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OCR for page 200
6
rem r ~.
IWO lerS:
Public and Private Supply
~ a person with a serious drug problem, or a referring clinician, or
a parent looking for the best possible help for a troubled son or daughter,
the paramount issues in drug treatment are simple and direct: what kind
of treatment works best for this problem, and how easy is it to get access
to the needed treatment in terms of quality, location, price, and openings?
These individual concerns, repeated across hundreds of thousands of cases
a year, cast a large question mark over the size, distribution, structure, and
efficiency of the treatment supply system.
For analysts, these questions are articulated somewhat differently.
How well does the treatment supply system now meet the need for drug
treatment? What general changes in scale or structure, if any, are necessary
to improve the match between the supply of treatment and the need for
it? What are the most important constraints or rigidities that condition the
possibility of appropriate reforms? More concisely: Does the supply system
match treatments to needs? If not, then why not, and how can it be fixed ?
In this chapter and the two chapters that follow, the committee at-
tempts to resolve these issues. This chapter describes in qualitative and
quantitative terms how the supply system is now constituted. This task
was easier 10 to 15 years ago, for the system then was more uniform in
its content, clients, and purposes and there was a national data collection
system. Notwithstanding today's impoverished data, after thorough analysis
the evidence clearly depicts the structure of the treatment system: there
are To highly contrasting tiers of drug treatment—one for the poor under
200
OCR for page 201
PUBLIC AND PRIVATE SUPPLY
201
public sponsorship and one for those who can pay with private insurance or
out-of-pocke! fiends.
The existence of two tiers of providers is not unique in social and
health services. Within the general medical delivery system there are public
hospitals and clinics that primarily serve the poor and underinsured and
private medical centers that primarily serve the affluent and well-insured.
But the drug treatment system breaks that general mold in several critical
respects. The two tiers of drug treatment differ from each other not only
in their sources of financing but also in their recency and origins, provider
and facility characteristics, modalities and services offered, clientele served,
and capacity utilized (for example, the size of "waiting lists"~. Moreover,
the public tier interacts extensively with the criminal justice system.
These contrasts are sharper and deeper than any of the differences
that separate the two tracks of general medical care. Based on these
differences and its previous analysis of treatment needs, the committee in
this chapter reaches several general conclusions about the national supply
system, including the relation of the public and private tiers, the nature
of their major respective problems, and the general direction of needed
reforms. Chapters 7 and 8 continue the discussion begun in this chapter
but in greater depth.
THE TWO TIERS: AN OVERVIEW
It is useful to conceive of the treatment system as being made up
of two tiers of providers. The public-tier providers are publicly owned
programs or private, not-for-profit programs whose revenues are largely
from government agencies. This tier includes large, multisite residential
and methadone programs, but mostly it comprises small, not-for-profit
outpatient clinics in about 2,000 communities across the nation. These
programs primarily serve clients who are indigent or underinsured. This
system of care had its origins in the wars on crime and poverty of the late
1960s and early 1970s, and it was (and is) in many ways an adjunct to the
criminal justice system.
The private tier is made up of privately owned providers (both for-
profit and not-for-profit programs) that serve clients who have private
health insurance or sufficient financial resources to pay for drug treatment.
The private tier has developed mainly from hospital units that originally
focused almost entirely on medically directed inpatient treatment of alco-
holism. Yet the characteristics of these programs are changing as outpatient
care and aftercare become more important. This tier is growing rapidly,
and the total revenues received by its providers are beginning to approach
the total revenues of providers in the public tier. Within the private tier, the
OCR for page 202
202
TREATING DRUG PROBr EMS
ranks of for-profit providers are growing more rapidly than the number of
not-for-profit providers.
There is very little overlap in providers and limited overlap of clientele
between the two tiers. On the one hand, people with private health
insurance rarely choose to be treated initially by programs that serve the
indigent population. On the other hand, public subsidies often are not
large enough to cover the charges of private-tier providers. There are a
few programs especially residential not-for-profit facilities that straddle
the two tiers, but they are dwarfed in number by those clearly belonging to
one tier or the other.
Financing Differences
No data sources currently available permit a comprehensive description
of the two tiers. Nevertheless, the tiers are sharply distinguishable in data
collected in the 1987 National Drug and Alcoholism Treatment Utilization
Survey, or NDATUS.i The axis that most clearly divides the two tiers
of treatment is source of revenue. Closely correlated with these tiers
are radically higher levels of reimbursements for private clients, modest
differences in the nature and richness of delivered care, and disparities in
accessibility of services, with a much greater chance that applicants to the
private tier can gain immediate admission to treatment.
Figure 6-1 shows private revenues as a percentage of total revenues by
type of treatment facility and ownership. The figure clearly shows that all
types of for-profit providers serve primarily clients who are covered by pri-
vate health insurance or who pay their own fees; these providers gain about
80 percent of their revenues from these two courses. Government~wned
providers clearly serve clients who are covered by government programs.
iThe most recent editions of the survey, in 1982 (NIDA, 1983a) and 1987, each came shortly
after dramatic changes in the public financing system. First came the switch in FY 1982 to fed-
eral block grants, the major effect of which was to reduce federal treatment funding virtually
overnight by 25 percent. The second major change was the 1986 Anti-Drug Abuse Act, which
reversed the earlier trend and increased federal dollars for drug treatment by 20 percent.
