An Examination of Costs, Charges, and Payments for Inpatient Psychiatric Treatment in Community Hospitals

Objective: Hospitalization is a critical component of treatment for individuals with serious and persistent mental illness. Despite its resource intensity, the costs of inpatient psychiatric hospitalizations in the United States are not well understood. The objective of this research was to provide cost estimates for inpatient psychiatric care. Methods: Using Premier's Perspective Comparative Database, supplemented with the Market Scan database, this study estimated the average charges, cost to provide care, and amount of reimbursement for inpatient psychiatric care in 418 community-based hospitals in 2006 (N=261,996 hospitalizations). Results: Charges were 2.5 times higher than the hospitals' reported costs to deliver care. Reimbursed amounts indicated by Market Scan were similar to the reported costs to deliver care. The average cost to deliver care was highest for Medicare and lowest for the uninsured: schizophrenia treatment, $8,509 for 11.1 days and $5,707 for 7.4 days, respectively; bipolar disorder treatment, $7,593 for 9.4 days and $4,356 for 5.5 days; depression treatment, $6,990 for 8.4 days and $3,616 for 4.4 days; drug use disorder treatment, $4,591 for 5.2 days and $3,422 for 3.7 days; and alcohol use disorder treatment, $5,908 for 6.2 days and $4,147 for 3.8 days. Conclusions: Consistent with past research, the results suggest that previous attempts to control pricing may have led to unintended consequences, including a large gap between charges and reimbursed amounts, potential cost shifting between payers, and potentially extended lengths of stay to offset reduced per diems. The lack of transparency in pricing makes it challenging to estimate the cost to society for a day of psychiatric hospitalization. (Psychiatric Services 63:666-671, 2012; doi: 10.1176/appi.ps.201100402)