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Substance Abuse and Mental Health Services Administration
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Many attempts have been made to understand factors influencing the cost of care in the public psychiatric system. Perhaps the best known is the approach using diagnosis-related groups (DRGs), initially designed to classify hospital episodes for medical and surgical care. However, this system has proved difficult to apply to mental health care (1). A critical limitation is that DRGs are weak predictors of costs (2).

Virtually all studies concur that hospital care is more expensive than community care. Some studies found hospital costs to be two to three times higher than costs for community care (3), while others reported hospital costs eight to nine times higher (4,5). Given this high level of disparity and the need to develop models for estimating costs that are valid across service settings, it is important to clarify this issue. This study compared inpatient and outpatient costs and examined their relationship to patients' diagnosis and functioning. (Authors)
Psychiatric Services