American Journal of Law & Medicine

Short-sheeting the psychiatric bed: state-level strategies to curtail the unnecessary hospitalization of adolescents in for-profit mental health facilities.


The hospitalization of minors in for-profit psychiatric facilities is a relatively new phenomenon on the landscape of American health care and reflects a confluence of distinctly modern economic, social, and attitudinal factors. Mental hospitalization of youths was rare in the early part of the century, and the mental health system was not used to any significant degree for the institutionalization of children until the 1960s. The dominance of the for-profit enterprise in the world of psychiatry is a more recent development. It has even entered the realm of popular culture as a symbol of alienated youth.[1]

The for-profit psychiatric hospital poses a two-pronged medicolegal issue. First, private facilities' commitment procedures lack the due process controls present in public facilities. Second, the aims and practices of a for-profit hospital are far different from those of non-profit facilities--both public and private--because the latter exist for primarily non-economic reasons. In short, there is often a tension between what is medically necessary and what is financially desirable.

This Note examines the hospitalization of youths in private, for-profit, psychiatric facilities and the attendant implications. Part II of the Note describes the factors that gave rise to the private psychiatric industry. Part III discusses the legal rights of minors in psychiatric treatment. Part IV offers an in-depth analysis of legislative efforts in California, South Dakota, and Minnesota to protect minors from inappropriate psychiatric hospitalization. This section specifically examines the strengths and weaknesses of the respective programs, as well as the political and social forces they face. Part V discusses states' Certificate of Need programs and their role in regulating the proliferation of for-profit psychiatric facilities. Part VI presents six specific recommendations for reform of the for-profit psychiatric industry, and Part VII offers a summary and conclusion.


Medical science, as an empirical discipline, does not exist in a vacuum. Rather, "medicine" is a social construct, shaped by societal forces. Definitions of health and sickness, and the institutional responses that follow, are products of political, economic, and sociological pressures. This section discusses six facets of the problem.


Over the past several decades, many behaviors once considered immoral, deviant, or undesirable have been reinterpreted as forms of medical illnesses. This trend, termed "medicalization,"[2] is applied to compulsive gambling, alcoholism, violent behavior, and sexual disorders. A condition once labelled as a 'moral failing' or a 'vice' is now portrayed as a manifestation of a disease or illness.[3] For example, the weak-willed 'drunkard' is now the victim of "alcoholism," a cognizable and treatable disease.[4] "[B]efore that, there had been only drunkenness, condemned from the pulpit and managed by the policeman."[5] Once excessive drinking became a disease, it was reassessed "as a condition that physicians should treat."[6]

Adolescence[7] is now an unfortunate victim of medicalization. The older, and perhaps more conventional view, is that this phase of life is a psychological and sexual transition from childhood to adulthood that invariably involves conflict and confrontation between parent and child.[8] Today, many perceive "adolescence [as] a medical condition, a disease process."[9] The use of vague and malleable language to describe adolescents and their behavior compounds the problem. The publications of the National Association of Private Psychiatric Hospitals (NAPPH)[10] illustrate this well.[11] Warning signs of alcohol and drug abuse in children and adolescents that may require inpatient care include "deterioration of family relationships, isolation, a marked change in dress or appearance, [or] a change in group of friends."[12]

Constellations of behaviors are loosely grouped under the rubric of "conduct disorder, personality or childhood disorder, or transitional disorder."[13] As a general rule, "these categories describe troublemakers, children with relatively mild psychological problems, and children who do not appear to suffer from anything more serious than normal developmental changes."[14] The fluidity of diagnosis and the subjectivity of assessment terms suggest that a 'disorder' is actually a convenient label for a youth who is a 'troublemaker' or is experiencing "non-pathological turmoil, rebellion, or identity crisis."[15] These appellations "imply a level of diagnostic precision that has yet to be proven empirically and allow for the exercising of virtually unbridled discretion on the part of mental health professionals."[16] Such diagnoses and their use--or overuse--symbolize the rise of psychiatric and therapeutic modalities as the dominant method of confronting situations once handled by juvenile justice systems.[17]

The data compiled over the past decades suggest a relation between the reductions in the use of juvenile justice and incarceration systems and the increases in admissions to mental hospitals. This trend, called "transinstitutionalization,"[18] implies that "[t]he diagnoses given to a substantial proportion of children now in psychiatric facilities indicate that a label of status offender or juvenile delinquent could be just as easily applied to them as to those actually assigned such labels in the juvenile justice system.[19] In essence, a "'hidden' or private juvenile justice correctional system rapidly evolved for disruptive or 'acting out' youths who are no longer processed by the juvenile justice control agencies."[20]

Upon admission to a psychiatric facility, a youth encounters an entirely new set of problems. Hospitalization often involves forced isolation, administration of psychotropic medication, "invasions of privacy, and social pressure to conform behavior to certain norms."[21] A confusion of treatment with punishment may occur.[22] In addition, a minor faces the stigma of being labeled mentally ill.[23] This "could interfere with the new learning and the sense of confidence necessary to produce positive therapeutic change."[24]