Several cautions are in order regarding the 1987 estimates. First, there is evidence from
state reports (Butynski and Canova, 1988) that the response rate to the 1987 NDATUS may
have been as low as 70 percent of all programs. Prior NDATUS efforts were reported to have
had response rates of better than 95 percent. Second, financial data were omitted by almost
15 percent of responding programs. Thus, the estimates of treatment delivery and funding are
conservative. (How conservative cannot be known unless nonresponse analysis is performed by
the original survey contractor.) Moreover, this survey focused only on provider units specializ-
ing in drug and alcohol treatment. Probably not included in the NDATUS were such providers
as community hospitals that deliver symptomatic treatment (detoxification) in scattered units
and private practitioners—psychiatrists, psychologists, and social workers who do not work in
formally identified specialty service units. The 1987 data reported here are based on original
analyses of the 1987 NDATUS data tape supplied to the committee by NIDA.
OCR for page 203
PUBLIC AND PRIVATE SUPPLY
100
90
80
70
60
50
30
20
10
For-profit
~ ~ Not-for-profit
~] Government
1
l mL
~sy>~/ art °~e'',' We
203
FIGURE ~1 Defining the two tiers: private fees as a percentage of total revenues, by
ownership and facility type. Source: Institute of Medicine analysis of the 1987 National
Drug and Alcoholism Treatment Utilization Survey.
Not-for-profit organizations are in the middle but are clearly differentiated
by type of facility. More than 66 percent of the revenues of programs that
are based in not-for-profit hospitals come from private sources. About 20
percent of the revenues of all other types of not-for-profit providers come
from private sources; the remaining 80 percent of their revenues come
from public contracts, grants, and reimbursements.
Table ~1 presents information, divided into the two tiers, on clients,
facilities, and service intensity among the providers responding to the
NDATUS in 1987. The private tier comprises all for-profit providers plus
private not-for-profit hospitals; the public tier comprises all other not-
for-profit facilities plus government-owned programs. Private-tier providers
received 41 percent of the reported drug treatment expenditures while
treating 22 percent of the clients; public-tier providers received 59 percent
of total revenues and treated 78 percent of the clients. The average revenue
per client admitted to a private-tier program was $2,450, compared with
$1,240 per public-tier admission. The primary factor in this difference in
revenues is the locus of services offered in the two sectors. About 83 percent
OCR for page 204
204
TREATING DRUG PROBLEMS
of the revenues received by the private tier were generated by hospital-
based programs, in contrast to 9 percent in the public tier. Moreover,
inpatient and residential revenues per client in private-tier facilities were
three to four times greater in private- than in public-tier facilities, although
average outpatient revenues per client were nearly identical (Figure 6-2~.
The programs of private-tier providers were more service intensive
than those of public-tier providers. In the private residential and inpatient
setting, there were 7.2 clients per counselor, compared with 9.7 clients
per counselor in the public setting. Although the number of clients per
counselor in the outpatient setting was more nearly similar for both tiers,
private-tier clients were seen more often. However, without adjusting for
group versus individual therapy and for the size of the groups, data not
available from the NDATUS, these findings concerning personnel ratios
must be viewed cautiously. Finally, although much more expensive, the
duration of treatment tends to be somewhat shorter in private- than in
public-tier facilities. The net impact of these differences v~s-a-vis quality
of care is difficult to assess because the two systems serve quite different
types of clients, and those differences probably extend to client therapeutic
needs.
TABLE 6-1 Comparison of Selected Characteristics of
the Public and Private Tiers of Drug Treatment
Characteristic Total Private Public
Annual admissions (in thousands) 848 212.4 636.0
Current census (in thousands) 263 47.5 215.9
Capacity (in thousands) 329 72.2 256.5
Capacity utilization 80% 66~o 84%
Additional capacity 25% 52% 19%
Revenues (millions of dollars) 1,312 521 791
Revenue per admission 1,550 2,450 1,240
Facilities 5,121 1,275 3,846
Hospitals 960 801 159
Residential 990 76 914
Outpatient 2,765 331 2,434
Methadone 334 67 267
Corrections 72 0 72
Clients per counselor
Inpatient 9.1 7.2 9.7
Outpatient 38.5 37.3 38.8
Outpatient appointments/week 1.7 1.9 1.65
Source: Institute of Medicine analysis of the 1987 National Drug and Alcoholism
Treatment Utilization Survey. Data were provided by the National Institute on Drug
Abuse.
OCR for page 205
PUBLIC AND PLATE SUPPLY
LL
LL
In
o
60
-
1, 90 _
A) 80 _
:;:
50
40
20
10
o
205
~~ Private Tier
[;... :... ~ Public Tier
1~,
Van! ~ ~
*is,, ~eS,`~e,...
