Economics of practice and inpatient care

Abstract The nature and structure of inpatient psychiatric services are rapidly evolving. This article identifies and explores how these changes are being influenced by four interrelated areas: rapid growth in general and private hospital psychiatric practice; increased connections of public, private, and voluntary sectors of care; the emergence and quick acceptance of capitated and managed care programs; and dramatic change and growth in the insurance industry. These four interrelated areas further the development of a two-tier system in psychiatry: one for those with insurance, and one for the poor and the severely disabled. The changes in these four areas have also led to greater and more complex regulatory and monitoring activities, greater demand for increased economic competition among services, and new alliances and innovations in the delivery of treatment. This article discusses how the four areas have combined to support a two-tier system and how they are likely to affect the future evolution of general and private hospital inpatient psychiatric practice.