TABLE 3. PERCENT DECREASE DURING YEAR AFTER REFERRAL AS COMPARED WITH PRIOR YEAR UTILIZATION OF NONPSYCHIATRIC PHYSICIAN SERVICES AND LABORATORY OR X-RAY PROCEDURES, ACCORDING TO PATIENT CHARACTERISTICS AND PSYCHIATRIC THERAPY ON BENEFITS

1 Percent not shown in any cell where base (number before referral) was less than 10.

Another indication of the consistency of reduced utilization of physician and ancillary services after psychiatric referral is evident in the data in Table 4. Here, a determination was made as to whether each patient made fewer, more, or the same number of visits during the 12-month period after psychiatric referral as he or she made during the prior year for physician services or for laboratory or x-ray procedures. Only about one fourth of the study patients made more visits for physician services after referral than before in contrast with the almost 60 percent who made fewer visits after referral. Similarly, only 28 percent of the patients made more visits for laboratory or x-ray procedures after referral than before, while 52 per cent made fewer such visits. Both of these differences were statistically significant (P<.001). When the patients were grouped according to the actual number of visits made in the year preceding referral, this pattern of fewer visits held for virtually all groups of patients who had at least two visits in the prior year for physician or ancillary services. The greatest relative reductions occurred among those who made the most visits during the prior year. Thus, of the 81 patients who made more than five visits for physician services during the year preceding referral 64 (79 per cent) made fewer visits in the post-referral year than they did in the prior year.

TABLE 4.-NUMBER AND PERCENT OF PERSONS WITH FEWER, SAME, OR MORE VISITS IN YEAR AFTER REFERRAL COMPARED WITH YEAR PRECEDING REFERRAL, BY TYPE OF SERVICE

The chi-square test was employed to test the equality of the number of patients showing

a decrease in number of visits with those showing an increase.

DISCUSSION

The consistent results of this pilot study clearly indicate that the short-term outpatient psychiatric benefit at GHA was associated with a decrease in the utilization of physician and ancillary services under the plan. Not only was there a decreased utilization following psychiatric referral for the study group as a whole, both with respect to the number of persons seen and the number of visits made, but this decreased utilization held-to a greater or lesser degree for all subsegments of the population studied.

Of some interest in this regard is the relationship between utilization of physician and ancillary services at GHA and the number of therapy sessions attended under the short-term psychiatric benefit. Note has been made of the fact that the study patients who did not attend any outpatient therapy sessions under benefits (although referred by the screening psychiatrist for such care) showed as great a relative reduction of medical services utlization as did those who received all or part of their authorized therapy. This finding would seem to imply that the visit to the screening psychiatrist alone may have had a beneficial effect on the patient, at least to the extent that the patient apparently had reduced need or desire for physician or ancillary services following the screening. However, it should be noted that some patients referred on benefits may have elected to obtain their psychiatric therapy outside the GHA benefit structure at their own expense. Unfortunately, the GHA records do not ordinarily reflect such outside care. In any event, it is clear that whether or not the referred patients as a group actually availed themselves of the benefit provisions, they showed a reduced subsequent utilization of general medical services provided by the group practice plan.

It is reasonable to assume that the observed reduction in utilization of physician and ancillary services at GHA to a large extent reflects a reduced need or desire for such services, rather than a shift by the patients to other sources for their medical attention at additional cost to themselves (although, undoubtedly, some such shifting did occur). This assumption is based upon the fact that these patients continued to maintain their GHA membership throughout the 27-month study period, and that the very great majority did return to GHA for at least some medical attention during the "after" period.

When viewed in terms of the effect on the provider of services, the reduction in use of physician and ancillary services at GHA would seem to imply a reduction in cost which would otherwise occur in the provision of such services and, theoretically, a more efficient utilization of appropriate services. There was no attempt to do any cost-benefit analysis in this study, the primary purpose of which was directed at utilization without regard to costs. However, an inference could be made that the cost savings due to reduced utilization would be reflected in the entire benefit structure without setting forth dollar amounts.

