Can Your System Afford (Not) to Build Behavioral Health Space?

Over the past 20 years, health systems have frequently considered expanding behavioral health (BH) capacity at their hospitals, only to see such ambitions dismissed by leadership given:

• The number of potential projects and high demand for capital.
• The ROI of the BH project as compared to other endeavors.

That’s changing.

The pandemic has brought a renewed sense of urgency to the BH space, with the percentage of adults reporting symptoms of anxiety or depression jumping from 11.0% to 41.1% in 2021. The impact among children has been no less dire, with several major pediatric associations declaring a national emergency in child and adolescent mental health in October 2021.

Healthcare organizations have been gaining a better understanding of the impact that their BH population has on all aspects of care delivery—and the costs attributed to how and where those patients receive care.

• According to Modern Healthcare’s 2022 Construction and Design Survey, more than 70% of the 89 construction and design firms surveyed said they are seeing increased demand for a BH component in their medical projects.^[1]
• Studies are starting to demonstrate that while costs are higher for individuals with BH diagnoses, the potential exists to achieve cost savings by better managing those patients.

The events of the past several years have also prompted action from the federal government. President Biden’s proposed 2023 budget includes mandatory investments of $51.7 billion over 10 years to improve behavioral health. Of that, $7.5 billion is earmarked for mental health workforce development and service expansion, and $35.4 billion to improve mental health access in Medicaid. Such funding could spur investment in BH facility construction or upgrades.

While the capital and resources required for BH patients in an inpatient (IP) unit are still significant (and continue to be higher than for non-BH patients), the difference between BH and non-BH capital for the ED and clinic settings is much less substantial and has a higher impact on the need for IP space than ever before. Given the known impact of BH on physical health, investing in the right combination of capacity at the appropriate access levels—truly integrated BH care—can potentially lead to reductions in the total cost of care provided to the community.

Understanding Capital Costs by BH Space Type

Healthcare organizations must consider a number of different capital costs when planning the build-out of new BH capacity. For each type of clinical space, the cost of building “net new” primary room types should be compared to the cost of renovating existing, underutilized space to be appropriate for BH care. For a capital planning analysis, reasonable square footage (SF) and construction cost estimates are often developed at the department level and then broken down to a cost per room level using the unit costs provided by RS Means.^[2]

IP Beds

To get to a reasonable capital cost per IP bed (as shown in table 1), the departmental gross square feet (DGSF) required for a 30-bed unit is first estimated using an evidence-based SF driver. That value is then applied to the median construction cost (for new and renovation scope types) and divided by the bed number to arrive at a construction cost per bed. For BH IP beds, the estimated cost per bed includes additional programmatic elements such as isolation rooms and therapy areas, additional storage areas (securable lockers, etc.), and other space needs specific to BH guidelines. In this scenario, the capital required for BH IP beds proves to be substantially more than general acute care beds (22% to 37% more, depending on scope of construction).

Nationally, the average length of stay for all IP visits is 4.6 days, compared to 7 days for stays principally related to mental health or substance use.^[5] With every BH patient admission, the health system is experiencing increased costs associated with the longer average length of stay, as well as extra staffing needs and security coverage. Each BH patient can cost the organization three to five times more per IP visit, with no additional revenue (and often less revenue) received for the IP stay.^[6]However, for every BH bed created (to appropriately care for those patients), at least 1.5 medical/surgical (M/S) patients could be treated and discharged during the same time period that the M/S bed was inappropriately occupied, highlighting an enhanced revenue opportunity.

Caring for a BH patient in a clinically appropriate unit also presents significant operational benefits:

• Bed management/discharge planning becomes more routine.
• Capacity/census levels are easier to forecast.
• Staffing can be managed more appropriately (both clinically and administratively).

Having the right staff for the right clinical units can help a hospital meet the expected ratios, treat patients more efficiently, and improve staff safety—often with better results (and patient and staff satisfaction scores).

ED Rooms

ED space is often overutilized by BH patients, a trend that has continued throughout the pandemic. Of particular concern, ED usage rates rose among children in 2020. The California Health Kids Survey reports that about one in six high school students in California considered suicide in 2020, and one in three suffered from depression. The Milbank Memorial Fund, meanwhile, shows that mental health ED visits rose 24% from April to October 2020 for kids ages 5 to 11 and 31% for kids ages 12 to 17 during the same period.^[7]

BH patients also have different needs, protocols, staffing, and throughputs than the typical ED patient. These differences must be addressed for both the good of BH and non-BH patient care delivery.

