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A high proportion of people with severe mental health problems are unemployed but would like to work. Individual Placement and Support (IPS) offers a promising approach to establishing people in paid employment. In a randomized controlled trial across six European countries, we investigated the economic case for IPS for people with severe mental health problems compared to standard vocational rehabilitation. Individuals (n=312) were randomized to receive either IPS or standard vocational services and followed for 18 months. Service use and outcome data were collected. Cost-effectiveness analysis was conducted with two primary outcomes: additional days worked in competitive settings and additional percentage of individuals who worked at least 1 day. Analyses distinguished country effects. A partial cost-benefit analysis was also conducted. IPS produced better outcomes than alternative vocational services at lower cost overall to the health and social care systems. This pattern also held in disaggregated analyses for five of the six European sites. The inclusion of imputed values for missing cost data supported these findings. IPS would be viewed as more cost-effective than standard vocational services. Further analysis demonstrated cost-benefit arguments for IPS. Compared to standard vocational rehabilitation services, IPS is, therefore, probably cost-saving and almost certainly more cost-effective as a way to help people with severe mental health problems into competitive employment.
People with severe mental illness face many challenges in securing paid work, and employment rates are low . Not surprisingly, many public and other bodies emphasize the need to target help on these individuals [2, 3]. As macroeconomic pressures mount and public budgets face substantial cuts, it becomes all the more pressing to know whether such help is cost-effective (do the outcomes justify the costs?) and to gauge its budget impact (what is the impact on overall expenditure?).
Individual Placement and Support (IPS) has emerged as an effective way to help many people with severe mental illness obtain competitive employment [4, 5] and could potentially contribute to social and economic inclusion. A multisite randomized trial of IPS, conducted in six European cities (the EQOLISE study), was the first to examine directly the hypothesis that IPS would prove more effective than comparison services in Europe .
As in the United States , Canada , Australia , and Hong Kong , the study found that IPS participants were much more likely to work in competitive settings and worked more hours than individuals receiving comparison services. Recently, Bond et al  argued that the positive findings in support of IPS in the United States “may transport well into new settings as long as programs achieve high fidelity to the IPS model”. However, what are the economic consequences? In this study, we examined the cost-effectiveness, budget impact, and overall economic impact of IPS, using data from the EQOLISE trial.
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Employment is a major contributor to an individual's economic status, social position, and quality of life. Unfortunately, people with severe mental illness have high rates of unemployment. For example, a five-country European study found less than a quarter of people with schizophrenia were in paid employment, the proportion being as low as 5% in London . The economic and social impacts of employment difficulties are enormous. For individuals, it can mean long-term reliance on state welfare benefits, insecure low-paid work, and a disability trap that makes it hard to escape . For the broader society, the impacts are the risk of an almost permanently marginalized, socially excluded group of people , and high costs: productivity losses because of unemployment or absenteeism account for a large proportion of the overall cost of schizophrenia across many countries .
Public policies across much of the world emphasize the importance of promoting employment opportunities for disadvantaged groups, including people with chronic disabilities and health problems [2, 3]. Although that policy attention has tended to focus more on people with common mental disorders, various attempts have been made to improve access to employment for people with severe mental health problems. These include the development of sheltered work settings, clubhouse models and social firms, and, more recently, integration into competitive work settings without prior preparatory steps, following the IPS approach. IPS seeks to place people in open paid employment, providing them with intensive and ongoing support. The approach has an encouraging track record in a number of US sites, and is beginning to be explored elsewhere. This wider exploration is needed because, for example, European health systems, benefits systems and labour markets differ in important ways from those in the United States.
In this multicenter European trial of supported employment, IPS was found to dominate alternative vocational services against which it was matched, producing better outcomes in terms of both the proportion of people who worked for at least 1 day and the number of days they worked at lower cost overall to the government provider of health and social care services. This pattern held at five of the six European centers, Groningen being the exception. With the inclusion of imputed values, the difference was maintained. An analysis of uncertainty using cost-effectiveness acceptability curves yields a consistent overall view of the findings in that, whether imputed values are used or not, IPS is almost certain to be viewed as more cost-effective than standard vocational services even if the decision maker is not willing to pay anything for an additional 1% of clients working at least 1 day or for an additional day of work. That IPS would yield better competitive employment outcomes than comparison vocational services in Europe should not be surprising, given that IPS has consistently done so almost everywhere it has been tested, whether in the United States, Canada, Australia, or Hong Kong . An exception is the Supported Work And Needs (SWAN) study , although concerns have been expressed about the fidelity of the IPS service delivered .
