Background. 

Concerns over rising health care costs have led to pressure on health care providers to reduce inpatient costs.

Methods. 

Inpatient claims data were analyzed for adult users of mental health services (n = 45,579) from a national sample of over 3.8 million privately insured individuals between 1993 and 1995 from the MarketScan™ database. Costs and annual hospital days per treated patient were compared across diagnostic groups and plan types.

Results. 

Inpatient mental health costs fell 30.5% over the period, driven primarily by decreases in the number of hospital days per treated patient per year (−20.0%), with smaller changes in the proportion of enrollees who received care (−0.2%), and per diem costs (−13.1%). Patients whose primary diagnosis was mild/moderate depression saw the largest decrease in costs per treated patient (44.5%), and those diagnosed with schizophrenia experienced the smallest decrease (23.5%). There was no evidence of substitution of medical for psychiatric care.

Conclusions. 

Inpatient cost reductions have been substantial and are primarily caused by reductions in the number of inpatient mental health treatment days per treated patient. Further research is needed to evaluate the impact of these changes on outcome, quality of care, and patient satisfaction.