Similar to the IP bed capital need modeled above, table 2 breaks down the cost to build out an ED “pod” of rooms for both general exam/treatment (E/T) rooms (in this case, three-walled rooms with a curtain) and a BH/crisis intervention (discrete) pod with securable rooms. If built to the right capacity for the targeted patient mix, the difference in cost for new (or renovated) ED rooms by type is not significant.

The major issue typically experienced by health systems is that BH patients tie up general E/T rooms in a department that is already near or at capacity under normal operations. Managing a full ED for a significant period of time can impact the ability for patients to be seen, treated, and admitted or discharged in a clinically appropriate and high-quality manner.

If the hospital is also seeing a high census in its bed units (sometimes caused by BH patients occupying the low-acuity M/S beds as described above), then this can cascade into longer average ED visit times for all but the higher-acuity and trauma/resuscitation patients. While not always the case, there is also a staff (and patient) safety concern for having a patient in-crisis in an area where they cannot be safely supervised.

Examining the historical trend for BH patients occupying ED space will result in a reasonable target for BH pod capacity. However, EDs should model the room quantity using a lower utilization number to guard against underbuilding while also helping to mitigate a return to the issue trying to be corrected (BH patients backing up the general E/T rooms). The value return here is not dissimilar to the IP scenario: efficiently moving patients through the ED (discharged or admitted to a bed) so there is capacity available to treat patients who are clinically appropriate for that care setting.

Ambulatory Clinic Exam/Consult (E/C) Space

Adequate outpatient (OP) ambulatory space is essential for providing BH care. OP clinic space could be a stand-alone BH clinic or expansion of an existing primary care practice. However, costs to develop ambulatory clinic space can vary. Several variables often insert themselves, not the least of which is how an organization plans to develop net new capacity: new construction, renovation of existing OP space as an owner, or leasing space in an already established medical office building.

In most cases, the cost of developing an E/C room for either general medical practice or BH use is about the same. The E/C rooms for both uses are similarly sized, with a target of 120 SF per room. However, depending on the type of BH care needed (general BH, IOP, etc.), there could be some additional space requirements, such as group therapy rooms. Also, some functional nuances may apply to BH ambulatory space that other medical clinics might not require (discrete parking and building access for privacy, proximity to ground floor for outdoor sessions and/or smoking areas, etc.).

Capital Planning Must Be Holistic

Before making capital requests to add or renovate SF, first determine whether your current service offering is sufficient and effectively utilized to meet the BH needs of the patient population. If a need for BH space is identified, review how best to care for this population across the entire care continuum (e.g., optimizing staffing, implementing telehealth/virtual visits). Once you have a handle on how to provide the care, then look at where to provide the care.

Health systems also need to be mindful of the mental health needs of the pediatric population. Despite increasing numbers of children and adolescents seeking BH care, anemic reimbursement rates and staffing shortages are limiting access. Providers are dedicating bigger portions of their capital project budgets to BH, recognizing that children who don’t get the treatment they need are staying in the system longer.^[8]

What other parameters should you consider in developing an appropriately sized and resourced service line (and determining its capital requirement)?

• Demand for BH IP Services: Are BH beds necessary? How often are BH patients tying up inappropriate beds? Is the demand significant enough to consider redistributing or adding beds?
• BH Bed Supply: If the best solution is new beds, do you build out a BH unit (which has higher SF requirements than a typical M/S unit)? Or is the better value proposition to build out M/S beds and backfill the former M/S unit with BH patients?
• Workforce Planning: Have you optimized your staffing model to account for utilization, demand, and local provider workforce supply? Are providers working at the top of their licenses in order to maximize their contribution?
• Telepsych Services: Does your capacity planning strategy allow for both in-person and virtual care options? Projections around virtual visits during the planning stage will be critical for determining the right number of BH rooms to build out, particularly for ED and OP capacity planning.
• BH Reimbursement: Are your managed care agreements appropriately aligned with your service mix, care settings, staffing model (inclusive of APPs), and care delivery model (inclusive of telehealth)?

Ultimately, health systems need to provide the right care in the right place at the right time and at the right cost, for all patients. BH needs in the community historically have been undermet; now is the time to reverse that trend. BH care must be viewed holistically, including the cost of space and assets as well as needed operating costs. Strategically developing an integrated solution can have a positive impact on your system’s long-term capital spending, staffing requirements, overall patient management, reimbursement, safety standards, and satisfaction levels (both patients and staff). If these goals are achieved, the care delivered by your organization to the community will improve outcomes and result in a more equitable system.

_{This is an updated blog that was originally published to the ECG website on February 28, 2021.}

Published May 19, 2022