on hospital stay. Some state hospitals have an average length of stay of 15 to 30 days. But as many as 50 per cent of their admissions may be of alcoholics, and the same patient may repeat the cycle again and again. The result, in short, is a statistical nightmare, distorted out of all rational shape.

We have one fact whose precise meaning is not clear. We know that in 1971 the average public mental hospital employed 106 full-time professional staff members per 1,000 inpatient residents. The general hospital employed 420 and the private mental hospital 502.M The average private hospital, in short, has nearly five times as many professional personnel available to the patient as the average public mental hospital.

It must, of course, be remembered that most public mental hospitals have a large number of chronically ill schizophrenics and elderly patients whose need for high personnel ratios may sometimes be less. But we do not know the "right" number of personnel for what planners call the "optimum cost-benefit ratio." We presume that a patient who is emotionally disturbed needs a reasonable amount of human contact. We presume it is better if that contact is with someone who is healthy and understands his illness. Perhaps 106 members of personnel are sufficient; perhaps 502 are inadequate. For the moment, the figure stands in limbo.

Though we do know other facts about psychiatric hospitals, public or private, we are still ignorant about many of the critical questions and we have not done as much as we should to clarify them. The average cost per patient-day in a private psychiatric hospital is quoted at two to three times the cost in a state institution. But state hospital costs are traditionally underestimated. We are not sure which kind of institution provides the best value for money paid, or even, as some contend, whether the state would save money if it purchased mental hospital services instead of providing them.

Despite our uncertainties, some basic principles are clear, and the clearest have not changed much in the 225 years since the two Benjamins - Franklin and Rush - launched the Pennsylvania Hospital. The first principle is that hospitals, like most such institutions, either fill a basic need or disappear. The second is that hospitals must somehow balance the service they provide against the money they receive to provide it. All other elements in the system - population growth, morbidity, new treatment methods, scientific discoveries - are translatable into these basic terms.

Some will object that this summation is inadequate because it takes too little account of therapeutic excellence. Unfortunately, the fact that an institution provides the highest quality of care means nothing to a person who cannot pay for it, to a person who is too far away to get there, or to a person who is denied admission because there is no room. It is impossible to separate the provision of health care, on the one hand, from the ability to pay for it, on the other. A pauper is indifferent to vintage wines, and an indigent patient is not much enthralled by Joint Commission accreditation. What matters to him is whether he can get care or whether some agency will buy it for him.

Private health insurance was among the earliest efforts to meet that concern. Health insurance, of course, is simply another method of payment for health services. It is not "free" any more than education or home insurance or garbage removal is "free." But, in the past 50 years, it has given more people a way to meet hospital bills of unpredictable magnitude. Health insurance permits the patient and the hospital to reach a reasonably firm agreement about paying for care. The patient wUl not be bankrupted, and the hospital can make rational plans to meet its payroll, purchase its supplies, and provide its services. In fiscal 1974, according to a recent New York Times article, only about $1 of each $3 spent for personal health care expenditures was paid directly out of pocket by the patient. Almost all of the rest was paid by government or private insurers. For hospital services, $9 out of every $10 charged for care in 1974 was met by third-party payers.9

The trouble with private health insurance is that one has to buy it. Since that is now impossible for 30 to 40 million Americans, there has been increasing impetus towards some scheme of government health insurance available to everybody and somehow financed by the federal government.

When Medicare, the first massive federal invasion of the health care field, was enacted in 1965, the preamble stated: "Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided." It may be that other, nobler phrases can be located in the Congressional Library. It may even be that some have proved, in the long run, to be wrong. But surely that one sentence must hold the national record for sheer monumental inaccuracy. The "manner in which medical services are provided" has been massively affected by Medicare, and that effect will be multiplied under whatever National Health Insurance program is enacted. No future projections for private psychiatric hospitals, or for any other hospitals, have any meaning except in terms of these yet unwritten provisions.

