Mental Health Services: I. Settings and Programs

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Since the mid-1950s, fundamental transformations have taken place in the size, location, diversity, funding, and attitudes toward mental health services in the United States, changing the organized response to the identification and treatment of mental health problems. These changes have altered the central policy and ethical questions that arise in the mental health system as a whole. When involuntary commitments to custodial mental hospitals dominated the system, the central issues involved inappropriate social control. In the diversified system based upon community care and treatment that has evolved, the most pressing issues include how to fund and deliver services to the most seriously ill persons, allocate services to meet a potentially huge demand, and improve service delivery outside the traditional system of mental healthcare.

Evolution of Mental Health Services

Until the mid-1960s, two separate systems dominated mental health services: public mental institutions that treated a large population of inpatients and a smaller private sector that provided most outpatient psychotherapy. Large, impersonal, custodial facilities dominated the inpatient sector and housed poor, isolated, severely mentally ill persons (often elderly) for long periods of time (Grob, 1973). Most residents lacked family ties or were committed as a last resort by their families. The flaws of these institutions are well known: huge size, overcrowding, geographic isolation, involuntary confinement, depersonalization, coercion, and custodial emphasis (Goffman). Nevertheless, they provided the most seriously ill persons an integrated range of services—housing, food, symptom management, respite from stressful community conditions, medical treatment, and a locus for social interaction—in one centralized location. Alongside the core of state mental hospitals, a smaller outpatient sector dominated by private psychiatrists practicing analytic psychotherapy treated clients who could afford those services (Hale).

The mental health system at the beginning of the twenty-first century is much different. A revolution in mental health services began in 1955, when the average number of residents in state and county mental hospitals started to decline from a peak of 550,000, to 370,000 in 1969 and about 60,000 by 1998 (CMHS, 2001). Taking into account a growing general population, the number of residents in state and county mental hospitals fell from 339 per 100,000 persons in 1955 to 91.5 in 1975, and to only 21 in 1998 (CMHS, 2001). Typical patients in state hospitals have also changed: from the elderly to the young; from long-term to short-term patients; and from persons with deteriorating and untreatable diseases of the brain to ones suffering from concurrent substance abuse disorders.

As state mental hospitals became institutions of last resort for the most intractable patients, alternative forms of inpatient care grew substantially. Less than 10 percent of admissions to twenty-four-hour care facilities occurred in state and county mental hospitals in 2000, a four-fold decline since 1969 (CMHS, 2001). Most inpatient psychiatric services now take place in general hospitals, private psychiatric hospitals, specialized chemical dependency units, nursing homes, and residential treatment centers for children (Kiesler and Simpkins). These facilities generally do not treat the same types of persons who had been found in public mental institutions: Their residents are more likely to have affective and substance abuse disorders and less likely to have schizophrenia.

The overall growth in mental health service provision has also been dramatic. Between 1955 and 1997, the total number of patient episodes in mental health organizations rose more than 600 percent—from 1.7 million to 10.7 million (CMHS, 2001). By 1994, all expenditures for mental health and substance abuse services exceeded $68 billion (Mechanic). In constant dollars (with 1969 as baseline), spending by mental health organizations increased from $3.3 billion in 1969 to $5 billion in 1994.

Most of the growth in mental health services stemmed from the expansion of outpatient treatment. From only 23 percent of total mental health episodes in 1955, outpatient episodes grew to 76 percent of episodes in 1998. Nevertheless, inpatient episodes consume over 80 percent of expenditures for mental health (Kiesler and Simpkins). The number of mental health professionals also expanded commensurately during this period. For example, in 1975 about 20,000 licensed psychologists practiced in the United States; this figure grew to 46,000 in 1986 and to at least 73,000 by 1997 (CMHS, 1998). The growth of mental health professionals who are psychiatric social workers, school psychologists, marriage and family therapists, and counselors was even greater. For example, between 1972 and 1994 the number of full-time psychiatric social workers nearly quintupled and there were nearly twenty times the number of professionals in the category of other mental health workers (CMHS, 2001).