, By Eve
FIGURE 6-2 loo tiers of cost: estimated revenues per client year in each tier, By facilit`,r
and tier. Source: Institute of Medicine analysis of the 1987 National Drug and Alcoholism
Treatment Utilization Surveyor.
Client Differences
Compared with private-tier clients, public clients have longer histories
of drug taking, are more likely to have taken more types of drugs, are less
likely to be employed or engaged in other socially conventional activities,
are more likely to have major social deficits (e.g., education), and are
more likely to have records of criminal activity and involvement with
the criminal justice system. These differences are evident in all of the
major studies of public-tier clients, including the Drug Abuse Reporting
Program, or DARP (Sells, 1974a,b); CODAP, the Client-Oriented Data
Acquisition Process; and TOPS, the Treatment Outcome Prospective Study
(Hubbard et al., 1989), when contrasted with multiprogram studies of
private-tier clients (e.g., the Chemical Abuse/Addiction Treatment Outcome
Registry, or CATOR, as reported in Hoffmann and Harrison [1988] and
Comprehensive Care Corporation [1988~.
Most of the clients served in the public tier have many deficits such as
diminished general health, poor education, and family breakdown. These
deficits may be due to their drug problems, or they may predate such
problems and exacerbate them. Public-tier providers thus need to have
OCR for page 206
206
TREATING DRUG PROBLEMS
a variety of services at hand to accomplish their therapeutic goals. As a
consequence, their staff requirements may well be higher than those of
private-tier providers, and the staff patterns shown in Table 6-1 probably
mask deep-seated differences in the program resources available to achieve
their therapeutic objectives.
Capacity Differences
In 1987 there was considerable excess capacity in the nation's drug
treatment system. (The extent of capacity utilization in the two tiers is
shown in Table 6-1 and Figure 6-3.) Capacity utilization varies by type
of program and by tier. In general, there is considerable excess capacity
throughout the private tier and much less in the public tier. There is
excess capacity in hospital-based programs but little excess capacity in
methadone programs. Nationwide, public methadone programs reported
about 5 percent excess capacity—quite a narrow margin as these programs
often have unexpected dropouts and chronic staff shortages. The excess
capacity is not evenly distributed across the country. Programs in cities and
states are virtually full, with long waiting lists. Moreover, excess capacity,
particularly in the private tier, does not necessarily mean that there is
currently idle or underused staff and space. Rather, it indicates providers'
willingness to expand and accept additional clients and to increase staffing
and other program inputs appropriately.
THE GROWTH OF THE NATIONAL TREATMENT SYSTEM
fiends in Client Numbers and Provider Characteristics
The characteristics of the national treatment system have changed over
time. Most of the data come from the NDATUS series, which has been
conducted by the National Institue on Drug Abuse (NIDA) since 1976.
The basic trends are shown in Figure 6-4.
In 1976 there were approximately 229,000 individuals in treatment on a
daily basis. The majority were in outpatient nonmethadone programs. The
next largest group was in methadone maintenance, followed respectively
by residential and hospital programs. Enrollment in the residential and
outpatient nonmethadone modalities declined steadily from 1976 through
1982, although in some areas of the country, residential treatment enroll-
ment was stable even in the face of dwindling funds. In the subsequent
five years, however, residential and outpatient nonmethadone enrollment
rebounded dramatically; in contrast, methadone maintenance enrollment
remained fairly stable. The methadone census peaked at 80,000 in 1977,
OCR for page 207
PUBLIC AND PRIVATE SUPPLY
90
-
80 _
70 _
60 _
50 _
40 _
30 _
20 _
10 _
O _
207
Private Tier
Public Tier
Aid/ WI/~/
my. he
FIGURE 6-3 Additional available treatment capacity in the national drug treatment system
by facility type, as a percentage above current client census. Source: Institute of Medicine
analysis of the 1987 National Drug and Alcoholism Treatment Utilization Survey.
declined to 68,000 in 1980, and increased to 72,000 in 1982 and to 82,000
in 1987.
In light of the great national concern about drugs and crime, it is
surprising to observe that formal drug treatment in correctional settings
canvassed by the NDATUS fell steadily from 9,100 clients in 1977 to
6,200 in 1982. This figure was nearly unchanged in 1987, even though the
number of inmates had more than doubled during the five-year period.
A Bureau of Justice Statistics survey (Innes, 1988) estimated that more
than 30,000 state prison inmates were receiving drug treatment in 1986,
many of them evidently in programs not recognized and included in the
1987 NDATUS. It is likely that these additional inmates were reporting
on drug-specific problems discussed during the course of general prison
counseling, education, or medical services.
