Comparative Costs and Impacts of Canadian and American Payment Systems for Mental Health Services

In attempts to contain mental health costs, administrators are increasingly using incentives, competition, and accounting strategies and are creating more complicated financing systems. Yet the costs of these strategies and their impacts on the efficacy and efficiency of mental health services have yet to be studied. The authors compare mental health payment systems in British Columbia and Oregon. In the Canadian system, the patient is isolated from payment, sources of revenue are consolidated at the provincial level, only one payment mechanism per service type is used, health care documentation is oriented more to clinical needs than to reimbursement, and more discretion is delegated to providers. As a result, Canadian overhead costs are substantially less than those in the U.S. Patients have universal access to medical services in the Canadian system, and providers in hospitals, agencies, and individual practices have high incomes with low overhead costs.