The analogue to the growing number of mental health professionals is the greater number of persons who seek help from them. By 1983, about 23 million people—15 percent of the adult population of the United States—sought some type of treatment for mental health or addiction problems over the course of a year (Regier, Narrow, Rae, et al.). Population surveys also indicate a growing readiness of the public to use mental health services. One large national survey showed that while less than 1 percent of respondents sought help from psychologists, counselors, and social workers for mental health problems in 1957, 18 percent of respondents reported seeking professional services in 1996 (Swindle, Heller, Pescosolido, et al.).

Another striking trend has been the expansion of psychotropic medications. In the decade between 1985 and 1994 alone, the proportion of psychiatric outpatient visits in which psychiatrists prescribed an antidepressant increased from 23 percent to 49 percent, and the number of prescriptions for psychotropic medications soared from about 33 million to about 46 million (Pincus, Tanielien, Marcus, et al.). Three of the seven most-prescribed drugs of any kind are now antidepressants (Horwitz). These drugs are not imposed on unwilling patients, but are highly sought-after and valued therapeutic aids promoted to the general public through ubiquitous advertising campaigns (Kramer).

Reasons for Changes in Mental Health Services in the United States

A number of technological, ideological, legal, and economic reasons led to the steep decline in the use of traditional mental institutions and the growth of mental health services. The introduction of psychotropic drugs in the mid-1950s provided an efficient and effective technology that could be used easily in community settings. The ideology of mental health professionals after World War II emphasized a broad concept of mental illness, noninstitutional care, and treatment for a wide array of emotional and social problems (Grob, 1991). Judicial and legislative mandates regarding mental health services also began to change in the late 1960s toward specific and restrictive standards for commitment and the expansion of civil rights during and after commitment proceedings (Appelbaum).

The locus of authority for mental health services also shifted after World War II. Until that time, states and localities were responsible for providing services. The creation of the National Institute for Mental Health in 1949 and the passage of the Community Mental Health Centers Act of 1963 created partnerships between the federal government and localities that bypassed hospital-dominated state mental health systems (Grob, 1991). The hundreds of community mental health centers that emerged in the 1960s and 1970s, however, did not serve the same population as the state hospitals, but instead provided psychotherapy to people suffering from emotional, behavioral, marital, and family problems. These centers made mental health services more accessible, brought more services to lower socioeconomic and minority populations, and enhanced the acceptability of mental health treatment. They did not, however, replace the services state hospitals once provided to chronically ill persons, and generally neglected the most seriously mentally ill (Rochefort).

Out of the array of technological, ideological, judicial, and political reasons for changes in mental health service provision, shifts in patterns of reimbursement were especially important. Although not developed to serve the mentally ill, Medicaid (a program jointly administered and funded by federal and state governments to bring medical services to the poor and disabled) and Medicare (a federal program funding medical care for the elderly and persons who have received disability payments for two or more years) grew into large sources of funding for mental health services. The eligibility of facilities to receive Medicaid and Medicare funds contributed to the changing patterns of inpatient services outlined above. Elderly persons with mental illnesses were transferred from state mental institutions ineligible for Medicare dollars to nursing homes that could receive these funds. Likewise, treatment episodes in general hospitals increased because federal programs reimburse inpatient psychiatric episodes in these settings but not in public mental institutions.

Changing patterns of private reimbursement have also altered the nature of mental health services. Private insurance coverage for both inpatient and outpatient services greatly expanded between the 1950s and 2000, although not at a level comparable to that for physical illnesses. Expanded eligibility of nonphysicians, including psychologists, nurses, and social workers, for third-party reimbursement has increased the pool of mental health professionals who provide outpatient treatment. A multitude of practitioners with different disciplinary allegiances, therapeutic ideologies, and treatment techniques have come to serve clients with acute disorders (Frank and Frank). Despite the great expansion of mental health services, however, no comprehensive system in communities has emerged to replace the services that persons with the most serious and long-term illnesses received in state hospitals.