The most radical changes were in the hospital census, which declined
from 5,500 in 1976 to below 3,000 during 197~1982 and then rebounded
to 10,600 in 1987. When the drug treatment system was built up in the
early and mid-1970s, hospital-based care was judged to be no more effective
in most cases than residential care (or, for many clients, than outpatient
OCR for page 208
208
TREATING DRUG PROBLEMS
150
cry 1 40
ma 130
~ 120
O 110
I 100
90
c,) 80
70
Z 60
50
40
ul 30
' 20
10
o
_ 144
_ ''
128 ''
_ "` Outpatient ''
_ '
_ '_,` ''
_ `~86 ''
Methadone ~ - _ _ 74 a' 81
-73
_ 67 71
15
10.6
2.9
21 Residential
- 5.5 Hospital 2.6
76 78 80 82 84 86
YEAR
FIGURE 6-4 Drug treatment client census by treatment modality, 197~1987. Sources:
National Institute on Drug Abuse (197~1980, 1983a) and Institute of Medicine analysis of
the 1987 National Drug and Alcoholism Treatment Utilization Survey.
care) in protecting health or promoting recovery, but hospitals were clearly
much more expensive (Strategy Council on Drug Abuse, 1975; Besteman,
1990~. Therefore, the use of federal drug treatment funds was restricted
to medically complicated detoxification; they could not be used for any
hospital-based rehabilitation treatment. By October 1987, however, total
enrollment in hospital-based detoxification still was only 3,369 clients, but
hospital-based inpatient rehabilitation treatment had grown exponentially
and was being delivered every day to 7,279 patients.
The parallel trend is in the number of hospitals newly reporting spe-
cialty treatment units for drug problems. This type of facility increased
from 350 in 1982 to 960 in 1987 and reported a total of 180,000 admissions
of individuals for drug problems (21 percent of total 1987 admissions). Five
out of six of these hospitals were in the private tier.
Another recent trend is away from programs that mainly treat drug
problems and toward units that treat both alcohol and drug problems.
Prior to 1982 the majority of drug treatment programs treated drug clients
only. This situation has now changed dramatically. The vast majority of
programs (80 percent) now treat both drug and alcohol problems. Since
the first survey to make the distinction, the 1979 NDATUS, specialty units
treating only drug problems have decreased in number from 2,000 to 1,000.
OCR for page 209
PUBLIC AND PRIVATE SUPPLY
209
A last major change is in the balance of ownership of programs. The
number of government-owned programs has changed little, going from 950
in 1982 to 1,020 In 1987. But private for-profit programs multiplied from
159 units with 9,800 clients (daily count) to 730 units with 29,000 clients.
Private not-for-profit units grew from 1,900 to 3,400 programs, with an
almost proportionate increase in clientele. Thus, drug treatment facility
growth has been largely in the private tier, especially among hospital-based
combined drug and alcohol (chemical dependency) units.
In 1987 most of the programs (2,750) in the drug treatment system
offered outpatient nonmethadone treatment as their primary modality.
Nearly 1,000 hospitals, another 1,000 residential (nonhospital) programs,
330 methadone maintenance outpatient programs, and 72 correctional
facilities with specialty drug treatment programs completed the drug abuse
treatment system. The total enrollment of 263,000 persons in 1987 was 50
percent greater than in 1982, although only 20 percent larger than in 1976,
the first year of the NDATUS. About 848,000 persons were admitted to drug
abuse treatment in NDATUS programs during the 12 months preceding
the census date, October 31, 1987. A total of 263,000 persons were
currently enrolled in drug treatment as of October of that year. Treatment
was provided by 5,100 different specialty facilities at an annual cost of
$1.3 billion. Additional health care was undoubtedly provided by general
health care providers (hospitals with no specialty units, physicians in their
offices), but this care was presumably symptomatic in nature (treatment
of emergency overdoses, accidents, or infections) and did not constitute
efforts to rehabilitate drug abuse or dependence as such.
The vast majority (225,000, or 86 percent) of clients in drug treatment
during October 1987 were being treated on an ambulatory basis—either
methadone maintenance or outpatient nonmethadone treatment although
previously they may have received inpatient or residential services. The
backbone of the public drug treatment system was 3,100 primary ambula-
tory programs that admitted 506,000 clients in 1987 and had 194,000 clients
as their static population number (including a small number temporarily in
hospital and residential beds). The 1,950 hospital and residentially based
programs in the system admitted 303,000 clients during 1987 and had a
static enrollment of 62,000 clients; however, 50 percent of these clients were
enrolled in their outpatient (including aftercare) services. Nonhospital resi-
dential facilities served 27,000 persons, and hospital inpatient wards, 10,600
persons. Hospital and residential revenues, however, were substantially
greater than ambulatory and outpatient receipts.
There were more clients in drug treatment in October 1987 than at any
previously recorded date. The 5,100 programs reporting to the NDATUS
for 1987 were the largest number ever recorded, up from only 3,000 in
1982.
OCR for page 210
210
TREATING DRUG PROBLEMS
1 400
En 1 200
Cal
o
o 1 000
800
600
400
200
Nominal Funding /
-
/
600 ~
_ 490 ~ Ret
- 440 300
340
1 1 1 1 1 1
, , . .