The role of the dysfunctional family and the use of hospitalization as a panacea should also not be underestimated. A minor who is an actor in a larger problem "becomes the family scapegoat by being singled out for hospitalization."[25]


Outpatient alternatives to hospitalization are scarce and expensive. A federal government survey estimates that at least 70% of all emotionally disturbed children receive inadequate or inappropriate mental health care.[26] A family seeking individual outpatient therapy for a minor may find a shortage of child psychiatrists within a reasonable distance from home and long waiting lists among practitioners.[27]

One explanation for this problem is the national shortage of child psychiatrists. Currently, there are between 3,000 and 4,500 child psychiatrists in the U.S.[28] In a 1980 report, the federal government concluded that 9,000 would be needed in 1990.[29] A 1990 update of the report concluded that the nation would need 33,000 child psychiatrists by 2010.[30] One doctor explained that the decline in child psychiatrists resulted from the medical establishment's perception of child psychiatry as a field that is neither prestigious nor remunerative.[31]


A third factor contributing to increasing rates of hospitalization among children and adolescents was the enormous growth over the past two decades in the availability of beds in for-profit psychiatric facilities. Prior to 1968, this type of institution did not exist; by 1982, such proprietary and for-profit enterprises controlled 43% of the psychiatric market.[32] In some situations, a private, for-profit facility is the only available treatment option.

The private psychiatric hospital offers an attractive financial option for a health care organization. "Its profit margins are large, investment costs are low, inpatient psychiatric care is now widely insured, and the complexity, (and perhaps ambiguity), of psychiatric diagnosis and treatment makes cost-control efforts by insurers and the government difficult."[33] Unlike a specialized clinic or tertiary care facility, a private psychiatric hospital need not invest in complex and expensive technology.[34] When compared with other forms of health care delivery, the per-patient cost of providing psychiatric treatment is low.[35] As one critic noted, "In the early '80s it was like the Klondike gold strike. There was money in them thar hills."[36]


The structural bias for inpatient care embodied in insurance and third-party payment plans is a crucial component of the problem. Twenty-nine states mandate insurance coverage for mental health benefits.[37] Nevertheless, less, only a small number of states cover individual outpatient psychotherapy benefits under their Medicaid plans.[38] Furthermore, the bias in favor of inpatient care also results from shrewd financial calculation. If outpatient resources are too accessible, "community mental health services will attract a new and broader clientele of policyholders to mental health services."[39] In short, companies may fear "net-widening" and limit their coverage in order to contain costs.[40]

The lack of meaningful reimbursement for outpatient treatment often forces parents and guardians to consider hospitalization for youths because it is the most affordable, rather than the most appropriate, option. "One can understand why even those families who prefer to keep their children at home may choose inpatient mental health services, despite the existence of community-based alternatives that may be more effective and less expensive: inpatient treatment may be the only option adequately covered by their insurance."[41]


The fifth factor follows hard on the heels of the structural bias in insurance coverage. A for-profit psychiatric facility must be able to avail itself of its patients' insurance plans. Thus, it is not remarkable that a congruence exists between patient diagnoses and the conditions eligible for reimbursement.[42] As noted earlier, the catch-all diagnosis of "conduct disorder" and its cousins are used to describe a wide range of behaviors. They are the most common diagnoses assigned to youths committed to mental hospitals because they are recognized by most insurance plans as reimbursable.[43]

This issue alarms many mental health professionals, who see a case of the tail (insurance) wagging the dog (the diagnosis).

One of the big questions facing American psychiatry is whether or not the profit motive in hospitals drives people to do things that are unacceptable ethically. That doesn't mean that every private psychiatric hospital is bad. It means that some people who tie their jobs and their world to the bottom line are going to see patients in every way they can.[44] The strength of physicians at a private psychiatric hospital in New Jersey, noted a critic, "was always their remarkable analysis of insurance. They were geniuses at assessing and diagnosing insurance."[45]

Manipulation of a diagnosis creates the medical justification for admitting and treating a psychiatric patient. Consequently, "the presence of full payment by medical insurance stimulates the use of maximum treatment measures, incorrect diagnoses . . . and full units."[46] Patients, particularly adolescents, "are hospitalized for periods consistent with their insurance coverage and discharged with diagnoses that question whether hospitalization is appropriate."[47]


Another dimension of the rise of for-profit psychiatric facilities is the concept of market elasticity and advertising-driven demand. For-profit facilities use television, radio, and print advertising widely. The NAPPH notes that "almost every non-governmental psychiatric hospital--whether religious, proprietary, or not-for-profit--is using advertising to offer services, explain its mission, and relate its need to the community. Indeed, it would be difficult to find a hospital which does not advertise . . . ."[48]

Unlike many other types of medical care, the demand for psychiatric services may be flexible. Advertisements can persuade the hesitant consumer of the desirability, or purported need for, inpatient treatment. In the case of adolescents, advertisements target parents and guardians. A parent may decide to commit a minor to a psychiatric facility because of a high-pressure sales tactic or an artificially created atmosphere of duress.

The NAPPH promulgated a set of guidelines for advertising by its members,[49] but documentary and anecdotal evidence suggest that advertising by private psychiatric hospitals runs the gamut, from the restrained to the alarmist. …

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