Another recent change in service delivery is the rise of managed mental healthcare (Mechanic). Managed care refers to a variety of organizational forms that impose routinized strategies to monitor, regulate, and review the treatment that professionals provide patients in order to provide costeffective care. Managed care is becoming the dominant form of treatment for mental health problems, and about three-quarters of persons with private health insurance now are in some kind of managed care plan (Kiesler). The principles of managed care dictate more rule-following, standardization, and regulated treatments that often conflict with individualized treatment plans (Luhrmann). Because persons with mental illness often require extensive and varied services, the requirements for their successful treatment often conflict with the restrictions and rigidities of managed care organizations.

International Mental Health Services

The major trends in the United States mirror changes in the provision of mental health services in most developed nations. Although the pace of deinstitutionalization differs across countries, the use of public inpatient facilities has sharply declined throughout most of the West (World Health Organization, 2001; Goldberg and Thornicroft). Persons who do enter inpatient facilities usually have short lengths of stay that typically average about one month or less. For example, the number of people occupying hospital beds in the United Kingdom fell even faster than in the United States, from a peak of 152,000 in 1954 to 39,500 in 1993. Italy has implemented the most ambitious plan of deinstitutionalization, which aims to completely eliminate all admissions to public mental hospitals (Donnelly).

The decline of public inpatient institutions has been accompanied by a decentralization of psychiatric services in most European and other developed societies (World Health Organization, 2001). Most of the smaller number of hospitalizations now occur in general hospitals and in facilities operated by non-profit or private agencies rather than by the national government. As in the United States, there has been a strong movement toward treatment in small facilities located in residential neighborhoods. Indeed, the ideology of community treatment—emphasizing keeping persons out of institutions, treating them in neighborhoods near their homes, and strengthening informal social support systems—is perhaps even stronger in Europe than in the United States. Client-centered movements of consumers of psychiatric services are also active in many countries. These movements have had a good deal of success in opposing mental hospitalization, coercive forms of psychiatric treatment, social stigma, and the power of psychiatric professionals, and in developing self-help groups of users.

There are exceptions to the general trend of declining use of inpatient hospitalization and increasing amounts of community treatment. For example, rates of occupied psychiatric beds in Japan increased between the 1960s and 1990s, and Japan has the highest number of inpatients of any country in the world (Shinfuku, Sugawara, Yanaka, et al.). Because public funds support inpatient treatment in private hospitals, these institutions have a financial incentive to admit many patients and keep them for long periods. In addition, most poor countries have rudimentary systems of outpatient treatment and the small amount of psychiatric care they provide typically occurs in large, antiquated inpatient facilities (World Health Organization, 1996).

Despite the success of most developed countries in reducing inpatient psychiatric populations, a number of common problems remain. Some of these problems are systemic. As in the United States, there is limited coordination between agencies that provide treatment, housing, social services, and social control. Insufficient amounts of adequate community housing also typify mental health systems. In addition, the most seriously disturbed and chronic patients continue to need inpatient care, severely straining the resources of most systems. Other problems stem from a poor fit between traditional modes of service delivery and particular types of clients (Goldberg and Thornicroft). The provision of mental health services to persons who are poor, homeless, immigrants, and substance abusers will be especially problematic in coming years. Most European nations have large immigrant populations who resist voluntary mental health treatment and are often subject to coercive forms of social control. Mental health systems rarely have enough personnel from minority backgrounds who could better relate to these patients. As in the United States, psychiatric patients who have co-morbid substance abuse problems are particularly difficult to treat within most mental health systems. As well, few mental health programs have established successful outreach programs to the homeless mentally ill. While the ideology of community treatment now dominates mental health service provision in nearly all developed countries, the implementation of this ideology lags behind.

