August 2001

Grant Results


From 1991 to 1998, researchers from the Institute for Health, Health Care Policy, and Aging Research at Rutgers, The State University of New Jersey, studied the care of schizophrenia patients who are covered by Medicaid in New York State.

Focusing on how variations in care received by these patients affected the treatment outcomes, the research team surveyed all 107 general hospitals in New York with adult inpatient psychiatric units and made 52 site visits. They also interviewed patients during and after their hospitalizations.

Key Findings

  • Care for patients with schizophrenia is frequently episodic and crisis-oriented rather than continuous or rehabilitative in nature.
  • Linkages between inpatient and outpatient care are often inadequate, with one third of patients reporting that no outpatient visit had been scheduled for them at the time of discharge.
  • Patients who had contact with their outpatient therapist prior to discharge reported fewer symptoms and had less difficulty controlling them three months after discharge, compared with patients who had no such contact.

The Robert Wood Johnson Foundation (RWJF) supported this project through a grant of $899,049.

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As a result of the de-institutionalization movement that began in the 1960s, long-term inpatient care is no longer common for people with serious mental illness.

Some 90 percent of the more than 2 million seriously mentally ill adults in the United States now reside in the community. Because of the nature of their illness and a widespread lack of community services, their treatment is often characterized by periodic re-hospitalization, typically in psychiatric units of general hospitals.

There has been widespread dissatisfaction with the care provided by these hospitals, largely because services have traditionally been focused on resolving the acute psychiatric episode, rather than on establishing continuity of care and maintaining functional status after discharge. The pressures of managed care to contain costs and the fact that hospitalization is the most expensive component of psychiatric care also contribute to concerns about the nature of hospital treatment and the adequacy of follow-up care.

In October 1989, New York State introduced a new method for reimbursing general hospitals for care provided to psychiatric patients covered by Medicaid. The reimbursement method required hospitals to pay a penalty for psychiatric patients who were re-hospitalized within 30 days of discharge.

The goal of the new plan was to encourage hospitals to continue caring for the sickest patients; to provide them with rehabilitation and discharge planning in addition to acute care; and to ensure that they received appropriate follow-up care outside of the hospital. IHHCPAR had previously conducted an independent evaluation of a trial of this reimbursement strategy.

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This grant from RWJF provided partial support to IHHCPAR to study the care of schizophrenia patients who were covered under Medicaid in New York. The grant was initially intended to allow IHHCPAR to assess the impact of the new reimbursement strategy on inpatient and outpatient care and patient outcomes.

Using a population of schizophrenic patients in the Medicaid program, the study was to determine whether the new financial incentives to hospitals led to improvements in patient functioning and quality of life. RWJF funds were supplemented by support from the New York State Office of Mental Health and the National Institutes of Mental Health (NIMH) Center for Research on the Organization and Financing of Care for the Severely Mentally Ill.

Preliminary research findings suggested that the change in reimbursement patterns had little impact on treatment or outcomes. The principal investigator attributed this to the fact that providers had little information about reimbursement practices, while financial administrators had little information about actual treatment practices. With approval from RWJF, the focus of the study shifted. The three phases of the new research design were:

  • To examine the treatment practices used to care for Medicaid patients with a diagnosis of schizophrenia in inpatient psychiatric treatment in New York's general hospitals. This was accomplished by means of a survey instrument, the Routine Inpatient Treatment Scale for Schizophrenia (RITSS), developed by project researchers.
  • To analyze survey data in order to differentiate hospital treatment practices with a "long-term treatment orientation" from those with an episodic orientation emphasizing acute care.
  • To evaluate the target population's clinical outcomes, social functioning, utilization of services, and quality of life under differing treatment styles in a selected group of general hospitals.

More than 3,000 RITTS surveys were returned from 97 percent of the 107 general hospitals with adult inpatient psychiatric units in New York State. Following a survey analysis, site visits were made to 52 hospitals for a more intensive study of their treatment routines.

