Shifting from external to internal provision of mental health services in a health maintenance organization.

A health maintenance organization whose mental health services had been supplied under contract by two successive external providers changed in 1978 to in-house provision of most services for both HMO and fee-for-service patients. The changeover necessitated a greatly enlarged staff, development of a treatment philosophy and utilization review procedures, and establishment of good cmmunications with external providers who supplied inpatient services. One objective of the change to in-house services was to further reduce hospital admissions and hospitalization costs; comparisons of admissions and costs over a five-year period before and after the change indicated substantial reductions in both areas.