Ethical Issues

The ethical issues that arose in a mental health system dominated by state hospitals were related to involuntary commitments, inappropriate hospitalizations, neglectful or abusive treatments and the validity of the label of mental illness itself (Szasz). In the huge but uncoordinated mental health system of the 2000s, the most pressing issue is to create coordinated service delivery systems for seriously disturbed persons. The dominance of medical models devised for specific acute conditions hampers efforts to create comprehensive services. Medicare and Medicaid, which were developed to finance treatment for acute physical conditions, usually do not cover long-term, comprehensive services that promote community living (although many states do use Medicaid options to finance a number of community-based services). Managed care organizations rarely have the expertise to provide appropriate treatment to persons with serious mental illnesses and lack the capacity to provide comprehensive mental health services (Mechanic). Drug therapies that form the core of medically-oriented treatment are effective in alleviating the symptoms of, although not curing, mental illness. These treatments are beneficial, but cannot address the needs for housing, monetary assistance, vocational training, and social interaction of seriously mentally ill persons who live in the community. The extent to which drug therapies cause harmful side effects is controversial (Healy; Valenstein). The dominant organizational forms and treatments in mental healthcare create great difficulties in developing comprehensive care programs for persons with serious mental illnesses.

COMMUNITY TREATMENT. A broad consensus has developed among consumers, families, and mental health professionals that community—rather than institutional—treatment is most consistent with the values of individual autonomy and choice that underlie contemporary policies toward disabled populations. In addition, evidence is accumulating that most persons with serious mental illnesses benefit more—and at no greater cost—from comprehensive community treatment programs than from hospital care (Mechanic and Rochefort). Although there is little evidence that comprehensive community treatment is cheaper than hospital care, such programs need not cost more than inpatient treatment (Weisbrod, Test, and Stein).

With the exception of a minority of violent, dangerous, and self-destructive persons, outpatient programs can allow seriously mentally ill persons to remain in the community with the help of an intensive range of mental health, psychosocial, and vocational services. One effective model uses assertive community treatment teams of mental health professionals who provide services in clients' natural living environments on a seven-day-a-week, twenty-four-hour-aday basis (Stein and Test). The staffs of these programs do not wait for patients to seek help, but aggressively offer treatment when they think it is needed. The aggressive enforcement of medication compliance and occasional hospitalizations has created concern that these programs can be overly paternalistic and coercive (Diamond and Wikler). Such interventions, however, might be necessary to keep the most difficult, disruptive, and noncompliant persons in community settings over the long term. The Fountain House program, which emphasizes job rehabilitation and the creation of a family-like atmosphere, is another effective, but less intensive, model for community treatment (Beard).

Despite the advantages of community-based treatment for the most seriously ill, skewed funding and administrative structures have precluded its widespread establishment. States continue to fund state mental hospitals disproportionately: 60 percent of state funding goes to hospitals that serve only 7 percent of the seriously mentally ill (Sharfstein, Stoldine, and Goldman, 1993). Opposition from public employee unions and local communities that are economically dependent on state hospitals often prevents shifting funds from inpatient treatment to intensive community treatment programs. Likewise, federal and private reimbursement programs fund relatively expensive treatment in inpatient facilities outside of public mental institutions, but will not usually cover treatment in clients' homes or in noncoercive residential facilities in the community.

Fragmented administrative authority for mental health services also prevents the development of integrated service systems. Service delivery for the seriously mentally ill typically involves an unplanned and uncoordinated mix of visits to emergency rooms, short-term stays in inpatient units, inadequate outpatient treatment, and a variety of entitlement programs that may not meet the special needs of the mentally ill (Bloche and Cournos). Different agencies with different missions provide housing, financial assistance, vocational training, medical treatment, and mental healthcare to the mentally ill (Mechanic and Rochefort). Mechanisms such as comprehensive case management and mental health authorities that assume organizational, financial, and clinical responsibility over a range of residential and psychosocial services can help coordinate the various agencies that provide these services (Morrissey, Callaway, Bartko, et al.). Solutions for serious mental illness must go beyond the development of effective drug treatments or psychotherapies to encompass a variety of systemic and organizational factors.

The philosophy of community treatment has also led to new and complicated issues regarding family responsibility for caregiving. Many family caregivers—typically mothers—are aging, ill, and lacking in resources to provide adequate care (Lefley). Yet the scarcity of community treatment programs means that families often must provide housing, monetary and emotional support, symptom management, and personal care to seriously ill adult children. Although mental health professionals are now less likely than in the past to view families as pathogenic, they still too readily blame or neglect family members instead of appreciating the value of family resources. Likewise, confidentiality requirements that allow widespread information flow between mental health professionals but preclude the sharing of information with family caregivers need reconsideration (Petrila and Sadoff).