For the present, we can only consider certain possibilities and try to perceive their long-run effects. It is likely that psychiatric patients will have to bear some degree of discrimination under National Health Insurance, as they did under Medicare. That is because many legislators still believe that psychiatric care is interminable, that the costs are excessive, and that the actuarial data are inadequate. This idea persists despite such recent studies as those of Reed, Myers, and Scheidemandel, which indicated that hospital care for mental disorders, in all types of hospitals, for up to 365 days per admission, could be provided for a representative working population for about $4.50 per person (at 1969 cost levels) and that insurance coverage for mental health care is entirely feasible.10

It must be noted, as a preamble to all our projections, that there will be enormous variations in service patterns, depending primarily on "covered" and "uncovered" services. For example, if a National Health Insurance scheme covers outpatient or partial care and not hospitalization, that will increase the existing "tilt" towards such services. That is probably a healthy trend. Whether, like most trends, it may be pushed too far too fast will depend on manpower and facilities as well as patients.

Though most observers now believe it to be unlikely, let us first assume a program of National Health Insurance with no coverage at all for psychiatric hospital care. Newhouse et al.11 have recently examined the effects of National Health Insurance on various elements of the health supply system. They note that, depending on the form of insurance adopted, the demand for all inpatient services would increase from 5 to 15 per cent over present levels. The demand for ambulatory services would increase far more, and the strain on ambulatory facilities would be far heavier, because there is currently much less "slack" in the ambulatory-care system.

Among the mass of potential patients not now in contact with any medical services and mainly indigent, numerous patients with psychiatric disabilities would surely not be covered, some of whom would need inpatient care. If National Health Insurance covers generalhospital services but not those of psychiatric hospitals, then such patients will immediately swamp the available general-hospital facilities. When they have done so, larger numbers will go to the state hospitals, because there will be nowhere else for them to go. The states, already in heavy financial weather and unable to collect National Health Insurance dollars for public mental hospitals, will be ever harder pressed.

Many of these new patients will be treated successfully in various community clinics and other settings. But some will still need hospital care, and the states, for their part, will bring heavier pressure for National Health Insurance dollars. In other words, if the coverage is not there initially, it will probably be added later.

Would private psychiatric hospitals be unaffected by all this? Obviously not. No one can foresee how many of their patients would be lost if National Health Insurance failed to cover their services. That would depend partly on such imponderables as the continued use of supplemental private insurance. But if generalhospital psychiatric beds were constantly filled, then some percentage of their "usual" patients would choose private facilities rather than state hospitals, and would find a way to pay for them.

Probably, however. National Health Insurance will include some coverage for psychiatric hospital care, though the precise kind of coverage it will be is unknown. In theory, this would mean that any person requiring psychiatric hospital admission would have an entirely free choice of hospital. In fact, it will mean nothing of the kind. Given a free choice, most patients will not go to the public mental hospital as now constituted. Neither will the average physician send his patient there. Under the predictable stresses of supply and demand, the general and private hospitals will fill first, after which the stream of patients who cannot get into either one will flood again into the old, familiar channel - the public mental hospital.

The channel may be familiar, but the stream will be different, for one very important reason - money. The patients may be the same, with the same problems, in the same setting. But every one of them will support most of his own care with National Health Insurance funds. And, for the first time in their long and arduous history, the state mental hospitals may become the new Cinderellas, cuddled by governors and wooed by finance commissioners. They not only will support themselves but also may make money! The real question is what will happen to the money.

In most states, the public mental hospitals are already earning substantial sums of money from private health insurance. Medicare, Medicaid, and other federal programs. In Connecticut last year, the amount totaled about $25 million, or one-third of the budget of the Mental Health Department.12 But in Connecticut, as in most states, that money does not go to the Department of Mental Health or to the hospitals. Rather, it is directed into the State General Fund and may be used as the budget planners propose (which is not, invariably, to upgrade mental health services).

If federal regulations do not require states to allocate a reasonable portion of the money earned by clinics and hospitals to the support of such clinics and hospitals, nothing will change. Politicians with control of the budget prefer to keep their options free. But, if such money were wisely applied to state psychiatric services, those services could be consistently improved and expanded so that, in time, state services might lose their stigma and assume their proper role in the spectrum of mental health care.

There will be other issues as well. Our experience with nursing homes under Medicare has already demonstrated that, where potential money flows, private enterprise rapidly follows. If psychiatric hospital services are covered by insurance, and if a shortage of such services exists, there will be a rush to build new proprietary facilities. But times have changed since early Medicare days. State and federal regulatory agencies now have authority to block or approve or modify such projects, on the basis of regional health plans and certificates of need.

