Move Patients from State Mental Hospitals to Special Nursing Homes

The state should move patients with mental diseases to special psychiatric nursing homes.

During the first two quarters of fiscal 1992, state hospital residents are being served in state facilities at an average cost of about $80,000 per year. 1~ Many of these residents do not require short-term, acute psychiatric care; instead, long-term skilled nursing care treatment in secure environments is more appropriate. This care, provided in the least restrictive environment, would be less expensive and could provide quality care for persistently and chronically mentally ill clients.

Special psychiatric nursing facilities have been used in California for these programs, because they can meet the addit ional fire and life safety requirements of a secured environment. These facilities are locked to accommodate the behaviors of the residents, such as disoriented wandering or posing a danger to themselves or others if residents are allowed to leave the faci lity.

Such nursing facilities have to be adapted to the particular needs of psychiatric clients. They require more common space than convalescent homes to provide care for ambulatory and younger populations plus more outdoor space for leisure, exercise an d sport activities.

Some counties in California are now using this approach. California has state-funded, but county-administered, human services; in Texas, these programs are funded and administered by the state.

The California psychiatric skilled nursing facilities are only intended to provide care for people who cannot be treated in the community and whose only other choices are acute care or state mental hospitals. The facilities provide programming to fulfill t he goals of reducing hospital placements, maintaining individuals at their highest level of functioning, developing client skills and identifying options available for future discharge placements.

In 1987, the County of Los Angeles contracted with a private provider to operate the hospital unit of mentally ill patients over 65 years of age. Costs for the County of Los Angeles declined from $228 per day to $140 per day for this unit, and when the cli ents moved out of the old hospital to a more efficient facility in the community, the cost further declined to $130 per day.

This 132-bed subacute facility has provided care and treatment for more than 700 elderly adults with serious, persistent psychiatric disabilities over the last five years. In 1991, 30 percent of its residents were discharged to a less restrictive environme nt within six months of admission.

The County of San Diego contracts with another privately managed, secure, free-standing skilled nursing facility, which serves individuals primarily between the ages of 18 and 64 in need of structured, 24-hour psychiatric care and treatment. Most of the residents have had episodic psychiatric illnesses of long duration and may have other medical problems.

Savings from treating chronically mentally ill patients in skilled nursing facilities versus hospitals for the mentally ill for the one 99-bed skilled nursing facility were $3.6 million for one year for 144 clients or an average of $25,000 a client.

The cost of running a 99-bed psychiatric nursing home in Texas would be an estimated $4.5 million . Texas has 24,000 to 26,000 empty nursing home beds. Most likely, a vendor could modify an existing nursing facility for this purpose.

Some of the cost of care in nursing homes, as in state facilities, can continue to be offset by third-party reimbursements. Such residents may be eligible for Supplemental Security Income or Social Security Disability Income payments. They may also receive Medicaid Part B and Medicare Part B reimbursement for ancillary services.

The Legislature should create a system of secure nursing care environments for some severely mentally impaired patients who are now in mental hospitals but who require lower levels of care. To achieve the savings identified in the fiscal impact table, the Legislature would need to reduce Texas Department of Mental Health and Mental Retardation s (TxMHMR) appropriations by the gross savings indicated and appropriate funds to TxMHMR to pay for the private psychiatric nursing facilities.

TxMHMR would need time to develop a reques t for proposals, including specifications and outcomes that would ensure quality care and would need to award the contract. The vendor would need to identify, lease or purchase, and modify appropriate facilities. Patients would need to be identified and mo ved into the new facilities.

Such facilities could serve clients referred from a variety of sources, including state hospitals, jails and private psychiatric facilities.

As an alternative to state mental hospitalization, the state should contract to pay for nursing home facilities for some residents now in state hospitals and those that are referred by community mental health centers.

The establishment of skilled nursing facilities for the mentally ill can provide another more appropriate and cost-effective level of treatment for some chronically ill clients. Contracts would need to be written and monitored to assure that quality care i s provided.

A transition period would be necessary to review and refer current residents of state hospitals. This would help ensure a smooth transition, and would also be necessary to negotiate contracts and establish facilities.

New clients would be referred by TxMHMR when appropriate and available space in state mental hospitals could be converted to other uses, such as drug rehabilitation or prison use.

The privatization of this function would mean a reduction of 1,146 full-time equivalent positions by fiscal 1995; however, many of these employees could be hired by the special psychiatric nursing homes.

Fiscal Impact
Based on California s experience, the cost savings to Texas could be substantial over time. Net savings to general revenue would amount to $1.3 million for fiscal 1994, over $12 million in fiscal 1995, the first full year of implementation, and $50.3 milli on over a five-year period. It would also reduce FTEs employed by TxMHMR by 1,146 in fiscal 1995; however many of these employees could be hired by the special psychiatric nursing homes.

Some minor administrative costs would be incurred by TxMHMR to review patients and establish contracts. There is insufficient data to determine these costs.

The 500 patients would be moved into the equivalent of five 99-bed nursing homes. The estimate assumes it would take TxMHMR nine months in fiscal 1994 to prepare a request for proposal, bid the contract and prepare patients for moving to the new facilities . The estimates assume about 200 patients are moved by the last quarter of fiscal 1994 and 500 by the start of the first quarter of fiscal 1995.
Gross Savings Net Savings
Fiscal to the General Administrative to the General Change
Year Revenue Fund 001 Cost Revenue Fund 001 in FTEs

1994 $ 3,600,000 $ 2,372,000 $ 1,228,000 113
1995 36,000,000 23,725,000 12,275,000 1,146
1996 36,000,000 23,725,000 12,275,000 1,146
1997 36,000,000 23,725,000 12,275,000 1,146
1998 36,000,000 23,725,000 12,275,000 1,146

1 Texas Department of Mental Health and Mental Retardation, Management Analysis and Reporting Unit, Executive Fact Book, FY 1992, Quarter-II , p. 15. (The facility cost was $169.60 a day for the first and second quarters of fiscal 1992. That figure includes administration, auxiliary, ancillary, rehabilitation and patient treatment services. The $222.51 figure includes those services and other c osts, such as employee benefits, central office overhead, building renovation and depreciation.)