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Lack of integrated behavioral care in hospitals drives major excess medical costs

April 3, 2013
by Dennis Grantham, Editor-in-Chief
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Follow the money, Part 2: BH specialist care can dramatically reduce medical costs for chronic disease care, but payment system stands in way

Read "Follow the money: Part 1"

Counting the costs of separation

The problem of separate payment goes beyond the fact that for both behavioral health and medicine, most of the providers and money are in one sector and most patients are in the other.  The key issue is the added cost of co-morbid behavioral health problems on top of medical conditions—a problem that Kathol demonstrated is a costly problem for both sectors. Among current medical patients with behavioral disorders, some 60% receive no behavioral treatment whatsoever. Of those that do receive treatment, by far the most common modality is medication.  Among those with depression, for example, just 13% of those treated in a medical setting received what Kathol called “minimally effective treatment.”

Citing a 2005 study of 6,500 Medicaid patients (Thomas, et al.), Kathol stated that patients who received no mental health care in a year averaged $2,700 in physical health care expenses. He then added, “If you add any psychiatric illness, the cost doubles. If you look at the subsets:  psychotic, depressed, anxiety, suds—total costs are up around $8,000.”

While some level of higher cost is understandable for medical patients who have behavioral disorders, due to the need for mental health and substance use treatment and medications, Kathol pointed out that “you also see a higher amount spent on medical services, on average one-quarter to one-third more than for those without a behavioral condition.” Of this, he explained that “the vast majority of these costs – 80 to 90% - are for what I call ‘excess medical service use.’” He noted that even pharmacy costs rose, and that those incremental costs were “70% medical, not mental health related.”

So, he concluded, “when you don’t treat the mental health problem in the medical sector, the cost of medical services goes up, the cost of pharmacy goes up. The use of mental health and substance abuse services remains low, we’re getting poor outcomes and we’re perpetuating this overspending on the medical side.”

Using claims studies from hospitals, Kathol compared the costs of treating individuals with seven chronic medical conditions with those of individuals with identical conditions plus a co-morbid behavioral disorder. In hospital based studies, these patients numbered between 30 and 45% of the chronic physical disease population.  According to Kathol, this is typical. “About 1/3 of general hospital patients will have a behavioral health co-morbidity.  It’s quite a large percentage.”

Compared to “all insured,” health care expenses for those with a chronic physical illness were 1-1/3 to 4 times higher, while costs for individuals with both a chronic physical illness and comorbid behavioral disorder ranged from 62% higher to 186% higher.

So what happens in these cases?  In terms of hospitalizations, Kathol stated that a two-year study of one hospital system’s claims activity revealed that the two thirds of patients who had a chronic disease but no behavioral health disorder accounted for $26 million in hospital income, while the 1/3 of patients that had co-morbid behavioral disorders accounted for just $2 m in income. 

Among the specific findings, Kathol said, were the fact that “those with co-morbid behavioral disorders have more intermediate and long stays than other patients. They have a predictably longer average length of stay. While chronic disease patients average a 5-day LOS, those with behavioral comorbidities average 1.2, 1.5, up to 2 days longer. This is a huge expense.”

So too are the frequency and cost of readmissions. “There was 39% differential in 30-day readmits for those with chronic diseases and co-morbid behavioral disorders,” said Kathol, noting that he has “seen up to a 70% differential in readmission” among this population.  He added that monitoring these patients is also more costly: “Hospitals are doing a lot more one-on-one monitoring. Using sitters to monitor patients as a suicide prevention measure has become a huge facility cost.”

Kathol said that according to Milliman, commercial insurers and Medicare incur an estimated $132 billion annually in additional costs in physical care settings due to the impact of untreated behavioral health disorders.  

“This is our opportunity”

Kathol concluded his remarks with a challenge to behavioral health professionals:  “Are you going to be part of the problem, or part of the solution? Do you want to move forward to help the 80% of patients that you’re now ignoring?  Do you want to see behavioral health benefits transition to be part of medical benefits?”

“I know that this is ‘a big ask,’ but if we [behavioral health] continue to operate separately from the medical side, depending on a separate system of payment, we’ve got no opportunity to make an impact.”

“This,” he continued, “is our opportunity to increase access to mental health care among the 80% we’re not reaching and to impact the excessive use of medical services. We need to work toward true coordination of resources and payment systems with medicine.”



Thomas MR, Waxmonsky JA, Gabow PA, Flanders-McGinnis G, Socherman R, Rost, K. Prevalence of Psychiatric Disorders and Costs of Care Among Adult Enrollees in a Medicaid HMO.  Psychiatric Services 2005; doi: 10.1176/