This will be no small problem for the bureaucrats. They hold the power of life or death over new proposals, and they will be squeezed between demonstrable new needs, on the one hand, and pressure to contain costs, on the other. If they permit new institutions to be built, state government agencies will be obliged to regulate them and ensure that they are not profiteering at public expense. If the controls are too loose, there will be major abuses. If the controls are too stringent, neither nonprofit nor proprietary programs will be interested, and the patient will be cast back into the state's shrinking lap.

On balance, it seems probable that existing psychiatric facilities will survive the advent of National Health Insurance because they have an available service for which need will increase. Whether new facilities will be built is a much more complicated question, which may vary greatly from one part of the country to another.

Fiscal survival is a useful start. It is even what the logician calls a "necessary condition." Without it, nothing else is relevant. For the private psychiatric hospital, it is a long way from a "sufficient condition," because it leaves unanswered a very basic question. Money aside, should psychiatric hospitals continue and, if so, how? Werner Mendel suggests, for example, that "the hospital as a form of treatment for severely ill psychiatric patients is always expensive, always inefficient, frequently antitherapeutic and never the treatment of choice."13 Others with similar views join in a chorus of condemnation of the psychiatric hospital as dehumanizing, gratifying pathologic dependency needs, and insulating the sick person from the real world.

These themes are not new, but they are expounded with increasing vigor by various groups with different objectives. Some psychiatrists would abolish hospitals, civil libertarians would transform them into hotels, and some mental health workers would move all their patients into community mental health centers. The condemnation is restricted mainly to inpatient psychiatric care, and sometimes it is justified. Patients have sometimes stayed far too long, treatment has sometimes been poor or absent, and dehumanizing effects have been demonstrated. Whatever else may happen to the private psychiatric hospital of the future, it must surely be a more flexible instrument of care, with more stress on outpatient and partial care and less on inpatient services.

But change ought to be carefully considered. Dehumanization is not an inevitable consequence of inpatient care, and we have discovered, in the past five years, that former patients are often no less dehumanized outside hospital walls. Neither citations of abuse nor assessments of treatment have yet abolished the need for some kind of asylum in the original intent of the word. We may call it something else if that helps. But, whether it be a mental health unit or a sheltered placement or (as Mendel advocates) a motel with crisis intervention, the basic need remains. Some patients require a gentle, secure place away from home where they can turn to people who try to understand and help them. For some, the time needed is very brief; for others, it is longer. But the need remains up to the present.

As private hospitals expand their services into the community, new problems will surely arise, because (unlike public institutions) they have no benevolent government to bail them out of fiscal difficulties. Most insurance programs pay adequately for inpatient services but inadequately for everything else. Outpatient services - whether in psychiatry, pediatrics, or family medicine - almost never support themselves, because most bureaucrats cannot concede how much they cost. They cling to the ancient medical tradition that ambulatory care is at least cheap, if not free, and they usually expect the hospital to subsidize it. It has taken some planners a long time to recognize that a hospital that is losing $10 per visit to its outpatient clinic will not recoup that money by doubling outpatient volume - it will only lose twice as much. In other words, the necessary flexibility and continuity of patient care will come neither in psychiatry nor elsewhere unless the legislators and their experts recognize that such care is neither free nor cheap.

Even if hospitals can negotiate these obstacles, one very dark cloud hovers on the horizon. Historically, the private psychiatric hospital has demonstrated the best features of private enterprise. Unfettered by bureaucratic constraints and unencumbered by politics, the private hospital could do what its public sibling could not. It could try new things, conceive new theories, and set new priorities. It could plan its own programs with continuity of administration and budget. Perhaps most of all, the private hospital could attract men of high caliber who wanted to work under such conditions.

It will not be so easy in the future. To put it bluntly, the hospital - any hospital - will survive at the government's pleasure and not otherwise. Neither federal nor state government will persecute the hospital. But, with the best will in the world, they can smother it to death. The elementary requirements for institutional survival grow larger every year. The average hospital administrator in 1975 devotes at least half of his time and energy to meeting the regulations he knows about, catching up with the new ones he does not know about, and fending off the proposed ones he knows will be disastrous.