76 78 80 82 84 86
YEAR
FIGURE 6-5 Drug treatment system funding for 1976-1987 in nominal and real 1976
dollars. Sources: National Institute on Drug Abuse (1976-1980, 1983a); Institute of
Medicine analysis of the 1987 National Drug and Alcoholism Treatment Utilization Survey.
lYends in the Funding Base
The specials drug treatment sector had revenues of $1.3 billion in
1987 (based on the NDATUS), which is sharply above the total system
funding of $530 million in 1982 and $500 million to $600 million per year
in the 197~1980 period (Figure ~5~. Yet in terms of real dollars or
purchasing Dower, funding of the national treatment system has seriously
deteriorated since the first NDATUS. Adjusting for inflation by using the
medical price index, total 1976 funding was worth 15 percent more than
total 1987 funding (Figure 6-5~. On a Aner-client basis the real value of
funding decreased about 21 percent from 1976 to 1987.2
The erosion in funding is further indicated in data on funding per
client in single-modali~ treatment programs from 1976 through 1987 (Fig-
ure 6-6~. Although the nominal dollar values indicate crowing revenue Der
"7 ~ A
2 Inflation adjustment might be performed with the consumer price index (CPI) rather than the
medical price index (MPI), but the latter is more realistic because treatment system personnel
are hired in the medical labor market. In 1982 the NDATUS (NIDA, 1983a) found that drug
program staffs were composed of physicians (3 percent), clinical psychologists (5 percent), social
workers (7 percent), nurses (9 percent), counselors (35 percent), other medical and direct care
personnel (17 percent), and medical administrators and support staff (24 percent). When the
CPI is used for inflation adjustment, real system revenues are 9 percent higher in 1987 than in
1976, and funds per client year are nearly identical.
OCR for page 211
PUBl UrC AND PRrVATE SUPPLY
211
client over the period, in real terms there was a decrease. The outpa-
tient nonmethadone and the methadone maintenance revenues per client
declined by about one-third. The decrease in real expenditures, however,
does not necessarily extend to the private tier. In the one meaningful series
in which a comparison of modalities in each tier across time is possible,
residential treatment per client in the public tier was funded in 1987 at
15 percent below the 1976 level after adjusting for inflation, whereas the
private-tier equivalent was about 150 percent higher.
Sources of Treatment Dollars
Underlying the shifts in clients and providers were substantial changes
in who paid for treatment (Table 6-2~. In 1976 the federal government
paid for at least 43 percent of drug treatment (NIDA, 1978), and state
and local governments paid for 48 percent. The rest of the funds came
from private fees and donations. Since that time, private payments for
drug treatment services have increased dramatically and represent the most
fundamental financial change in the system, largely corresponding to the
increasing treatment of drug problems in private hospital facilities. Even
within governmental funding, there has been a distinct trend away from
grant funding and toward more use of fee-for-service reimbursements.
In 1987, contracts and vendor reimbursements from states and local
governments ($483 million) were the most important sources of revenue
4.0
3.S
3.6
_ 3.4
>_ 3.2
Z 3.0
LL
2.8
cr
2.6
L1J
G 2.4
o
C)
it,
3,630
~ 3,320
` \3240
3,178 / `_' \~ Methadone
_ ~
\~
~ Outpatient ~
2,630 ~ _ _ _
~ ~ _ _ 2,390
76 78 80 82 84 86
YEAR
FIGURE 6-6 Annual funding per client year in methadone and outpatient nonmethadone
programs during 1976-1987 (in 1987 dollars). Sources: National Institute on Drug Abuse
(1976-1980, 1983a); Institute of Medicine analysis of the 1987 National Drug and Alcoholism
Treatment Utilization Survey.
OCR for page 212
212
TREATING DRUG PROBLEMS
TABLE 6-2 Funding of the National Treatment System, 1976-1987, by
Year and Final Source of Funding (in millions of dollars)
Source 1976 1977 1978 1979 1980 1982 1987
NIDA/ADAMHAa 160.8 119.3 131.6 143.7 127.6 79.4 11.2
Other federal
agencies 88.3 50.0 47.4 48.5 44.8 46.1 36.3
State b 206.0 177.3 164.5 147.7 133.8 165.4 355.3
Local 77.5 51.2 58.1 43.5 39.9 41.4 64.1
State/local fee-for-
service
reimbursements O.Oc o.o 0.0 3.2 10.7 16.6 74.3
Welfare/social
services 0.0 0.0 25.9 21.6 20.2 22.4 55.8
Public third party 0.0 0.0 0.0 49.5 44.5 62.2 139.5
Private third party 0.0 0.0 0.0 11.2 20.0 43.5 348.1
Client fees 0.0 0.0 17.6 17.2 21.3 35.6 157.3
Other 70.8 112.9 73.0 24.6 23.8 21.1 69.8
Total 603.4 510.7 518.1 510.7 486.6 533.7 1,311.7
Total in 1987 $ 1,519.1 1,173.3 1,098.1 990.7 851.0 755.0 1,311.7
Revenue per client
in treatment 2,500 2,200 2,400 2,500 2,700 3,100 5,000
Revenue (in 1987
$) per client in
treatment 6,300 5,000 5,100 4,900 4,700 4,400 5,000
aNational Institute on Drug Abuse/Alcohol, Drug Abuse, and Mental Health Administration.
reincorporating federal disbursements (e.g., block grant funds) administered by state authorities.