Comments should be made about the possible effect of hospitalization on the study findings, since a question might be raised as to whether or not there was appreciably more hospitalization in the period after psychiatric referral than in the prior-referral year. As mentioned previously, during the period of study, the GHA hospital records were not totally coordinated with the medical record, which was the principal data source for this study. Therefore, the effect of episodes of hospitalization on the study findings could not be evaluated. With respect to psychiatric hospitalization, however, since the study group excluded all patients whom the screening psychiatrist considered to have a chronic condition requiring inpatient or long-term outpatient psychiatric care, it is very unlikely that more than a handful of study patients would have required such hospitalization. In any event, the study findings were of such magnitude and consistency that they are unlikely to be materially affected by the factor of hospitalization. Another consideration relates to the study design whereby each patient was used as his own control in the "before-after" comparison. The absence of a suitable control group in this pilot study, against whom the "before-after" findings of the case group could be compared, limits the conclusions which can be drawn at this time; however, efforts are underway in a broader study to obtain similar data for such a comparison group. The question which arises here is whether the study patients, having already received medical attention one year, would be likely to require more or less care in the following year. If need for less care were

to be expected, this might account, at least in part, for the reduction in utilization observed among the study group. However, the GHA experience in the past indicates that patients using the plan, with its emphasis on preventive services and early detection of chronic disease, tends to use the services increasingly in subsequent years. This is supported by the following data for the total GHA experience around the study period, which show a level or rising per capita utilization in contrast to the observed finding of markedly reduced utilization by the study group. [3, 4]

Follette and Cummings [2] also studied medical utilization before and after psychiatric therapy in a prepaid health plan setting, namely the Kaiser Foundation Health Plan in the Northern California Region. Their case group consisted of persons who received psychotherapy defined as any contact with the plan's department of psychiatry. The medical utilization for the year prior to the initial contact with that department was compared with the utilization for each of five subsequent years, both for the case group and a matched control group who did not receive psychotherapy. The outpatient medical services in that study included visits to outpatient medical (nonpsychiatric) clinics and contacts for outpatient laboratory and x-ray procedures; however, these three types of services were lumped together in the analysis. Despite differences in the setting, benefit structure, mental health disciplines utilized, and study design from those of the GHA study, Follette and Cummings also found a significant decline in utilization of medical services following psychotherapy.

A further, although limited, indication of reduced utilization of general medical services following outpatient psychotherapy is contained in an unpublished report of another study. In 1965, the Health Insurance Plan of Greater New York (H.I.P.) instituted, as a demonstration project, a mental health service which, upon referral by a group physician, provided an outpatient psychiatric treatment benefit in one of its medical groups. One section of the final report of that project[1] submitted by H.I.P. to the National Institute of Mental Health, which partly supported the demonstration project, contains an analysis of the relationship between psychiatric treatment and the use of medical services including family physician office visits, specialist office visits, and x-ray and laboratory services. Due to sample size limitations and other considerations, the results of this analysis were viewed in the report as exploratory only.

The "treatment" group (those seen in the mental health service for consultation or treatment) and three comparison groups were employed in a “heforeafter" analysis of medical utilization for periods covering one year before the appropriate "study" or "consultation" date and each of two years after. Although the report notes that the analysis did not demonstrate a consistent pattern across all comparison groups, it also states that the analysis indicated ". . . some tendencies pointing to lower medical utilization in the group to whom psychotherapy was available."

The supporting evidence of the Kaiser, H.I.P., and GHA studies strengthens the hypothesis of reduced utilization of medical services, and more efficient utilization of appropriate services, as a result of a short-term outpatient mental health benefit in prepaid health plan settings.

On the basis of the findings of the GHA study presented in this paper, the authors are now initiating a broader study which will include a "before-after" evaluation of the utilization of GHA medical and hospital services by all family members of patients referred on psychiatric benefit and will also employ one or more comparison groups.

ACKNOWLEDGMENTS

The authors wish to thank Mrs. Josephine Tate (GHA) for her assistance in abstracting the study data; Mr. Robert F. Woolson and Mrs. Warnilla Cook (both of the Biometry Branch, NIMH) for their assistance in the analysis; and Mrs. Mildred Arrill (Division of Mental Health Service Programs, NIMH) for her consultation.

REFERENCES

1. Department of Research and Statistics, Health Insurance Plan of Greater New York. Psychiatric Treatment and Patterns of Medical Care. Unpublished final report to the National Institute of Mental Health, Project MH 02321, July 1969.

2. Follette, W., and Cummings, N. A.: Psychiatric services and medical utilization in a prepaid health plan setting. Medical Care 5:25, 1967.

