{"id":360738,"date":"2026-09-30T12:43:24","date_gmt":"2026-09-30T12:43:24","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/360738\/"},"modified":"2026-09-30T12:43:24","modified_gmt":"2026-09-30T12:43:24","slug":"new-yorks-hospital-system-is-dysfunctional-for-the-seriously-mentally-ill","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/360738\/","title":{"rendered":"New York\u2019s Hospital System Is Dysfunctional for the Seriously Mentally Ill"},"content":{"rendered":"

In April, NewYork-Presbyterian Hospital paid the state $500,000 to close a years-long investigation<\/a> into its treatment of psychiatric patients. Attorney General Letitia James castigated the hospital system for a \u201crepeated pattern of failures\u201d: failing to restore psychiatric beds post-pandemic, to screen and stabilize emergency patients, and even to accept incoming ambulances.<\/p>\n

But NewYork-Presbyterian\u2019s alleged bad behavior masks a more complex mix of economic realities and payment incentives misaligned with patient need. General hospitals have rational financial and operational reasons to avoid psychiatric patients. The state, meanwhile, has rational reasons to steer those patients into general hospitals rather than psychiatric facilities\u2014not to provide better care or even reduce overall costs, but in response to federal reimbursement rules.<\/p>\n

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Together, these incentives produce a mental-health-care system that is economically inefficient and clinically inadequate, particularly for people with serious mental illness. Albany cannot fix these problems through fines and investigations. The better option is to rebuild specialty psychiatric hospital capacity.<\/p>\n

Long-standing federal Medicaid policy is the first core problem. Psychiatric hospitals offer more<\/a> specialty<\/a> mental-health<\/a> services and robust programming than general hospitals, and at lower<\/a> cost. But Medicaid generally won\u2019t send states<\/a> federal matching funds for adults treated in psychiatric facilities with more than 16 beds. Since Medicaid doesn\u2019t reimburse New York for psychiatric hospital patients but does cover half the cost in general hospitals, a Medicaid patient in a psychiatric hospital effectively costs New York twice as much\u2014thus, the state\u2019s preference for treatment in general hospitals.<\/p>\n

The Medicaid rule barring federal funds for psychiatric hospitals\u2014the so-called IMD exclusion\u2014is long outdated. Congress imposed it in 1965 to prevent states from shifting their asylum-based mental-health system costs onto the federal government. Washington expected states to continue financing their psychiatric hospitals. Instead, states discharged patients, shuttered facilities, and left Medicaid-covered general hospitals and community programs to absorb patients. The IMD exclusion drove much of the 97 percent decline in state hospital beds from peak capacity, creating today\u2019s national shortage<\/a>.<\/p>\n

Poorly reimbursed general hospital psychiatric care is the second core problem. Compared with nearly all other services a hospital can offer\u2014whether maternity care, surgery, or cancer treatment\u2014psychiatric services are largely unprofitable<\/a>, if not outright money-losing. A New York State Nurses Association report<\/a> found that the inflation-adjusted annual net patient revenue per psychiatric bed in the state shrunk from $100,000 to $88,000 between 2000 and 2018. The average general hospital bed, by contrast, generated about $1.6 million in 2018. General hospitals are not required to offer psychiatric services, so many don\u2019t: fewer than one in four<\/a> short-term acute-care hospitals nationally reported any inpatient psychiatric capacity, as of 2023. For institutions operating on single-digit margins<\/a> at best, the incentive to replace psychiatric capacity with more profitable utilization of hospital rooms is substantial.<\/p>\n

Covid-19 let general hospitals \u201ctemporarily\u201d reduce psych bed censuses. Normally, licensed psych beds can\u2019t be taken offline or closed without state approval<\/a>. But three years after the pandemic, roughly 850<\/a> beds remained offline across New York, and hospitals resisted bringing them back. The state ordered beds restored with fines<\/a> and investigations<\/a>. As of early 2025, around 35 percent<\/a> still had not been brought back.<\/p>\n

Federal law requires<\/a> hospitals to screen and stabilize all patients within their capability, regardless of ability to pay, and, if a hospital lacks capacity, to arrange transfer to an appropriate setting. This requirement creates a perverse incentive, however: general hospitals without psychiatric services may transfer stabilized patients, while those with available psychiatric beds are required to admit them. The closure of any psychiatric unit thus puts greater pressure on hospitals that have historically invested in serving these patients, giving them more reason\u2014and sometimes an economic need\u2014to reduce their own psychiatric-bed capacity. The result is ever-fewer general hospital psych beds. Nationally, the number of beds per 100,000 persons fell 20 percent<\/a> between 2011 and 2023.<\/p>\n

Attorney General James declared<\/a> that general hospitals \u201chave a legal and moral obligation to treat these crises with urgency and compassion.\u201d But no amount of moralizing can change the underlying economics. Fines and new settlement-related compliance requirements will only raise the cost of operating beds, making psychiatric services even less attractive. Like most of the state\u2019s large general hospitals, NewYork-Presbyterian is a nonprofit. It\u2019s unusually well-capitalized, with nearly $14 billion in net assets. If even NewYork-Presbyterian is leaving licensed beds offline, the economics of general hospital psychiatric care clearly don\u2019t make sense.<\/p>\n

