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Cost Effectiveness and Cost Benefit
Analysis of Substance Abuse Treatment:
Literature Review and Annotated
Bibliography
Presented by Henrick Harwood, The Lewin Group
Prepared For the Center for Substance Abuse Treatment
Document available at:
http://neds.calib.com/products/pdfs/litrvw/cost_lit_review/index.cfm
Major Conclusions
Treatment is effective!
Treatment pays for itself!
Some treatment approaches are more cost effective . .
.
Major Progress in Substance Abuse
Treatment
Quality of research better
Continuum of care
Patient placement criteria operationalized
Need for & composition of comprehensive services better
understood
Some Guidelines and Manuals published
– ASAM
– also AACAP; NIH; CSAT; CSAT grantees
Purpose
The goals of the literature review and bibliography were to:
Develop a comprehensive list of the literature available
Identify trends in the literature in terms of topics studied and areas in
need of work
Broadly characterize and summarize findings and conclusions of cost
effectiveness and cost benefit studies.
Citations by Type of Study
Type of Study

# of Citations
Cost of Treatment
20
Cost Benefit (or cost offset)
49
Cost Effectiveness
29
Literature Review
31
Methodology Report
21
Simulation
4
The largest number of studies have been cost benefit studies (49).
 There have been fewer studies with a primary focus on cost effectiveness
(29) or cost of treatment (20).
Perspectives of Economic Analysis
Is some/any treatment better than no treatment?
Are some types of treatment more economical than others?
What makes treatment more cost effective?
Treatment and Distinct Client Populations
–
–
–
–
–
Females
Adolescents
Co-Occurring Mental Illness and Substance Abuse
Prisoners/Offenders
Opiate Substitution Therapy
Conclusions
Cost benefit studies:
– Recent cost benefit studies consistently find that benefits (i.e.,
improvements in crime, health, and social functioning) are greater than the
costs of substance abuse treatment.
– Cost benefit studies examining benefits in terms of reduced health care
utilization and costs (“cost offsets”) find that health costs and utilization
sharply increase prior to treatment initiation, then fall dramatically
following the treatment period.
Cost effectiveness studies:
– A handful of cost effectiveness studies conclude that less expensive
treatment modalities or levels of care are more cost effective or cost
beneficial than more expensive approaches.
Comprehensive Cost-Offset Studies
Find Major Returns per Dollar Spent on
Treatment
French et al. (2000)
– $10 and $23, in two Washington State clinics.
Gerstein, Harwood, and Suter (1994)
– $7 in the California public system
Finigan (1995)
– $7 in the Oregon public system
Koenig, Harwood, Sullivan, and Sen (2000b)
– $4 in federally-funded programs
Health Costs of Substance Abusing
Populations are Higher than non-Abusers
Studies of insured populations compare those treated for alcohol and drug
abuse with non-abusing populations.
Those getting treatment have total health costs several times higher than the
non-abusing population before treatment initiation.
Holder and Hallan (1986)
– Tracked abusing and non-abusing populations for up to 4 years and found that
health costs were nearly identical at the end of that period.
Goodman et al. (2000)
– Found a reduction of the gap in costs between comparable treated and nonabusing populations over time.
– Found cost offsets for treatment of “alcohol abuse” but probably not for
“dependence” or those with mental comorbidities
Health Expenditures Decline Following
Substance Abuse Treatment
Analyze changes in health care utilization and costs before and
after treatment = “cost offsets”
Holder and Blose (1992)
– health care costs “declined by 23% to 55% from their highest
pretreatment levels”
Holder & Schachtman (1987):
– offsets made up for the cost of the treatment within 2 years
Cost-Offsets for Treated versus Untreated
Substance Abusers
Reiff, Griffiths, Forsythe, and Sherman (1981) HMO
– treated population had about $500 per year lower post-referral insured
health costs treatment refusers
Holder and Blose (1992) privately insured
– after treatment treated alcoholics had 24 percent lower health costs than
similar untreated alcoholics. Tracked 3 years.
Gerson et al., (2001) Ohio Medicaid
– treated substance abusers had annual insured health costs of about $500
less than diagnosed but untreated individuals.
Some Types of Treatment Are More CostEffective than Others (for Some Clients)
Hospital inpatient treatment versus intensive outpatient (IOP)
– Alterman et al., 1994; Bachman et al., 1992; Longabaugh et al., 1983; Schneider,
Mittelmeier, & Gadish, 1996)
– No significant difference in outcomes. Various client populations: male and coed adults;
cocaine addicts, poly substance abusers; and alcoholics.
