Given a growing population of depressed older adults, favorable fee-for-service reimbursement rules and managed-care pressures, it's not surprising that hospitals are adding geriatric psychiatric services to their continuum of care.
Lewisville, Texas-based Horizon Mental Health Management, a subsidiary of Horizon Health Corp., is the nation's largest contract manager of hospital psychiatric services with revenues of $62.4 million last year. A full 120 of its 170 contracts with acute-care hospitals focus on geriatric psychiatric services.
John Strieby, chairman and chief executive officer of Nix Health Care System in San Antonio, hired Horizon four years ago to manage a comprehensive geriatric psychiatric program.
Nix opened a 15-bed inpatient psychiatric unit in December 1993, which now has an average daily census of 12. A year later, the system began a partial hospitalization program offering intensive outpatient services to older adults with mental health problems. The service treats about 12 patients daily. And in February 1996, Nix started a home-care program for geriatric psychiatric patients that makes some 300 visits a month.
Strieby says he plans to continue expanding the program to include such services as a memory diagnostic clinic.
"The elderly are the fastest-growing segment of the population and have a high incidence of psychiatric illness," Strieby says. "The physicians were telling us that outcomes were better in specialized programs and cost-based reimbursement made it financially viable."
Other hospitals have spotted the same trends and are offering expanded programs designed to meet the specific needs of geriatric psychiatric patients. According to an American Hospital Association survey, 2,135, or 40%, of the 5,326 acute-care hospitals that responded said they offered geriatric psychiatric programs in 1995 through their own facility, their health system or a joint venture with another provider.
Interest has been spurred by clinical advances and changing attitudes toward mental health problems in older adults. In 1991, for example, the American Board of Psychiatry and Neurology, the national certification arm of the psychiatric profession, officially recognized geriatric psychiatry as a subspecialty of general psychiatry.
The graying of America also has prompted hospitals to design an array of special programs for seniors (June 16, p. 26). An estimated 18%, or 6 million, of the 33 million Americans aged 65 and older suffer from some form of depression and spend at least $800 million annually on treatment, according to the National Alliance for the Mentally Ill. And as the baby-boom generation ages, more than 20% of the population is expected to be older than 65 by 2030, compared with 12% today.
Favorable rules for Medicare reimbursement also have drawn health systems like Nix to geriatric psychiatry. All inpatient psychiatric units are exempt from the prospective payment system that applies to other acute-care services because of the difficulty in predicting the length of stay of psychiatric patients. Inpatient psychiatric units are instead reimbursed by Medicare under the system spelled out in the Tax Equity and Fiscal Responsibility Act of 1982, or TEFRA, which compensates hospitals based on their costs at a particular time.
"A geriatric psych unit could benefit a hospital financially if (the hospital) has unused capacity and certain fixed costs that it could spread over the new unit," notes Janice Pyrce, president of Pyrce Healthcare Group in River Forest, Ill.
Although the new federal budget calls for a cap on TEFRA payments, Strieby points out that the new rules "will still be cost-based and not too much of a penalty on efficient providers."
From a managed-care perspective, geriatric psychiatric-care systems can help attract contracts with their emphasis on prevention and placing patients in the most cost-effective, clinically appropriate setting, Pyrce says. She cited a 1995 study by Milliman & Robertson that shows how patients with elevated risks for mental health or stress-related problems were more likely to spend more on medical services (See chart.)
In response to growth in Medicare HMO enrollment, which now represents about 10% of all Medicare recipients, Atlanta's Promina Health System formed a subsidiary last year called Behavioral Health Partners to manage the premium dollars earmarked for psychiatric services under the system's global managed-care contracts.
Gary Lang, president of Behavioral Health, says the subsidiary reimburses providers using a case rate of less than $3,000 for each geriatric psychiatric patient who is enrolled in a Medicare HMO. The fee covers all the patient's physician fees and inpatient, partial hospitalization and intensive outpatient psychiatric services.
"It's a market-driven process," Lang says. "More Medicare recipients are attracted to Medicare HMOs, and that has a trickle-down effect on us. We were created to be proactive and provide an infrastructure for a provider-sponsored integrated delivery system."
Centura Health System's 290-bed St. Anthony Hospital Central in Denver recently expanded its geriatric psychiatric program to similarly meet managed-care expectations.
In 1988 the hospital opened a 13-bed inpatient geriatric psychiatric unit. Then, three years ago, the hospital added a partial hospitalization program to its geriatric psychiatric services. At the end of last year, it started an intensive outpatient program and in the spring of 1997 it opened an outpatient psychiatric clinic for older adults.
"We saw that capitated Medicare insurers were looking for the least restrictive and most cost-effective settings," says Tom Reiter, a psychiatric treatment coordinator at St. Anthony's. "Now we can plug patients into the continuum based on what their needs are."