OBJECTIVE: To determine the cost-effectiveness of Assertive Community Treatment (ACT) in comparison to Standard Case Management (SCM) for persons with severe mental illness and substance use disorders. DATA SOURCES AND STUDY SETTING: Original data on the effectiveness and social costs of ACT and SCM that were collected between 1989 and 1995. Seven community mental health centers in New Hampshire provided both types of treatment. STUDY DESIGN: Persons with schizophrenia, schizoaffective disorder, or bipolar disorder and a concurrent substance use disorder were randomly assigned to ACT or SCM and followed for three years. The primary variables assessed were substance use, psychiatric symptoms, functioning, quality of life, and social costs. DATA COLLECTION METHODS: Effectiveness data were obtained from interviews at six-month intervals with persons enrolled in treatment and with their service providers. Social cost and service utilization data came from client reports; interviews with informal caregivers; provider information systems and Medicaid claims; law enforcement agencies; courts; and community service providers. PRINCIPAL FINDINGS: Participants in both groups showed significant reductions in substance use over time. Focusing on quality of life and substance use outcomes, ACT and SCM were not significantly different in cost-effectiveness over the entire three-year study period. Longitudinal analyses showed that SCM tended to be more efficient during the first two years but that ACT was significantly more efficient than SCM during the final year of the study. CONCLUSIONS: In an adequately funded system, ACT is not more cost-effective than SCM. However, ACT efficiency appears to improve over time.

Concern over costs associated with mental disorders has led to an increase in the number of economic evaluations of treatment interventions; unfortunately, methods for measuring resource use have not kept pace with this concern. Although it is well-known that a significant proportion of the costs associated with mental illness are for resources other than treatment, program evaluators and researchers often count only treatment costs in cost-effectiveness comparisons. Further, existing methods for measuring resource use are plagued by faulty assumptions about resource use, poor validity and reliability, and difficulties quantifying resource use. The authors discuss these problems and suggest five ways of improving measurement of nontreatment resources: clarifying assumptions, using multiple data sources, flexible data collection strategies, methods for improving the accuracy of recall, and an episodic approach to measurement.

Utilization and cost of institutional and outpatient services were prospectively measured over 1 year for three groups of schizophrenic patients: current substance abusers, past substance abusers, and those without a history of substance abuse. Current abusers had significantly greater utilization and cost of institutional (hospital and jail) services. Current abusers also had greater utilization of emergency services. There were no significant differences between the groups in utilization and cost of other services, including psychosocial rehabilitation, outpatient treatment (case management, psychotherapy, and psychiatric visits), and housing supports. The implications for developing cost-effective treatments for dually diagnosed individuals are discussed.