Cost-Effectiveness of Providing Insurance Benefits for Posthospital Psychiatric Halfway House Stays

A model insurance benefit package for posthospitalization psychiatric halfway house care was developed and administered to 32 hospitalized mentally ill persons. The therapeutic and cost effectiveness of providing a 120-day benefit package was examined over a 14-month posthospitalization period. This was compared with the effectiveness of hospitalization benefits alone for the same patients over the 42 months prior to halfway house admission. In terms of therapeutic efficacy, there was no significant deterioration after hospitalization release in either the symptom or behavioral coping scales, except for an increase in somatization. Yearly hospital recidivism rates fell from 79% to 29%, and the average yearly length of hospital stay per patient fell from 83 days to 18 days. In terms of cost-effectiveness, halfway house benefits saved the insurers 59% of their hospitalization costs. The implications of these findings are discussed.