Mental health deinstitutionalization and the regional economy: A model and case study

Abstract

For approximately the last 20 years a nationwide movement in mental health policy has favored the deinstitutionalization of patients previously consigned to mental institutions, and one manifestation of this movement has been consideration of opportunities to consolidate and/or close some state mental institutions. This study focuses upon the regional economic impact of one proposed consolidation in New York State, that of the Utica and Marcy Psychiatric Centers, and it provides a method of analysis which should be useful for other states where facility consolidation has become necessary.

The study develops a conventional regional trade multiplier model which is utilized to estimate the regional (Utica-Rome SMSA) economic impact of the operations of the two hospitals, i.e. the regional income generated. The study also notes the contraction of operations of the two centers during the 1970's. and generates estimates of the regional income lost annually in recent years as a result. In addition, the study concludes that the large number of patients discharged into the community as the result of deinstitutionalization imposes a financial burden on the region of several million dollars annually. Finally, the study provides rough estimates of the regional income losses that would result from the closure of the Utica Psychiatric Center.

It is concluded that institutional closure and/or consolidation in some form is an inevitable and fiscally responsible consequence of continued deinstitutionalization. The critical unresolved question involves the continued development of an effective community-based program network as a necessary alternative to institutionalization. The ultimate impact on regional economies of such consolidations depends upon the pace at which community programs are developed, and the extent to which local governments are forced to assume financial responsibility for them.