CFrom 197~1978, cells reported as "0.0" were included in the "Other" category.
Source: For 197~1980, data were taken from the National Institute on Drug Abuse reports of data from the
National Drug and Alcoholism Treatment Utilization Survey (National Institute on Drug Abuse, 197~1980). For
1982 data, see National Institute on Drug Abuse (1983a). The figures for 1987 were derived from the Institute of
Medicine analysis of the 1987 National Drug and Alcoholism Treatment Utilization Survey.
for drug treatment providers. These monies, however, incorporated federal
block grant funds administered by the states. Block grant outlays in FY 1987
are estimated to have been about $110 million, or half of the $220 million
available for alcohol and drug treatment (Butynski and Canova, 1988) after
the 20 percent set-aside for prevention. State and local governments thus
spent about $373 million of their own appropriations for drug treatment,
compared with $110 million in federal block grant monies. Programs
reported the receipt of another $47 million in federal categorical contracts,
$139 million from Medicaid, Medicare, or other public insurance, and $56
million for welfare and social service payments (e.g., housing and food
allowances for clients in residential environments). The exact federal share
of these later payments is uncertain, but it is assumed to be about 50
percent because the federal contribution to Medicaid is a minimum of 50
percent. Medicare (which is all federal dollars) has historically experienced
a small number of claims for drug treatment.
OCR for page 213
PUB' :'C AND PRIVATE SUPPLY
213
In sum, state and local government expenditures on drug treatment
from all sources were approximately $470 million, or 37 percent of total
NDATUS expenditures, and the federal contribution was about $250 mil-
lion, or 19.5 percent of the total (Figures 6-7a and 6-7b). About 36 percent
of government treatment expenditures in 1987 (up from 16 percent in 1979)
came from public insurance payments (primarily Medicaid), welfare/social
a Other (4.3%)
1976 Private (5.0%)~ .
State & Local (48.2%)
b
1987
Other (5.3%)
Private (38.5 ~
Federal (42.5%)
Federal (19.5%)
State & Local (36.7%)
FIGURE 6-7 (a) Funding sources for drug treatment in 1976 (total expenditures: $603
million). Source: National Institute on Drug Abuse (1976-1980~. (b) Funding sources for
drug treatment in 1987 (total expenditures: $1.311 billion). Source: Institute of Medicine
analysis of the 1987 National Drug and Alcoholism Treatment Utilization Survey.
OCR for page 214
214
TREATING DRUG PROBLEMS
services payments, and local/state government fee-for-service reimburse-
ments. Nongovernmental revenue constituted a large share of total system
funding in 1987. With $348 million from private insurance and $157 million
from client out-of-pocket payments, private reimbursements totaled $505
million, or 38.5 percent of all revenues.
Irends in Federal Funding
Federal funding has played a major role in shaping the drug treatment
system. Nominal federal funding grew from $40 million in FY 1969 to
a peak of $300 million in FY 1974; it stabilized at $250 million to $290
million between 1975 and 1980, then rapidly declined to $160 million in
1982 before again growing to $190 million in 1986 and to $370 million in
1987 and 1988 (Figure ~8~. Final figures for 1989 and tentative figures
for 1990 are not yet certain, but they are likely to be comparable to those
of the late 1970s. These shifts up and down are even more dramatic after
adjusting for inflation.
Federal treatment monies directed toward community-based treatment
come primarily from Alcohol, Drug Abuse, and Mental Health Adminis-
tration (ADAMHA) categorical and block grant funds Amble 6-3~. These
figures also demonstrate the magnitude of fluctuations in federal funding
for publicly provided treatment between 1980 and 1990.
It is important to consider the role of treatment in the federal anti-
drug abuse strategy. From 1969 to 1975, the federal government put more
400
200
en _
CE to
6 _ 1000
J u,
o a)
~ a'
LL ~
O _
CI) t~
Z a)
O ~
_ o
800
600
400
200
o
520
/
310 290 Nominal $ ~ 370
/~ 140 '` ,804 110
~4~ Real (1~
68 72 76 80 84 88 89
YEAR
FIGURE 6~ Federal drug treatment expenditures during FY 1969-1989 (in nominal and
real 1969 dollars). Source: Nominal drug expenditure data from the Strategy Council on
Drug Abuse (1975 and later yeam), White House Office of Public Affairs (1988), and Ollice
of National Drug Control Polipy (1989~. Price deflators were provided by the Bureau of
Labor Statistics.
OCR for page 215
PUBLIC AND PRIVATE SUPPLY
215
of its anti-drug abuse resources into treatment than into criminal justice
or prevention activities. That pattern has now changed. In 1989 criminal
justice efforts received an estimated $2.7 billion, compared with $680 million
for prevention and $520 million for treatment (Figure ~9 and Bible 64~.