The manifest failures of deinstitutionalization—especially the highly visible problems of the homeless mentally ill—have given rise to public demand to reinstitute civil commitment for the most obtrusive among the seriously mentallyill. In fact, federal entitlement programs have allowed most formerly institutionalized patients to avoid homelessness (Goldman, Adams, and Taube). The more visible homeless mentally ill are likely to be young persons in urban areas with concurrent substance abuse disorders who have never experienced lengthy hospitalizations and who are resistant to traditional mental health service delivery (Lamb). While young, chronic, and sometimes homeless mentally ill persons present a particularly challenging task for mental health service delivery, flexible and nontraditional programs of service delivery that emphasize the provision of adequate housing can best meet the special needs of this population (Bachrach).

INAPPROPRIATE SERVICE PROVISION. While the most seriously ill persons are often unable to obtain needed services, the mental health system overemphasizes inpatient services for persons who could more efficiently and economically be treated in outpatient settings. Particularly troubling is the fact that reimbursement patterns and financial pressures to fill inpatient beds drive service delivery. Paradoxically, while many states have reduced hospital services for the most seriously mentally ill to save costs without providing needed treatment in the community, less seriously ill persons—especially those with affective and substance abuse disorders—are often unnecessarily treated through inpatient episodes in both general and private hospitals. Few data exist about the accessibility, quality, and effectiveness of mental health services in these settings, although good evidence from randomized studies shows that most patients who receive care in hospitals could receive more effective and less costly care as outpatients (Kiesler and Sibulkin). Youths under eighteen are particularly likely to be committed to residential facilities; contrary to trends in other age groups, inpatient treatment for youths rapidly increased from the 1980s to 2000 (CMHS, 2001). There is no evidence, however, that such treatment is necessary, effective, or appropriate, although it is very expensive (Kiesler and Simpkins).

A more effective and efficient mental health service system would place less emphasis on expensive inpatient interventions and more emphasis on comprehensive, long-term community services for the chronically ill. The disabilities associated with serious mental illnesses require long-term care that is responsive to the episodic and recurrent nature of these disorders. For the acutely disturbed, such a system would de-emphasize extended psychotherapy while supporting short-term, directed interventions of proven effectiveness (Kiesler).

Another obstacle to creating a more effective and efficient system lies in the largely hidden nature of much mental health service delivery. Despite the large and growing number of mental health professionals, general physicians are the leading providers of mental health services, accounting for about half of all mental health and addictive treatment services (Regier, et al.). Conversely, about 20 to 30 percent of medical visits are for mental, rather than physical, health problems. However, primary physicians often do not appropriately recognize and treat mental disabilities. Professional training of physicians should place more emphasis on the appropriate diagnosis and response to mental disorders in primary practice. Nonphysicians, such as nurse practitioners, could also play a greater role in the treatment of psychological problems in medical settings. Nursing homes—where growing numbers of the psychiatrically-disturbed elderly reside without receiving adequate mental healthcare—are another location where psychiatric need and mental health service provision are mismatched.

An additional problem of mental health services lies in the expansive definition of mental illness. Once equated with psychotic disorders, the definition of mental illness now includes a wide scope of emotional, behavioral, and psychophysiological disorders (American Psychiatric Association). These definitions encompass many ordinary problems of living as well as serious mental illnesses (Kirk and Kutchins; Horwitz). Those who hold an expansive view of mental health often call for mental health service provision to a wide spectrum of persons who suffer from mental disorders but who do not seek treatment. Advocates of this view cite statistics from community surveys showing that about 16 percent of the U.S. population has a current mental health or addictive disorder, about 30 percent have such disorders over a one year period, and up to 50 percent suffer a disorder over the course of their lifetimes (Regier, et al.,; Kessler, Beglund, Zhao, et al.). These surveys also indicate that only about 13 percent of disordered persons seek help from a mental health or addiction specialist, and only about 30 percent seek any help at all for their problem. In this view, there is a tremendous unmet need for mental health services in the community.

