Background. In the UK the replacement of long-term in-patient care with community-based support has been part of central government health policy for many years. One of the challenges of implementing such a policy is the prediction of support and service needs in the community and the associated costs.

Method. Using research data from north London analyses were undertaken to examine the associations between service use and costs in the community and the characteristics of hospital in-patients.

Results. Although clinical diagnosis was not a useful predictor of either service utilisation or costs, more than a third of the variation in community care costs could be explained by symptoms, behaviour and personal characteristics at least one year earlier.

Background. The social costs of anxiety disorders, which afflict a substantial proportion of the general population in the United States, are considered.

Method. Data from the National Institute of Mental Health (NIMH) Epidemiological Catchment Area Program were analysed.

Results. Over 6% of men and 13% of women in the sample of 18 571 had suffered from a DSM–III anxiety disorder in the past six months. Nearly 30% of those with panic disorder had used the general medical system for emotional, alcohol or drug-related problems in the six months prior to the interview. Those with anxiety disorders were also more likely to seek help from emergency rooms and from the specialised mental health system. Men with panic disorder, phobias or obsessive–compulsive disorder in the previous six months are more likely to be chronically unemployed and to receive disability or welfare.

Discussion. Once correctly diagnosed there are safe and effective psychopharmacologic and behavioural treatments for the anxiety disorders. Nevertheless the burden of anxiety disorders extends beyond the direct costs of treatment to the indirect costs of impaired social functioning.

Background. The study is aimed at assessing the costs before and after the diagnosis and the provision of effective treatment for panic disorder (PD), and the offset effect related to the psychiatric encounter.

Method. A 24-month prepost design was used to collect data on clinical status and health care services utilisation in a natural environment. The 61 PD patients' assessment included the SCID-UP, ratings on general functioning, improvement, severity of symptoms and level of disability. All health care services used and lost workdays were recorded.

Results. Both sociodemographic characteristics and the outcome show that this was a standard group of PD patients, who received effective treatment for their condition. The total direct costs of health care use during the previous year and the year after the diagnosis were, respectively, US$ 29 1 58 and US$ 46 256. The indirect costs of lost productivity were US$ 65 643 in period I and US$ 13 883 in period II.

Conclusions. A strong offset effect (94%) has been found in this study, significantly greater than the one described for psychiatric disorders as a whole. The costs of nondiagnosis are usually overlooked when estimating the global costs of PD. Methods for improving early detection of PD may substantially reduce the costs incurred before diagnosis.

Background. A conceptual framework Is described for a broad cost–benefit evaluation of improved financial access to treatment of untreated affective disorders.

Method. The analysis provides an estimate of the value of resources needed to provide improved access to treatment, and it compares these resources to the value of resources the improved access to treatment might save.

Results. The cost–benefit analyses based on recent cost of mental illness studies provide some evidence that appropriately treating people with untreated affective disorders is cost-beneficial.

Conclusion. Patients, providers and buyers of health care should be further encouraged to pay more attention and to commit more financial resources to the treatment of affective disorders.

Background. This paper summarises the methods and sources of data used to estimate costs of affective disorders and presents the results.

Method. A timing model employing regression analysis was developed to estimate morbidity costs. This model measures the lifetime effect on current income of individuals with affective disorders, taking into account the timing of onset and the duration of these disorders.

Results. Affective disorders imposed an estimated US$20.8 billion burden in 1985 and US$30.4 billion in 1990 in the US. Affective disorders represent 21 % of the costs of all mental illnesses. Direct treatment costs comprised 58.4% of the total in 1985; morbidity costs, 8.1%; mortality costs, the present value of future earnings lost due to premature mortality, 28.9%, based on a 6% discount rate; and other related costs, including the cost of crime, lost productivity due to incarceration, and caregiver services, 4.6%. Private sources account for 49% of the total direct expenditures for treatment of persons with affective disorders; state and local funds, 26%; and federal funds, 25%.

Conclusion. In light of the high burden of affective disorders on societal resources, more attention should be directed at comprehensive, research-based strategies to reduce the prevalence of these disorders in the United States.

Background. Cost containment mechanisms, such as prepayment, are being considered or implemented in the US and elsewhere, but there have been few studies of the effects of such mechanisms on quality or outcomes of care for individuals with serious psychiatric disorders.

Method. Key results from US studies on cost containment and their implications are reviewed.

Results. Cost savings in out-patient mental health care can be achieved through increasing the share of costs paid by the covered individual or through prepayment, but individuals with the greatest psychological distress or poor people may achieve worse outcomes under greater cost containment. Quality of care may be poorer under some forms of prepayment than under fee-for-service care, yet a national prospective payment mechanism for depressed elderly in-patients was not associated with a marked drop in quality or outcomes of care among those admitted.

Conclusions. Prepayment, relative to fee-for-service is not always associated with lower outcomes or quality of care for affective disorders. Under cost containment, quality and outcomes of care, especially for the sick poor, should be monitored to identify adverse consequences.

Background. A randomised controlled trial of day treatment with community care for patients with schizophrenic and affective disorders, referred for in-patient psychiatric treatment, was conducted to evaluate patterns of treatment and the course of illness with its psychosocial consequences over a period of two years.

Method. Seventy patients, of whom 34 had affective and 36 had schizophrenic disorder, were assigned to the experimental condition (day treatment with ambulatory and domiciliary care), and 33 patients, of whom 16 had affective and 17 had schizophrenic disorder, were assigned to the control condition of standard clinical care.

Results. Day treatment with community care was feasible for 40.6% of the affective patients and 33.3% of the schizophrenic patients. The direct treatment costs of both disorders, based on numbers of in- and day-patient days and out-patient contacts over two years, appeared more or less the same. Patients benefited equally from day treatment as from in-patient treatment, although there were some gains in self-care and in functioning in the household among experimentals. Although schizophrenics were socioeconomically worse off, and also suffered from more (severe) symptoms and social disabilities than the affective patients at entry into the study, they were similar at two years. This finding is unexpected, compared with other follow-up studies. Extra cost for patients and families were not observed. Patients and their families in the experimental condition were significantly more satisfied with the treatment. Experimental patients spent much more time at home during admission, remained much less time in secluded wards, and were more compliant with treatment.

Conclusions. Day treatment could be considered a cost-effective alternative to in-patient treatment.

Background. Most mental illness is treated in primary and not secondary care settings, with depression and anxiety the commonest conditions encountered.

Method. The paper describes on-going Department of Health initiatives to optimise the primary care of common mental illnesses such as depression.

Discussion. Primary care attenders with depression are often higher consumers of general health care than non-depressed attenders. Further data will become available soon from these ongoing studies to inform the debate on the optimal use of available resources in primary care. There is a particular need to evaluate non-pharmacological interventions in primary care.