At present, the Institute of Living is surveyed regularly by 15 major regulatory bodies, ranging from the Joint Commission to the State Sanitation Inspector. There are, in addition, 17 professional training programs, whose representatives visit or who require yearly reports. Twenty-three states examine the high-school program. At least 12 miscellaneous state and federal agencies, ranging from the Equal Opportunity Employment Commission to the Internal Revenue Service, require regular reports or certificates of compliance. Nobody is certain of the total number because new ones are added so often. But about 70 assorted governmental and professional bodies jostle for position behind the shoulders of the director. And that compendium does not include the expanded surveillance required under the new utilization review procedure, length-of-stay studies, and criteria for admission recently promulgated by the Department of Health, Education, and Welfare.

These are not a swarm of gnats that can be brushed away to fly elsewhere. Every agency possesses professional or governmental power to affect hospital operations in varying degrees. As a result, these agencies are steadily eroding the energy and initiative of professionals at all levels and diverting more and more attention from patient care.

The total cost is impossible to compute because the greatest expense is not in money. It is, rather, in that intangible spirit that moves institutions in one direction or another. There is an inexorable pressure away from creativeness and toward conformity. One result of that pressure is likely to be a gradual disappearance of those important individual differences between institutions. This, in turn, will create instead a smooth, unblemished mediocrity. Unless this is somehow combated in the next decade, the most successful institution will be not the most innovative but only the most methodical. Every guideline will be scrupulously observed, every therapeutic procedure rigidly complied with, and every patient neatly treated and discharged at the precise second prescribed by the utilization review criteria. There will be no meaningful research because the paperwork will be nearly impossible and the expense will be insupportable.

This is tragic enough for all of medicine. It will be worst of all for psychiatry, because psychiatry still has the most to learn. Economists and politicians often argue that one cannot make an omelette without breaking a few eggs. If flexibility and creativeness are lost, they say, that is a necessary price to pay for cost control and maximization of benefits. The fact remains that Karl Menninger's milieu therapy would have been disapproved by the Federal Employees' Benefit Program, and Frieda Fromm-Reichman would never have got her first patient past the Utilization Review Committee!

Hospitals of every kind are now caught in a swirling riptide of control and regulation, all in the name of public protection. The new regulators know very little about mental illness, except that it is painful and often expensive, and they are all too eager to sacrifice quality on the altar of economy. Hospital administrators, for their part, are sometimes tempted to let them do so without further protest because their protests, in the past, have availed so little.

But numb acceptance of bad regulations is only a short-run solution. The bad regulations soon become institutionalized, and it is then too late to challenge them. The trend towards excessive regulations, which overlap and duplicate and contradict, will be checked only by continued patient, enlightened leadership in all sectors of psychiatry. This is not a parochial problem. We will either solve it together or not solve it at all. And if we do not solve it, the greatest loss will be not to the institutions or the people who work in them, but to the patients who come for help.


1. Grob, G. Mental Institutions in America. New York: The Free Press. 1973.

2. Ibid.. pp. 36-37.

3. Ibid.. p. 39.

4. Grob, G. The State and the Mentally III. Chapel Hill, N. C: University of North Carolina Press. 1966.

5. Ibid.. p. 25.

6. Inventory for Mental Health Facilities. Biometry Branch, NIMH, Jan.. 1974.

7. Ozarin. L., and Taube. C. Psychiatric inpatients: Who. where and future Am. J. Psychiatry 131 (1974). 98-104.

8. Staffing Patterns in Mental Health Facilities, NIMH Series B1 No. 6. 1972.

9. New York Times. March 30. 1975.

10. Reed, L, Myers, E.. and Scheidemandel. P. Health Insurance and Psychiatric Care: Utilization and Cost. Washington, DC: The American Psychiatric Association. 1972.

11. Newhouse. J.. Phelps, C. and Schwartz, W. Policy options and the impact of National Health Insurance. N. Engl. J. Med. 290:24 (1974), 1345-1359.

12. Connecticut State Department of Mental Health. 1974-75.

13. Clayton, T. The changing mental hospital: Emerging alternatives. Hosp. Community Psychiatry 25.6 (1974), 386-392.


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