3. Group Health Association. GHA News-Annual Report Issue, vol. 28, no. 1, March 1965.

4. Group Health Association. GHA News-Annual Report Issue, vol. 30, no. 2, March 1967.

5. Public Information Section, National Institute of Mental Health. Improving Mental Health Insurance Coverage. Washington, D.C., U.S. Department of Health, Education, and Welfare. PHS Publication No. 1253, August 1965.

6. Reed, L. S. Private health insurance, 1968: Enrollment, coverage, and financial experience. U.S. Department of Health, Education, and Welfare, Social Security Bulletin 32:19, No. 12, December 1969.

7. United States Civil Service Commission. Summary of Benefits-Group Health Association, BRI 41-41, January 1966.

Dr. DAVIS. The problem about the general hospital psychiatric units, two problems really, I see. They are more expensive because the psychriatric patient in the hospital bed pays a higher rate since that hospital also has to use the psychiatric patient to cover other expensive services, like cobalt machines, operating rooms, and emergency rooms. In a free-standing psychiatric hospital you do not have these higher costs to average out.

The other problems seem to be general hospitals are not comprehensive. A general hospital psychiatric unit tends to be much less comprehensive and not offer a full range of services, such as a day hospital or outpatient treatment or halfway houses.

These cheaper service delivery modules are available through many free-standing psychiatric facilities, but not generally through general hospital psychiatric units.

Senator DOLE. How do you classify drug addicts? Are they classified as psychiatric patients?

Dr. DAVIS. Generally, yes. There is also a medical component. These people usually need to be detoxified. As they withdraw from the drug, they are high-risk. Usually both a specialist in internal medicine and a psychiatrist will initially treat the patient. Once he is detoxified and out of danger physically, the psychiatrist takes over the treatment. Senator DOLE. Thank you.

Senator TALMADGE. Thank you very much, Doctor. We appreciate your contribution to our deliberations.

The next, and final, witness is Mr. James M. Hacking, assistant legislative counsel, National Retired Teachers Association, American Association of Retired Persons.

If you will insert your statement in full in the record and summarize it, we would appreciate it.

STATEMENT OF JAMES M. HACKING, ASSISTANT LEGISLATIVE COUNSEL, NATIONAL RETIRED TEACHERS ASSOCIATION AND AMERICAN ASSOCIATION OF RETIRED PERSONS

Mr. HACKING. On my left today is a consultant of ours, Mr. Ralph W. Borsodi. If you will permit, I will proceed to the summary of my

statement.

While we generally endorse S. 1470, we expect that the health care cost savings that would accrue from the implementation of its reforms would be far too little-if there are any at all-and would come far too late for our associations to consider it an adequate remedy for the problem at hand.

If the health care system is inevitably going to evolve into one in which provider operation and resource allocation are closely controlled, regulated and funded by the Federal and State governments, then we look upon S. 1470 as a bill to effect the type of long-term structural reforms in payment procedures that will be necessary and consistent with this trend.

We shall not burden the subcommittee with a description of how things work in the health sector or what it is currently costing or what it is expected to cost in the future if it remains unchanged nor do we intend to recite the calamitous consequences if present trends are allowed to continue. We would simply say that if we continue to feed our national resources into the health care industry at the escalating intake rate that has come to prevail, then other priorities like military protection, education and training, income maintenance, tax reform and relief and health benefit program expansion must suffer.

The magnitude of the crisis in health care grows with each day that the status quo in this economic sector is perpetuated. That is why our associations have since the expiration of the economic stabilization program in mid-1974, consistently advocated, in every forum available to us, the reimposition of sectorwide controls. Despite all the bad things that can be said about a controls program, we consider it the only potentially effective instrument available for achieving significant health care cost savings quickly and arresting the exorbitant inflationary trend.

As you might guess, we have strongly endorsed the administration's Hospital Cost Containment Act. Although we wish it were broader in scope and stronger than it is, we still urge its speedy passage. We recognize that it is not a long-term or permanent solution to the costescalation problem in health care. All it can do is "buy time" that is necessary to develop and implement structural reform.

With these thoughts in mind, we would like to turn now to S. 1470. First, if we are to continue along the road toward a full Government controlled and regulated health care system, then the development and implementation of a prospective budgeting and rate setting procedure for hospitals and other institution providers is essential. Cost reimbursement is quite out of the question. To the extent that the provisions of S. 1470 proceed in this direction, they have our support.

However, based on past experience, it seems very doubtful that the system of prospective budgeting for routine operating costs can be im