Administration and Policy in Mental Health Vol. 18, No. 1, September 1990

SPECIAL ISSUE: INTRODUCTORY REMARKS

This issue contains six new papers from the field of economics and mental health bearing on mental health policy. Four of the six papers present empiri- cal research, and two discuss design of state payment policy towards local mental health providers.

Franks documents the time and financial resources committed by families caring for a mentally ill individual. The size of the commitment, the disparity of the commitment across families, and the role of publicly provided services in relation to demands on the family are all illuminated in her study. She makes a convincing case that the design of state policy must take into account the role of the family as a "service provider."

Preferred Provider Organizations (PPOs) promise savings to buyers, but the sources of those potential savings have not been clearly identified in research. One possibility is that PPOs attract providers with less costly practice styles, and that the PPO serves to channel clients to these less expensive providers. In a large sample of psychologists solicited for PPO membership, Altman finds this not to be true. At least in this case, if these are savings, they would have to originate from a change in behavior of the psychologists once they become members of the PPO.

Gaynor has assisted several states in design of incentive contracts with local public providers, and in his paper, he summarizes his main message for state policy makers. He discusses the ways that are being used (and should be used) to encourage local decision makers to consider the cost of state facilities (such as a state hospital) in an efficient way.

In virtually every state, the state has a role as a payer for mental health care through the Medicaid system, as well as a role as a provider of care to Medicaid and other clients. In its payer role, the state is interested in designing a payment system that balances concerns for access, quality and cost in the incentives it creates for private providers. New Hampshire's new payment

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system for psychiatric discharges in Medicaid, described by McGuire, Mosa- kowski, and Radigan, makes use of recent research on economics and mental health to design a new payment system. The alternative to a simple Diagnosis Related Group payment system described in this paper could serve as a model for other states.

Frisman and Haas-Wilson write about the market for social worker services when social workers are eligible for direct reimbursement from third-party payers. More social workers are entering private practice, with important potential implications for public agencies. Private practice opportunities may increase agency labor costs, and introduce a source of potential competition for clients. Frisman shows in a random sample of licensed social workers, the personal and market-related factors that affect the decision to enter private practice. Haas-Wilson studies referral patterns for social workers in private practice, why some social workers receive more referrals than others. Her work suggests strongly that the market mechanism is an imperfect interpreter of social workers' relative skills.

Thomas G. McGuire