New Study: Assisted Outpatient Treatment Saves More Taxpayer Money Than It Costs

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In every case program costs were “more than offset” by reducing public spending in other areas, resulting in a net cost reduction to the public, the study conducted by Health Management Associates found.

We already knew AOT was an effective treatment option that saves lives. The report shows it saves money, too, even in geographically different settings where it is being put to work in dramatically different ways.

Court-ordered treatment in the community reduces taxpayer costs associated with untreated serious mental illness for individuals stuck in the “revolving door” of repeated hospitalization, incarceration and other consequences of non-treatment, according to a report issued Wednesday.

The study, conducted by Health Management Associates, found that the costs of serving clients in assisted outpatient treatment (“AOT”) were more than offset by the reduced need for inpatient hospitalization and other high-cost services. A net public savings resulted.

“In all cases,” the review of data from seven counties in New York and Ohio reported, the taxpayer costs when individuals stayed in treatment – keeping medical appointments, filling prescriptions and otherwise using mental health services – “were more than offset by the reduction of other public investments such as hospitalization and incarceration.”

“We already knew AOT was an effective treatment option that saves lives,” said Doris A. Fuller, executive director of the Treatment Advocacy Center. “The report shows it saves money, too, even in geographically different settings where it is being put to work in dramatically different ways.”

Cost savings were consistent across the urban and suburban New York counties, where AOT receives dedicated state funding, and in Summit County, Ohio, where it is integrated into existing mental illness services.

The use of AOT resulted in net cost savings of 47% in New York City, 58% in five outlying New York counties and 50% in Summit County, Ohio, the study reported. In all counties, reduced psychiatric hospitalization produced the greatest cost savings – from 40% in New York City to 67% in Summit County. Medicaid-paid costs also declined because of reduced hospital costs.

Fuller said the Treatment Advocacy Center commissioned the report in response to concerns from public officials that they cannot afford to utilize AOT for their highest-risk citizens with a history of noncompliance with mental health treatment. She said these individuals “repeatedly suffer consequences from their lack of treatment that incur significant taxpayer costs.”

“If states and counties look at what they are spending in every budget area touched by untreated mental illness– crisis intervention, law enforcement, jails, homeless shelters and more – they will find they can’t afford not to use this treatment option,” the executive said. “An AOT court order improves quality of life for the individual and safety for the community – all while being far less restrictive than the jails or hospitals where this population too often lands. We no longer provide an adequate number hospital beds for people with chronic or acute psychiatric disease. AOT is a cost-effective alternative for promoting the stability they need to begin recovery.”

In addition to reporting the cost impact of AOT in the seven counties, Health Management Associates analyzed how the counties identified and quantified cost centers and developed concrete recommendations for other states and counties to use in projecting or assessing their own cost of implementing court-ordered treatment in their communities.

NOTE: Assisted outpatient treatment/AOT is an approach that delivers mental health treatment in the community under a civil court order. Criteria differ by state but are universally limited to at-risk adults with severe mental illness and a history of cycling through public and other services because of the symptoms that result when they don’t stay in treatment, the report said. Although these individuals represent a tiny fraction of the total population with mental illness, they are a “major driver of treatment and system costs” because of their repeated use of high-cost services. AOT is known as “Kendra’s Law” in New York.

The full report is available at TACreports.org/hma-cost-study

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Jamie Mondics
Treatment Advocacy Center
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