Implementation of the State-Local Program Realignment Act in California in 1991—which decentralized the State's mental health system—enhanced access to inpatient and outpatient care for patients with the most severe mental illness. The impact of decentralization on patients with less severe diagnoses was mixed, according to a study supported in part by the Agency for Healthcare Research and Quality (AHRQ National Research Service Award training grant T32 HS00026). With funds allocated directly to local governments to provide mental health services, both inpatient and outpatient service use increased significantly for patients with severe diagnoses and fell significantly for those with mild diagnoses.
Patients with schizophrenia, mood disorders, other psychotic disorders, substance use disorders, and personality disorders received significantly more outpatient treatment. During the realignment, nearly 1 percent of patients with severe mental illness were shifted from State hospitals to community-based services, which may explain their increased use of outpatient services. Also, fewer patients with substance use disorders were hospitalized, and more patients with anxiety disorders were treated as outpatients. It has long been argued that substance abuse and anxiety disorders can be treated efficiently on an outpatient basis.
Overall, the level of use of inpatient care after realignment was not cut as severely as one might expect. Patients with schizophrenia or other psychotic disorders received significantly more inpatient treatment. Outpatient services increased for patients with severe diagnoses and met the level of need for patients with most mild diagnoses. After realignment, the treatment cost per inpatient was significantly higher, suggesting that the sickest patients continued to receive expensive services when necessary. However, outpatient costs per user were significantly lower for all diagnoses, probably as a result of service contracting prompted by the realignment program, notes lead author, Amy Zhang, Ph.D., of Case Western Reserve University. Dr. Zhang and her colleagues based their findings on analysis of California's Client Data System of those receiving mental health services in the State from 1988 to 1990 and 1992 to 1994.
See "The effects of program realignment on severely mentally ill persons in California's community-based mental health system," by Dr. Zhang, Richard Scheffler, Ph.D., and Lonnie Snowden, Ph.D., in the September 2000 Psychiatric Services 51(9), pp. 1103-1106.