– Day treatment costs about half (or less) as much as inpatient care of same duration
Day treatment and intensive outpatient compared to less intensive regimens
– Weisner et al., 2000: “step-down day treatment to IOP” versus “IOP alone” for a poly
substance population; no differences in outcomes; costs almost twice as much (about
$1650 versus $900)
– Avants et al. (1999): for a medically indigent methadone population day treatment was
no more effective than “enhanced standard” care; the more intensive treatment cost about
twice the less intensive care
Longer Treatment Yields Better Outcomes
Harwood, Hubbard, Collins, and Rachal (1988)
– An additional day of treatment retention reduced crime-related costs during and
in the year following treatment by 2 to 4 times the cost of the day of care.
French, Zarkin, Hubbard, and Rachal (1991), and French and Zarkin (1992)
– Increased stay in treatment associated with significant increases in earnings &
decreases in illegal earnings, But much less than the cost of the care.
Koenig et al. (2000b)
– Post-treatment benefits only partially offset costs of an additional day of
treatment.
Barnett & Swindle (1997)
– VA inpatient 28 day programs had modestly higher outcomes than 21 day
programs (78 percent success versus 75 percent)
– Improvement judged too small to warrant operating 28 day programs since the
costs are materially higher.
Strong Benefits from Treating Women
Harwood, Fountain, Carothers, Gerstein, and Johnson (1998)
– Benefits about four times greater than the cost of treatment
Svikis et al. (1997)
– Successfully treated versus untreated pregnant women
– Treatment cost $6,600 (day treatment)
– Average NICU costs/ birth $900 for treated women vs $12,200 for untreated
Daley et al. (2000, 2001)
– Pregnant women; economic returns from birth outcomes and criminal activity
– Residential and combined residential-outpatient treatment most cost effective,
better than standard outpatient, methadone and detoxification
Berkowitz, Brindis, Clayson, and Peterson (1996)
– Mandating pregnant and parenting offenders into treatment saved about $3,000
vs. the nearly $17,000 in expense to incarcerate (and treat them in prison) for
six months
Adolescents Benefit From Intensive
Services
Schoenwald, Ward, Hennggeler, Pickrel, and Patel (1996)
– Compared “multisystemic therapy” (MST, an intensive mix of
substance abuse, mental health and social services) with “usual
services” for adolescents
– MST reduced arrests by 26 % and time incarcerated by 46 %
– Costs for therapeutic services increased 50 % over usual services
– The reduction in incarceration from MST offset the increase in costs
Marital Therapy is Cost Effective, Some
Approaches More So than Others
Fals-Stewart, O’Farrell, and Birchler (1997)
– combining behavioral couples therapy with individual counseling more
effective than individual based treatment alone
– no more costly
O’Farrell, Choquette, Cutter, Floyd et al. (1996)
– behavioral marital therapy superior to interactional couples therapy
– BMT was also less expensive
Treatment for Offenders Pays for Itself
Hughey and Klemke (1996):
– Offenders completing in-jail program (85%) had lower rates of re-arrest
compared to similar untreated inmates.
– Savings after treatment costs were $3,500/offender.
– Further (but unestimated) benefits from reduced victim, police and court costs.
Maddox (1996)
– Based on lit review of drug courts judged cost-effective
– $5,000 in incarceration costs compared to treatments costs of $900 to $1,600
per defendant.
– Recidivism rates and drug use post-treatment are also reduced.
Co-Occurring Substance Abuse
and Mental Illness
Jerrell and Hu (1996):
– supportive, low intensity mental health plus substance abuse treatment:
12 step and case management models
– cost savings of over 40% during the post-treatment period
French, Sacks, DeLeon, McKendrick, & Staines, (1999)
– Mentally ill homeless substance abusers in modified TC group
experienced significantly lower levels of alcohol intoxication,
criminality, and depression than those in the treatment-as-usual group,
and
– Incurred a lower cost of health treatment, offset costs for TC services
Opiate Substitution Therapy
Kraft, Rothbard, Hadley, McLellan, and Asch (1997)
– Low, medium and high levels of counseling and support services
– Medium level was most cost effective, but high had modestly better results
Barnett (1999)
– One additional life year is saved for each $5,900 spent on methadone treatment
Compares very favorably with results for other health interventions
Zaric et al. (2000)
– Using methadone to reduce HIV transmission yields an additional 1 year of quality
adjusted life at a cost of $8,200
– Most of the benefits are with the non-injection drug using population.
Barnett, Zaric, and Brandeau (2001)
– Buprenorphine for opiate addiction is cost effective at a price of up to $30 per dose if
applied to clients that would not use methadone
– However, methadone is the treatment of choice for clients that will accept it