Four hospitals then were selected for further in-depth study. Two of these hospitals were considered "innovative" because of their long-term treatment orientation—which included providing vocational rehabilitation and social skills development, promoting family involvement, and ensuring linkages between inpatient care and outpatient care and social services. The other two hospitals had more "traditional" psychiatric units that focused on treating acute psychiatric episodes.

The two sets of hospitals were matched as closely as possible on the basis of hospital size, number of psychiatric beds, case-mix, proportion of Medicaid patients, and average length of stay. A total of 315 patients, ages 18 to 64, were recruited from the four hospitals and interviewed during their hospital stays; 83 percent of them (266 patients) were interviewed again three months after discharge.

Initial plans to conduct a one-year follow-up of the service utilization of this group was delayed due to difficulties securing Medicaid data tapes from the state. These Medicaid data are currently being analyzed.

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The principal investigator reported the following findings and conclusions to RWJF:

  • A long-term treatment orientation that closely ties inpatient and outpatient care is appropriate for integrated health care delivery systems. The concept is particularly useful for addressing the challenges of managed care.
  • There was a high rate of failed linkages between inpatient and outpatient programs, which points to the need for greater coordination and integration with outpatient providers. Clients with schizophrenia receive care that is episodic and crisis-oriented, rather than continuous and rehabilitative in nature. For example, one-third of clients were not scheduled for outpatient mental health appointments at the time of hospital discharge. More than half the inpatient clinicians seldom, or never, checked to determine whether their clients kept their first outpatient appointments.
  • Patients who spoke with an outpatient clinician during a hospital stay were significantly more likely to follow-up on a referral, yet more than two-thirds had not met with an outpatient therapist while hospitalized. Those who had pre-discharge contact also reported less difficulty in controlling their symptoms.
  • Approximately 20 percent of clients reported stopping their antipsychotic medications for one week or more within three months of discharge. The failure to comply with medication regimens was significantly associated with exacerbated symptoms, dropping out of outpatient treatment, emergency room visits, re-hospitalization, and homelessness.
  • Clients who were not compliant with medication regimens were less likely to have formed a good therapeutic alliance prior to discharge and were more likely to have family members who refused to become involved in treatment.
  • The combination of a drug abuse disorder, persisting psychiatric symptoms, and impaired functioning at the time of hospital discharge posed a substantial short-term risk of becoming homeless.
  • Although inpatient psychiatric staff view family involvement in treatment as positive, it is not often recognized as a priority beyond the inpatient stay. Few inpatient units refer clients to outpatient services that involve families or continue their contact with families. Those inpatient psychiatric units that did report more family involvement during hospital stays also tended to use more strategies to foster linkages to outpatient services.
  • Discharge planners typically do not receive feedback on the outcomes of their referral plans. Adequate feedback could provide opportunities to direct clients to follow-up services, and serve as a means of educating discharge planners.
  • Despite the variations in practice, the extent of the innovation on inpatient psychiatric units was less than the researchers had expected. Those units that were most impressive typically had a richer resource base, higher staff-to-client ratios, and longer length of stays.


One monograph and 22 articles and book chapters were produced as part of this project, including articles in Milbank Quarterly, Health Affairs, and Psychiatric Quarterly. In addition, project staff made numerous presentations to mental health professionals and academic colleagues, both in the United States and overseas. (See the Bibliography for details.)

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  1. When conducting research in a hospital, efforts should be made to ensure the cooperation of the many players in the hospital who may be affected by research activities. Specifically, investigators recognized the importance of collaboration with the hospital's psychiatric team, its administrators, and its financial officers. The researchers established strong ties at the participating hospitals and kept hospital staff apprised of their ongoing work. They were also sensitive to the importance of minimizing the burden of their research on the staff.
  2. The complexities of state agencies, and the involvement of large and sometimes bureaucratic institutions, such as general hospitals, may complicate research efforts.

