Community Support

the Evaluation Center@HSRI Toolkit

Estimating Per Unit Treatment Costs for Mental Health and
Substance Abuse Programs

Barbara Dickey, Ph.D.,
McLean Hospital, Department of Psychiatry, Harvard Medical School, Belmont,
Massachusetts

Jennifer K. Beecham, Ph.D.,
Personal Social Services Research Unit , University of Kent at Canterbury, United
Kingdom

Eric Latimer, Ph.D., &
Douglas Hospital, Verdun, Quebec, Canada

H. Stephen Leff, Ph.D.
the Evaluation Center@HSRI, Cambridge, Massachusetts

March 1999

Address for Correspondence:
H. Stephen Leff, Ph.D.
the Evaluation Center@HSRI
2269 Massachusetts Avenue
Cambridge, MA 02140
Telephone: (617) 876-0426 x309

Table of Contents

I. INTRODUCTION

II. DETERMINING THE BEST APPROACH TO ESTIMATING COSTS: BALANCING LEVEL OF PRECISION WITH LEVEL OF EFFORT

III. DEFINING AND COUNTING SERVICE USE (STEP 1)

     1. Identifying Services
     2. Defining Services
     3. Units of Treatment
     4. Sources of Data

IV. ESTIMATING PER UNIT COSTS (STEP 2)

     1. Acute Inpatient Treatment
     a. Hospital Per Diems: Cost Reports
     b. Hospital Per Diems: Paid Claims
     c. Hospital Per Diems: Paid Claims

     2. Day Hospital Treatment
     a. Hospital Cost Reports
     b. Agency Contracts

     3. Acute Outpatient Treatment
     a. Using Information Supplied by an Agency or Clinic
     b. Secondary Data: Billing Information

     4. Long-Term (non-acute) 24-hour care
     5. Long-Term Community Support Services
     6. Crisis Visits
     7. Emergency Room Services
     8. Case Management
     9. Housing Costs
     10. Shelter Costs
     11. Market-Rent Apartments
     12. Police Contact

V. DEVELOPING A FORMAT FOR SUMMARIZING SERVICE USE AND COSTS (STEP 3)

     1. Linking Service Use Data With Per Unit Cost Estimates
     2. Summarizing Services
     3. Grouping Services

VI. CARRYING OUT COST EVALUATIONS (STEP 4)

     1. Guideline #1: The most precise estimate of a per unit cost is the opportunity cost.
     2. Guideline #2: All per unit cost estimates should include capital costs.
     3. Guideline #3: Projected expenditures need to be discounted.
     4. Guideline #4: Cost evaluations should include social costs.
     5. Guideline #5: Cost variation should be explained.
     6. Guideline #6: Cost effectiveness studies are more helpful to policymakers than a study of costs alone.
     7. Guideline #7: Cost studies have limitations.

REFERENCES

APPENDIX

Examples of 2 Schemas from: Unit Costs of Health and Social Care

Housing Costs for Adults Who Are Mentally Ill and Formerly Homeless

The Cost and Outcome of Community-Based Care for the Seriously Mentally Ill