New York is pressuring general hospitals to restore beds in the first place because the state itself eliminated capacity. Between April 2014 and December 2023, New York lost more than 10 percent<\/a> of its already-insufficient total inpatient capacity, with three-quarters of losses occurring in state psychiatric centers. Reductions were part of former Governor Andrew Cuomo\u2019s \u201cTransformation Plan<\/a>\u201d to reduce<\/a> per-person costs of care\u2014or, more accurately, to reduce the cost of care borne by the state.<\/p>\n

To her credit, Governor Kathy Hochul has begun reversing state hospital cuts, and her push on general hospitals did restore hundreds of beds<\/a>. But New York still has fewer psychiatric beds than before the pandemic.<\/p>\n

Neither carrots nor sticks have compelled general hospitals to pick up decades\u2019 worth of slack from the state hospital bed decline. In 2022, the state committed<\/a> $27.5 million annually to raise general-hospital reimbursement rates by 20 percent. But higher rates are compelling only if they make psychiatric services more profitable relative to medical and surgical services. Twenty percent hasn\u2019t closed that gap. Nor are treatment beds wholly interchangeable. Specialty psychiatric hospitals are better equipped to handle severely ill patients who pose safety risks or need longer stays. General hospitals mostly see psychiatric patients as acute admissions through their emergency departments; few have the expertise to treat the most severe cases.<\/p>\n

Reimbursement rules have produced a race to the bottom for psychiatric beds, effectively abandoning the most severely impaired mentally ill New Yorkers. The shortage of psychiatric beds in both psychiatric hospitals and general hospitals across the state means there\u2019s often nowhere to transfer patients, who are then boarded<\/a> in emergency departments for hours, days, or weeks. Patients may leave those facilities on their own accord, as James\u2019s NewYork-Presbyterian investigation observed, and emergency departments have few practical or legal means to hold them even when continued treatment and oversight are in a patient\u2019s best interest.<\/p>\n

Absent adequate inpatient care, adults with serious mental illness make up a disproportionate share of homeless<\/a> and jail<\/a> populations. They face elevated suicide<\/a> risk and premature mortality<\/a>. Untreated psychosis<\/a>, particularly with substance use, significantly increases violence risk<\/a>. All New Yorkers feel these consequences: among those arrested<\/a> for subway violence in 2022\u201323, 89 percent had a documented history of homelessness, mental illness, or both.<\/p>\n

Maximizing federal reimbursement is a reasonable goal for any state\u2019s health-care policy, but it\u2019s not obviously saving New York money on net. Among commercially insured adults<\/a> in 2023, mental-health admissions to general hospital psychiatric units averaged $14,900, compared with $13,400 in psychiatric facilities. The Medicaid population differs, yes, but these findings are suggestive. Not treating patients in psychiatric hospitals doesn\u2019t make their eventual treatment in general hospitals less expensive; it simply shifts part of a larger bill to the federal government. Two-thirds<\/a> of general hospital psychiatric patients spend time in emergency departments, one of the most expensive ways to receive treatment. Patients inadequately stabilized bring further costs in the form of unnecessary repeated hospitalizations and spillover onto other public systems. An honest accounting may find that general hospital psychiatric treatment is not truly cost-effective for the state, or for American taxpayers more broadly.<\/p>\n

Expanding Medicaid patients\u2019 access to psychiatric hospitals, further, wouldn\u2019t definitively increase hospitalization. An observational study<\/a> of 3.2 million seriously mentally ill beneficiaries found that waivers allowing federal matching were associated with 41 percent lower psychiatric costs, 26 percent lower odds of psychiatric emergency visits, and 11 percent fewer incarcerations.<\/p>\n

Psychiatric treatment is ultimately a question of costs and benefits. Current state spending produces a dysfunctional system and poor outcomes for vulnerable patients, with costs borne by all New Yorkers. Wouldn\u2019t it be worth spending differently\u2014or even spending more\u2014to achieve meaningfully better outcomes? Democrats should be familiar with that argument. Psychiatric hospitals have the purpose-built staffing and scale to treat the hardest cases, freeing general hospitals and community programs to serve patients who need less intensive care.<\/p>\n

The NewYork-Presbyterian settlement reveals how decisions that make sense in isolation can produce an irrational system. New York cannot punish general hospitals into rebuilding the specialized psychiatric capacity that state and federal policy spent decades dismantling. Instead, Albany should direct more funding to psychiatric hospitals while pursuing every available federal waiver and exception to secure reimbursement.<\/p>\n","protected":false},"excerpt":{"rendered":"In April, NewYork-Presbyterian Hospital paid the state $500,000 to close a years-long investigation into its treatment of psychiatric…\n","protected":false},"author":2,"featured_media":360739,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[9,24,63,122,124,123],"class_list":["post-360738","post","type-post","status-publish","format-standard","has-post-thumbnail","category-queens","tag-new-york","tag-new-york-city","tag-nyc","tag-queens","tag-queens-headlines","tag-queens-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/360738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=360738"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/360738\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/360739"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=360738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=360738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=360738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}