Nowhere To Go: Psychiatric Bed Reductions and Ambulance Diversions

In the past decade, the fraction of emergency department visits related to mental illness has more than doubled. In order to receive effective treatment, mentally ill patients typically need to be transferred to a psychiatric bed. In 2010, the wait time for a psychiatric bed in California was estimated at over 10 hours. While waiting, patients do not receive adequate psychiatric treatment and limit resources for medical emergencies. If emergency department resources become too strained, ambulances can be diverted away from the hospital. Using hospital level data in California between 2002 and 2012, this paper explores how reductions in psychiatric bed availability impact the amount of time a hospital diverts ambulances from their emergency department. The results show that when the number of psychiatric beds in a hospital’s county increases, ambulance diversion hours decrease significantly. Psychiatric beds are unlikely to be profitable for hospitals, but after factoring in all the social costs of fewer mental health services, policymakers may find increasing psychiatric beds to be cost effective. Between 2009 and 2012, California reduced the state mental health budget by $765 million annually. According to the findings in this paper, reducing funding for mental health services can potentially lead to an increase in overall costs to the government. JEL Codes: I10, I18, I19