The emphasis on unmet need for mental health services has generated calls for parity in coverage of the treatment of mental and physical health problems. Most third party payers impose higher co-payments for mental health treatment, limit the number of mental health visits and total amount of payment for mental health treatments, and refuse to pay for the treatment of many mental health conditions. Advocates for parity argue that such restrictions unfairly discriminate against persons with mental health problems. Efforts to bring parity had some success when the U.S. Congress passed the Domenici-Wellstone Amendment in 1996. That legislation, with many restrictions and limitations, requires parity of limits on the treatment of mental health and other medical conditions (Mechanic). The Amendment, however, has not brought about major improvements in the funding of mental healthcare.

Advocates of parity between mental health and other conditions do not generally define the specific conditions to which parity should apply. A different view is that, instead of seeking parity in treatment for all mental health conditions, the highest priority for care should be the much smaller group of persons who have severe disorders that lead to serious functional impairments. Surveys that ask respondents if they or someone in their household has a serious mental illness that interferes with their daily life find prevalence rates of between 2 to 3 percent of the population (Kessler, et al.). Because these lower estimates still involve between four and six million people, and because services are finite, there is a clear need for some allocation criteria for mental health services (Boyle and Callahan). Targeting services toward individuals who neither perceive a need for mental healthcare nor suffer from serious functional limitations could be wasteful and ineffective and could direct attention away from the many unmet service needs of the people who are in the most desperate circumstances. Mental health reforms can reasonably include high co-payments for persons with less severe disabilities who desire psychotherapy, as well as higher standards of accountability for psychotherapeutic techniques eligible for reimbursement. These principles could help reorient service delivery toward community treatment of the most seriously ill without generating the huge costs of meeting the total demand for mental health services (Frank, Goldman, and McGuire).

SUCCESSES OF MENTAL HEALTH SERVICES. The many failures of the current U.S. mental health system should not detract from its successes. The expanded federal role in funding mental health services through Medicaid and Medicare has the potential to create a more adequate communitybased system that is sensitive to the needs of the seriously mentally ill (Koyanagi and Goldman). States with the will to do so have the ability to devise more effective mental health systems, especially through the creative use of Medicaid waivers. The growth of public mental health treatment has led to declining social class differences in the receipt of services. Changing cultural definitions and understandings of mental disorders have lessened, although not eliminated, the stigma of mental illness and have increased public willingness to seek mental healthcare. Although flawed in many ways, there is more accessibility to mental health services than ever before.


U.S. mental health services at the beginning of the twenty-first century consist of unplanned and uncoordinated services driven by patterns of reimbursement originally developed to treat problems of physical health. Deinstitutionalization diminished the role of state hospitals without replacing the services once found in these settings. The most seriously ill obtain the least adequate treatment, while reimbursement patterns that emphasize acute care in hospital settings create inappropriate and unnecessary inpatient episodes for persons who could be treated equally well through less expensive outpatient therapy. As costs for all types of healthcare have escalated to reach 14 percent of the gross national product, and as managed care organizations have proliferated, some sort of controls over mental health service provision are inevitable. Reforms that would lead to a more equitable and effective system would place less reliance on expensive inpatient care and long-term psychotherapy and more on comprehensive and continuous community care for the most seriously ill, and short-term and directed care for the acutely ill. The knowledge exists about what changes are needed in mental health service provision, although fiscal inefficiencies, administrative fragmentation, and professional resistance might prevent reform. It will be difficult to create a mental health system that responds as adequately to the most seriously disordered as to the less seriously disturbed—but such a system will be more humane.

allan v. horwitz (1995)

revised by author

SEE ALSO: Children: Mental Health Issues; Coercion; Confidentiality; Disability; Electroconvulsive Therapy; Informed Consent: Issues of Consent in Mental Healthcare; Institutionalization and Deinstitutionalization; Life, Quality of; Mental Health, Meaning of Mental Health; Mental Health Therapies; Mental Illness; Mentally Disabled and Mentally Ill Persons; Patients' Rights: Mental Patients' Rights;Psychiatry, Abuses of; and other Mental Health Services subentries


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