In summary, the nation's drug treatment system began to erode after
1976. Although the private tier grew steadily all through the 1980s and the
public tier has been increasing since the middle of that decade, the drug
treatment system is still notably weaker and smaller than it was in 1976
in aggregate funds and in resources per client served. Sources of overall
TABLE 6-3 Federal Appropnations (in millions of
dollars) for Drug, Alcohol, and Mental Health Treatment
Provided Through Alcohol, Drug Abuse, and Mental
Health Administration (ADAMHA)-Administered
Categoncal and Block Grants, 1980-1989
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989 (est.)
1990 (tent.) 1,133f
ADMSa ADTR
Block Grant Supplementb
Estimated Portion
for Drug
TreatmentC
256
136
107
117
92
98
93
167
160
260
448
625d
543
428
468
462
490
468
508
487
765 e
163
156
aAlcohol, drug, and mental health services (ADMS).
bAlcohol and drug treatment (ADTR) supplemental 1987-1988 appropriations.
CApproximately half of the ADMS block grant was for drug and alcohol treatment.
All of the ADTR monies were for drug and alcohol treatment. Congress instituted a
20 percent set-aside of the block grant funds for prevention services in 1984. Ap-
proximately half of the block grant substance abuse treatment funds have been spent
on drug treatment. Statutorily, not less than 35 percent of the substance abuse monies
could be spent on either drug or alcohol treatment.
dIn 1980 this figure was an aggregate of categorical grant programs for alcohol,
drug, and mental health services. In later years these funds were collapsed into the
ADMS block grant.
eThe 1989 appropriation of $805.6 million was effectively reduced to $765 million
by a 10 percent set-aside for data collection, technical assistance, and services re-
search.
fAdding the 1990 tentative set-aside of 5 percent yields the actual block grant total
($1. 192 billion).
Source: Unpublished data from the ADAMHA Office for Treatment Improve-
ment.
OCR for page 216
216
TREATING DRUG PROBLEMS
2.6 _
2.4 _
Cry 2.2
J
o
Go
2.o
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
o
/
Criminal Justice ~
-
Treatmen,:
- By ~ Prevention \
~ _
l
69 71 73
75 77 79 81 83 85 87 89
YEAR
FIGURE 6-9 Federal anti-drug abuse funding for FY 1969-1989 (in 1987 dollars). Source:
Nominal drug expenditure data from the Strategy Council on Drug Abuse (lg75 and later
yean), White House Office of Public Affairs (1988), and Office of National Drug Control
Polic~y (1989~. Price deflators were provided by the Bureau of Labor Statistics.
support for the treatment system have changed materially. The govern-
mental share particularly that of the federal government has declined,
whereas private reimbursements have been growing. Even with the recent
large increases in funding through the Anti-Drug Abuse Acts of 1986 and
1988 and the emergency ADAMHA appropriation for FY 1990, federal
support for treatment in inflation-adjusted dollars is still well below the
level achieved in 197~1974.
CONCLUSION
The most important feature of the nation's drug treatment supply
system is its very clear division between two tiers of providers that differ
in financing, origins, clientele, capacity utilization, and modalities. There
is a public tier of mostly outpatient and residential programs for indigent
clients, many with serious criminal records and other social deficits, that is
about 20 years old; and there is a smaller private tier of mostly hospital-
based programs for middle- and upper-class clients, which is effectively
about 10 years old.
The 1987 NDATUS, although a limited and imperfect instrument of
observation, gives the clearest available picture of the two tiers. Its data
show a private tier composed of 1,275 treatment providers, all of whom
were receiving at least half (on average, more than three-quarters) of their
revenues from client fees or private third-party reimbursements. More than
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PUBLIC AND PRIVATE SUPPLY
217
800, or 63 percent, of these private-tier providers were in-hospital programs
(both for profit and not for profit); about 25 percent (334) were outpatient
programs; and the remaining 11 percent were about evenly divided between
residential and methadone programs.
The public tier revealed by the 1987 NDATUS comprised 3,846
providers receiving on average just below one-fifth of their revenues from
client fees or private reimbursements. More than 2,400 (63 percent) of
these programs were outpatient facilities (largely private, not-for-profit
contractors); 24 percent (914) were residential facilities; and the remaining
13 percent were divided among methadone programs (267), government
hospitals (159), and correctional programs (72~.
