Two Wrongs Don't Make a Right

PRIOR to 1980, mental health coverage was primarily based on fee-for-service reimbursement through indemnity plans. Outpatient benefits varied from minimal to generous; decisions concerning psychiatric hospitalization (and to a great extent length of stay) were based on the psychiatrist's clinical judgment and only somewhat constrained by the paucity of beds. During the past 15 years, the mental health delivery system has undergone a two-stage evolution.1The first stage was free-market competitive expansion. As a result, the use of inpatient services increased, especially the for-profit psychiatric hospitalization of adolescents. The second stage was managed care, dramatically decreasing the use of psychiatric hospitalization. The engine for both the first and second set of changes was not innovative treatment or outcome studies; on the contrary, it was profit that filled psychiatric beds in the 1980s, and it is profit that empties them in the 1990s. This profit is eroding the traditional covenant