Study: Fountain House Dramatically Reduces Medicaid Costs of People With Serious Mental Illnesses

NYAPRS Note: Fountain House, the creator of the Clubhouse model back in the late 1940’s, has released a very impressive and timely NYU study that demonstrates that a group of clubhouse members with extensive service needs that had amounted to over $18,000 the year before joining the program, reduced their use of Medicaid funded services by $783 per month. This drop in Medicaid utilization amounted to a 21% reduction in total cost of care than had been anticipated during their first year as members. These findings bolster the value of clubhouse services in an value based environment. See the study and article below.

'Clubhouses' May Be The Missing Links In Treating Mental Illness, New Study Shows

William, who suffers from schizoaffective disorder, first started attending Fountain House, a social center and resource hub for people with mental illnesses that's located in a stately brick building on West 47th Street, after being hospitalized last year. William said he experienced a psychotic episode after his support system crumbled, with the shutdown of his psychiatric support group and the departure of his church's longtime pastor.
"During the day I had nothing to do," said William, 42, who askedCrain'snot to publish his last name to preserve his privacy. "With the isolation and the withdrawal, my symptoms exacerbated."

William, who hasn't been readmitted to the psychiatric ward in the 10 months since he joined Fountain House, credits the clubhouse model the agency pioneered. The nonprofit engages its members in the daily tasks that are vital to running the facility while also offering wellness skills, educational and employment opportunities, and care management.

A study released this week by researchers at NYU's Health Evaluation and Analytics Lab lends credence to the idea that the clubhouse model, which Fountain House has helped spread to more than 300 sites worldwide, helps cut back on hospitalizations for high-need patients, saving Medicaid money. About 90% of Fountain House members are enrolled in Medicaid, and researchers used a Medicaid claims database to conduct the study.

A group of Fountain House members who racked up more than $18,000 each in Medicaid expenses the year before they joined the clubhouse incurred monthly medical expenses that were 21% lower than anticipated during their first year as members, saving Medicaid about $783 per month. The authors found that although these 134 high-need members were costing Medicaid more money in prescription drugs and outpatient care during their first year, they were saving the system money overall because of reductions in inpatient care.

"You need that extra component, which is the community," said Dr. Ralph Aquila, medical director of Fountain House. "We understand the need for primary care, psychiatric care, but then the community you see here is just as important as any other delivery of medical services."

James Knickman, who co-authored the study, said he was surprised by the results. "It's very hard to budge the health care expenditure needle, and I've seen so many other efforts," he said. "This is one of those cases where there's pretty strong evidence emerging that a social-service approach is reducing the actual need for medical care."

Aquila said he believes Fountain House's value to the Medicaid system is not just in helping people avoid psychiatric hospitalizations, but also in helping members access primary care services to control chronic conditions such as diabetes and hypertension.

Currently, Fountain House relies on the government for about 69% of its revenue. Aquila said the center aims to increase its clinical partnerships and the funding it receives from Medicaid in the future.

But for William, who copy edits the Fountain House newsletter and produces audio stories about members to share with donors, what keeps him coming back are the relationships he has formed and the opportunity to hone his professional skills.

"Fountain House gives me structure, it gives me community and it allows me to have a place to come to every day where I'm needed," he said. —C.L.

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Fountain House is proud to share the research report, Project to Evaluate the Impact of Fountain House Programs on Medicaid Utilization and Expenditures, conducted by the New York University Health Evaluation and Analytics Lab (HEAL),a joint initiative of the NYU School of Medicine's Department of Population Health and the NYU Wagner School of Public Service.

This important study demonstrates that high utilizers of New York State Medicaid services have a 21% decrease in total cost of care after enrolling in Fountain House. Further, it shows greater cost savings among those members who utilize Fountain House frequently.

These findings come at a critical time as New York’s $8 billion Medicaid reform effort is underway. We are hopeful this research will support a transition from the current system of care to new “Comprehensive Community System of Care” that goes beyond integrated healthcare to include social interventions - a vitally needed, overlooked and underfunded addition to primary and psychiatric care.

For nearly 70 years, Fountain House has provided a place for people with mental illness to come, build friendships, access employment and education opportunities, and participate in innovative wellness activities. These findings speak to the need for funding for community programs for people with the most serious forms of mental illness that transform individual lives while reducing costs to society.


Kenneth J. Dudek


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