Is it in medical centers’ self-interest to provide substance use disorder treatment?: A cost-consequence analysis in a national health care system

First published: 10 May 2019 | Last updated: 20 May 2019

Aims:  This study estimated the economic consequences for public sector medical centers that expand or reduce substance use disorder (SUD) treatment services.  The purpose of this study was two-fold.  (1) To determine whether the effects of SUD services “spill over” into other parts of a hospital, for example by changing the amount of medical or psychiatric care that substance dependent patients use, and, (2) To give an example of an approach to cost-consequence analysis that may influence policy makers more than do traditional analyses that include costs for which the relevant policy makers are not responsible (e.g., Showing hospital directors that if they spend money on treatment, the police, court system or other hospitals will save money).

Design: We extracted records for approximately 3.3 million substance dependent patients of the U.S. Department of Veterans Affairs (VA) system from 1998 to 2006. We utilized time series regression with a hospital fixed effect (n=125) to determine the relationship between changes in SUD department expenditures on where SUD-diagnosed patients get care.

Setting: The VA health care system, which is a federally owned system like the UK NHS.

Findings: In the fixed effects models, we found a positive correlation between changes in a medical center’s supply of SUD treatment and SUD-diagnosed patients’ use of specialized substance use treatment.  In addition, at medical centers that increased spending, SUD-diagnosed patients were less likely to use psychiatric services but more likely to use medical/surgical care.  Net cost models showed that overall, when medical centers choose to expand SUD services, the medical centers themselves incur greater costs.

Conclusions: The argument that SUD treatment “more than pays for itself” may be true from the perspective of society as a whole, but is not true from the perspective of the health care system that provides the treatment.


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Professor Keith Humphreys