The private tier treated 22 percent of all reported admissions and
received 41 percent of system revenues; it averaged $2,450 per treated
client, double the $1,240 average in the public tier. This cost difference was
largely attributable to two factors. Most private-tier (but relatively little
TABLE 6-4 Federal Anti-Drug Abuse Expenditures (in millions of dollars)
for Treatment, Prevention, and Cnminal Justice: Obligations for Fiscal Years
1969-1989 Provided in Nominal and Inflation-adjusted Figures
Nominal Dollarsa
Year Treatment
1969 40
1970 50
1971 80
1972 170
1973 280
1974 310
1975 250
1976 250
1977 260
1978 260
1979 290
1980 270
1981 210
1982 160
1983 180
1984 180
1985 190
1986 190
1987 370
1988 370
1989 520
Criminal
Prevention Justice
Real 1987 Dollarsb Criminal
Treatment Prevention Justice
120
180
260
460
540
640
660
700
670
720
730
770
1,030
1,180
1,370
1,560
1,780
1,830
2,290
2,400
2,460
10
20
50
110
140
160
110
110
110
110
120
140
120
120
140
150
180
190
320
450
680
40
60
90
170
210
280
320
360
370
420
470
550
810
980
1,190
1,420
1,670
1,760
2,290
2,490
2,660
160
190
290
600
950
960
700
620
590
560
560
480
330
230
240
230
220
200
370
340
450
20
70
130
310
350
360
230
210
200
190
190
190
150
150
160
170
190
190
320
440
630
aNominal drug expenditure data are taken from Strategy Council on Drug Abuse (1975 and later years), White
House Office of Public Affairs (1988), and Office of National Drug Control Policy (1989).
bPrice deflators were provided by the Bureau of Labor Statistics.
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218
TREATING DRUG PROBLEMS
public-tier) treatment takes place in hospitals, which are more expensive
than other settings; moreover, the average per diem charge in private-tier
hospital programs is about four times as high as the average charge in
public-tier hospital programs. There is also a threefold average differential
between the costs of private and public nonhospital residential programs.
Only the outpatient (methadone and nonmethadone) programs were similar
in cost in the two tiers.
The level of per diem support per client in the public tier fell sub-
stantially from the mid-1970s to the mid-1980s, although there has been
a notable recovery in the past three years. The actual cost of delivering
treatment has not declined; rather, the intensity and breadth of program
services and the experience levels of public-tier staff have been reduced.
The public tier was originally built, staffed, and trained in the early 1970s
largely with federal dollars, under an explicit plan to steadily reduce the
federal contribution and increase state and local dollars in proportion.
Something like this has occurred, but the federal decline has been much
more pronounced than the state and local increases. This pattern is at-
tributable to a general shrinkage in public services and a more specific
shift back toward the criminal approach to drug problems, rather than to
patterns or trends in the severity of the drug problem the epidemiological
trends in dependence during the early part of this period were stable and
in the latter part have been rising.
Private drug treatment was a small, nearly invisible presence through-
out the 1970s but then began exponential growth after 1980. This growth
largely involved increasing delivery of drug treatment in preexisting or
newly opening alcoholism treatment units, which began to see increasing
numbers of alcohol/drug and drug-only (mostly marijuana and cocaine)
clients among their insured clientele; some programs also began aggressive
efforts to reach more such patients as the incidence of alcoholism stopped
growing during the 1980s. The extension of alcoholism treatment capacity
to drug treatment occurred in the public tier as well and is manifest in
the sizable increase in the self-designation of NDATUS treatment units
as combined alcohol/drug providers. There was also a large expansion of
private methadone programs as political opposition to methadone ma~n-
tenance combined with budgetary pressures to close down existing public
methadone clinics.
How well does the treatment system match current demand and the
estimated need for services? In the 1987 NDATUS, reports of additional
treatment capacity (which the committee has interpreted to mean idle
capital assets, adequate licensing and use permits, and access to additional
personnel comparable in training to those already employed) was highest
(more than 50 percent above the current census) in private and public
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PUBLIC AND PRIVATE SUPPLY
219
hospitals and in private-tier residential facilities; it was lowest in public-
tier methadone and outpatient facilities. There were substantial regional
differences in public-tier capacity; consequently, some areas of the country
are sorely pressed for public-tier residential treatment as well.
The two tiers are so differently configured that it is not sensible, in
the committee's judgment, to try to engage more private-tier capacity on
a large scale for public use. There is a need for expansion of the public
tier but with an important reservation. The current resource intensity of
many public-tier programs is marginal at best. Expansion will reduce and
dilute this intensity unless careful countermeasures are taken. The need
for more resource-intensive treatment appears at least equal in importance
to increases in capacity. Rigorous data on the clinical effectiveness of
more intensive resources per patient are too sparse to permit certainty or
precision on this point, but the most sensible course, in the committee's
judgment, is to divide increased public resources between improving the
quality of services, facilities, and staff skills and increasing the capacity for
new admissions. A high priority should also be assigned to creating data
resources and analyses that will permit a close look at the relation of service
intensity, quality, and treatment outcomes.
Although the rise in severe cocaine problems has meant reductions
in opiate drug use in some areas, overall this trend has added to rather
than undercut other drug problems such as heroin dependence. Because
methadone maintenance—provided at adequate levels and with supporting
services is the most rigorously validated treatment for heroin dependence,
there is good reason to put additional resources into this modality in areas
of the country where need and demand for it are strongest, keeping in mind
the general principle of improving treatment resource intensity in parallel
with capacity. The private tier may be capable of offering methadone
treatment as efficiently as the public tier, although the scarcity of evaluation
research on private-tier methadone treatment warrants serious caution.
1
Representative terms from entire chapter:
drug abuse