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Data analyses on the baseline and three-month follow-up interviews with patients are ongoing. After delays, New York State has provided Medicaid data tapes to the investigators, allowing them to proceed with a one-year follow-up analysis of the patient sample to study patterns of inpatient and outpatient utilization and predictors of re-hospitalization. The investigators have also implemented, and are studying, an intervention designed to improve compliance with medication regimens. The study draws on findings from the research completed under the RWJF grant.

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Study of New York's Services System for Mentally Ill Medicaid Patients


Rutgers, The State University of New Jersey (New Brunswick,  NJ)

Institute for Health Care Policy, and Aging Research

  • Amount: $ 899,049
    Dates: August 1991 to August 1998
    ID#:  017998


David Mechanic, Ph.D.
(732) 932-8415

Web Site

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(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Books and Reports

Mechanic, D (ed). Managed Behavioral Health Care: Current Realities and Future Potential. New Directions for Mental Health Services. San Francisco: Jossey-Bass, Inc., 1998.

Mechanic, D (ed). Improving Inpatient Psychiatric Treatment in an Era of Managed Care. New Directions for Mental Health Services. San Francisco: Jossey-Bass, Inc., 1997. A collection of papers by project staff:

  • "Meaningful Linkage Practices: Challenges and Opportunities," Boyer, C.A.
  • "Treatment for Comorbid Schizophrenia and Substance Abuse Disorders," Hansell, S.
  • "The Challenges of Managed Care," Mechanic, D.
  • "The Future of Inpatient Psychiatry in General Hospitals," Mechanic, D.
  • "Towards an Integrated Approach to the Study of Inpatient Treatment of Schizophrenia," Olfson, M., Boyer, C.A., Hansell, S., et al.
  • "Medication Noncompliance," Olfson, M., Hansell, S., and Boyer, C.A.
  • "Discharge Planning in Psychiatric Units in General Hospitals," Olfson, M. and Walkup, J.
  • "Family Involvement in General Hospital Inpatient Care," Walkup, J.
  • "The Psychiatric Unit Comes to the General Hospital: A History of the Movement," Walkup, J.

Book Chapters

Mechanic, D. "Organization of Care and Quality of Life of Persons with Serious and Persistent Mental Illness." In Quality of Life in Mental Disorders, H. Katschnig, H. Freeman and N. Sartorius (eds). Chichester, New York: Wiley-Interscience, 1997.

Mechanic, D. "Key Policy Considerations for Mental Health in the Managed Care Era." In Mental Health, United States 1996, R.W. Manderscheid and M.A. Sonnenschein (eds), DHHS Pub. No. (SMA) 96-3098. Washington: Superintendent of Documents, 1996.


Boyer CA, McAlpine DD, Pottick KJ and Olfson M. "Identifying Risk Factors and Key Strategies in Linkage to Outpatient Psychiatric Care." American Journal of Psychiatry, 157(10): 1592–1598, 2000. Abstract available online.

Boyer CA and Mechanic D. "Psychiatric Reimbursement Reform in New York State: Lessons in Implementing Change." Milbank Quarterly, 72(4): 621–651, 1994. Abstract available online.

Boyer CA, Olfson M, Kellermann SL, Hansell S, Walkup J, Rosenfield S and Mechanic D. "Studying Inpatient Treatment Practices in Schizophrenia: An Integrated Methodology." Psychiatric Quarterly, 66(4): 293–320, 1995. Abstract available online.

Mechanic D. "Integrating Mental Health Services Through Reimbursement Reform and Managed Mental Health Care." Journal of Health Services Research & Policy, 2(2): 86–93, 1997. Abstract available online.

Mechanic D. "Technologies for the Delivery of Mental Health Care." International Journal of Technology Assessment in Health Care, 12(4): 673–687, 1996. Abstract available online.

Mechanic D. "Challenges in the Provision of Mental Health Services: Some Cautionary Lessons from U.S. Experience." Journal of Public Health Medicine, 17(2): 132–139, 1995.

