To quantify the cost of adult outpatient care in the county mental health system in California, the authors estimate the cost of specialty mental health services under two scenarios: (1) status quo and (2) all individuals in need of these services receive evidence-based care. The authors find that the California public mental health care system is underfunded to provide evidence-based care and propose recommendations to address the service gap.

Funding the Service Gap for Adult Outpatient Mental Health Services in California

A Simulation-Based Cost Analysis of Specialty Care

Nicole K. Eberhart, Rachel M. Burns, Federico Girosi, Shannon D. Donofry, Jonathan H. Cantor, Roland Sturm, Ryan K. McBain

ResearchPublished Apr 7, 2025

One in 26 adults in California live with serious mental illness that results in significant impairment. County mental health plans are responsible for providing specialty mental health treatment to these individuals when they are eligible for Medi-Cal (California's Medicaid program) or have no other options for treatment, but high caseloads suggest that the individuals served do not necessarily receive an evidence-based amount of treatment, and some individuals in need of and eligible for services may not be in the system of care at all. However, it is difficult to assess the true cost of providing evidence-based care. To quantify this critical piece of information, the authors estimate the cost of adult outpatient specialty mental health services under two scenarios: (1) services as they are delivered by counties in the current system (Scenario 1, the status quo) and (2) a counterfactual scenario in which all individuals in need of these services receive evidence-based care that aligns with clinical guidelines (Scenario 2, evidence-based care in a fully funded system).

The results suggest that substantial additional investment is needed for the county mental health care system to address two important shortfalls: (1) The system is not adequately funded to provide evidence-based treatment to its current treatment population, and (2) the system is not serving all eligible adults in California. The authors propose three recommendations for the public health system to address the service gap in providing evidence-based care to adults who require outpatient services for mental health conditions within county mental health plans.

Key Findings

  • In Scenario 1 (the status quo), the total cost of care to provide adult outpatient mental health care in county specialty mental health care programs to 509,600 adults was $2.88 billion, an annual average of $5,648 per user.
  • If all individuals who would be eligible to receive outpatient treatment in county specialty mental health care programs received evidence-based care in a fully funded system (Scenario 2), 598,314 adults would receive treatment costing an average of $21,166 per user.
  • Providing expanded, evidence-based treatment packages to the existing individuals served would result in an additional $7.91 billion in annual costs relative to Scenario 1, and providing these expanded treatment packages to an additional 88,714 who are not being served in the existing system would cost an additional $1.88 billion, resulting in a total cost of $12.66 billion.
  • Implementing Scenario 2 would correspond to a 17-percent increase in the number of individuals served, a 280-percent increase in costs per user, and roughly a 350-percent increase in total costs relative to existing service provision.
  • These estimates encompass only the direct costs to provide care and do not include additional potentially necessary investments, such as infrastructure expenditures or cost of additional outreach efforts.

Recommendations

  • The California public mental health care system should increase the volume and scope of outpatient services provided to reach alignment with evidence-based care. This will involve developing care guidelines and facilitating training for clinical staff, increasing staffing for the provision of services that are currently delivered at much lower volumes than recommended by clinical guidelines (such as psychotherapy), and increasing the quantity of care provided.
  • The California public mental health care system should increase outreach to ensure that all individuals who are eligible for mental health treatment services in the county behavioral health system receive needed care. As treatment capacity increases to provide the volume and scope of services aligned with evidence-based care, counties should shift emphasis and resources to increasing outreach efforts.
  • The California public mental health care system should increase funding for the system to ensure that there is adequate workforce capacity to meet the needs of an expanded patient population and align care delivery with clinical practice guidelines.

Topics

Document Details

  • Copyright: California Mental Health Services Authority
  • Publisher: RAND Corporation
  • Availability: Web-Only
  • Year: 2025
  • Pages: 44
  • DOI: https://doi.org/10.7249/RRA3489-1
  • Document Number: RR-A3489-1

Citation

RAND Style Manual

Eberhart, Nicole K., Rachel M. Burns, Federico Girosi, Shannon D. Donofry, Jonathan H. Cantor, Roland Sturm, and Ryan K. McBain, Funding the Service Gap for Adult Outpatient Mental Health Services in California: A Simulation-Based Cost Analysis of Specialty Care, RAND Corporation, RR-A3489-1, 2025. As of April 30, 2025: https://www.rand.org/pubs/research_reports/RRA3489-1.html

Chicago Manual of Style

Eberhart, Nicole K., Rachel M. Burns, Federico Girosi, Shannon D. Donofry, Jonathan H. Cantor, Roland Sturm, and Ryan K. McBain, Funding the Service Gap for Adult Outpatient Mental Health Services in California: A Simulation-Based Cost Analysis of Specialty Care. Santa Monica, CA: RAND Corporation, 2025. https://www.rand.org/pubs/research_reports/RRA3489-1.html.
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