Mechanic D. "Integrating Mental Health into a General Health Care System." Hospital and Community Psychiatry, 45(9): 893–897, 1994. Abstract available online.

Mechanic D. "Strategies for Integrating Public Mental Health Services." Hospital and Community Psychiatry, 42(8): 797–801, 1991. Abstract available online.

Mechanic D, McAlpine DD and Olfson M. "Changing Patterns of Psychiatric Inpatient Care in the United States: 1988–1994." Archives of General Psychiatry, 55(9): 785–791, 1998. Abstract available online.

Mechanic D, McAlpine D, Rosenfield S and Davis D. "Effects of Illness Attribution and Depression on the Quality of Life among Persons with Serious Mental Illness." Social Science and Medicine, 39(2): 155–164, 1994. Abstract available online.

Mechanic D and Surles R. "Challenges in State Mental Health Policy and Administration." Health Affairs, 11(3): 34–50, 1992.

Olfson M, Glick ID and Mechanic D. "Inpatient Treatment of Schizophrenia in General Hospitals." Hospital and Community Psychiatry, 44(1): 40–44, 1993. Abstract available online.

Olfson M, Mechanic D, Boyer CA and Hansell S. "Linking Inpatients with Schizophrenia to Outpatient Care." Psychiatric Services, 49(7): 911–917, 1998. Abstract available online.

Olfson M, Mechanic D, Boyer CA, Hansell S, Walkup J and Weiden PJ. "Assessing Clinical Predictions of Early Rehospitalization in Schizophrenia." Journal of Nervous and Mental Disease, 187(12): 721–729, 1999. Abstract available online.

Olfson M, Mechanic D, Hansell S, Boyer CA and Walkup J. "Prediction of Homelessness within Three Months of Discharge among Inpatients with Schizophrenia." Psychiatric Services, 50(5): 667–673, 1999. Abstract available online.

Olfson M, Mechanic D, Hansell S, Boyer CA, Walkup J and Weiden PJ. "Predicting Medication Noncompliance after Hospital Discharge among Patients with Schizophrenia." Psychiatric Services, 51(2): 216–222, 2000. Abstract available online.

Walkup J, McAlpine DD, Olfson M, Boyer CA and Hansell S. "Recent HIV Testing among General Hospital Inpatients with Schizophrenia: Findings from Four New York City Sites." Psychiatric Quarterly, 71(2): 177–193, 2000. Abstract available online.

Walkup JT, McAlpine DD, Olfson M, Labay LE, Boyer C and Hansell S. "Patients with Schizophrenia at Risk for Excessive Antipsychotic Dosing." Journal of Clinical Psychiatry, 61(5): 344–348, 2000. Abstract available online.

Walkup JT, Boyer CA and Kellermann SL. "Reliability of Medicaid Claims Files for Use in Psychiatric Diagnoses and Service Delivery." Administration and Policy in Mental Health, 27(3): 129–139, 2000. Abstract available online.

Walkup JT, McAlpine DD, Olfson M, Labay L, Boyer CA and Hansell S. "Is the Substance Abuse of Inpatients with Schizophrenia Overlooked?" General Hospital Psychiatry, 23(1): 26–30, 2001. Abstract available online.


Evaluation of the Consolidated Inpatient and Outpatient Psychiatric Rate Methodology. Final Report for the New York State Office of Mental Health, Bureau of Evaluation and Services Research, 1994.

Evaluation of the Consolidated Inpatient and Outpatient Psychiatric Rate Methodology. Interim Report for the New York Office of Mental Health, Bureau of Evaluation and Services Research, 1991.

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Report prepared by: Sara Dulaney
Report prepared by: Karyn Feiden
Reviewed by: Robert Crum
Reviewed by: Richard Camer
Program Officer: Andrea Kabcenell
Program Officer: Joel Cantor
Program Officer: Robert Hughes
Also interviewed: James Knickman

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