There are few cost-effectiveness results to frame the findings of the present study. Only three previous trials of IPS appear to have reported cost-effectiveness results, and cost-benefit results are even rarer. Comparing IPS with an enhanced vocational rehabilitation program in inner-city Washington, Dixon et al  estimated that IPS allowed clients to achieve additional hours of competitive work at an average cost of $13 per hour or $283 per additional week of competitive work (counting direct mental health costs). The SWAN trial found that, although the intervention cost only £296 per client, control group participants who were admitted to hospital had longer stays, so that total costs were £2176 higher on average for control group clients. The intervention was thus cost-effective (lower costs with similar effectiveness), but the saving in hospitalization seems unlikely to be attributable to the intervention, which had a very low intensity [23, 26]. Applying a cost-benefit framework to the New Hampshire trial of IPS, Clark et al  estimated a marginally higher benefit–cost ratio for IPS than for group skills training, from the perspectives of society as a whole (2.18 vs. 2.07) as well as from the perspective of government (1.74 vs. 1.39). Here both interventions were associated with significant, and nearly identical, reductions in costs of hospitalization.
The difference in the present study is partly attributable to IPS itself being less costly than comparison services: it cost less than comparison services in four sites. It is also attributable to lower inpatient costs — unlike the finding in the Washington trial. Among the five quasi-experimental studies that have looked for an association between hospital admissions (or hospital inpatient days) and being in IPS, three report no evidence of an association [28-30], whereas two others report fewer admissions for the IPS group [31-33]. In one case, however, fewer admissions were found only among people with higher outpatient mental health service use .
There are a number of reasons why IPS might reduce hospital use. Vocational advisors may happen to observe, for example, signs that their client is on the way to a crisis and alert his or her clinicians. Their relationship with a client may in and of itself have a therapeutic effect. Clients who do begin to work may experience an improvement in symptoms and self-esteem [34, 35], which might in turn reduce hospitalizations. Studies that have considered the effects of working on overall treatment costs do suggest that, in clients who enter into work (which IPS facilitates but does not guarantee), there are reductions in treatment costs [36-38], and these are largely influenced by inpatient use.
In the present study, inpatient hospital use for the IPS group was reduced significantly only during the first 6 months; the difference essentially disappeared by the end of the follow-up period. Further analyses (not reported here) indicated considerable variability in the difference in inpatient costs between IPS and comparison groups across sites and over time. Indeed, both fixed effects and random effects regressions of inpatient costs over time, service and the interaction between the two, indicated an overall downward trend in hospitalization costs, but no difference in trend between IPS and usual services (p=0.34 and 0.44, respectively). The observed difference at 6 months could therefore be attributable to chance. In only one of the six sites (Groningen) did IPS generate numerically higher costs than the comparison intervention (but the difference was not significant). This was the site where IPS was implemented in the least effective way compared with usual services: it appears to represent an atypical experience.
Variations in vocational service costs across sites also bear comment. Not surprisingly, given the heterogeneity in traditional vocational services, the cost of comparison services varied widely across sites. The considerable (threefold) variation in costs of IPS services was more surprising, because the same unit costs were used to calculate those costs across sites, and because all sites achieved good or fair levels of fidelity to the IPS model . Differences in infrastructure may account for some of the variability in IPS intervention costs.
The cost-effectiveness analysis was conducted from the perspective of the health care system, with costs measuring only health and social care inputs. Although effectiveness was gauged in terms of employment gained, this is a valid aim for community mental health services. When we turned to the cost-benefit arguments, we attached an estimate of the societal value of the employment gained but we did not attempt to attach monetary values to any other clinical or quality of life gains. Even so, this partial analysis demonstrated the broader social value of the IPS approach.
Limited sample size for the cost analysis is a limitation of the study, although one that is difficult to avoid given the complexity (and cost) of conducting studies such as this. The use of UK unit costs for all study sites may also be viewed as a limitation of the study, but this could not be avoided given the absence of country-specific information to compute valid and comparable unit costs in all sites. Moreover, using country-specific unit costs introduces further extraneous variation that would have to have been adjusted for in the analyses. In fact, unit costs for health services and social care are largely driven by local wage rates. Lower wage rates in some sites, such as Sofia, would tend to reduce all unit costs more or less proportionately, so that it is unlikely that the observed differences in cost between IPS and comparison services would alter very much in magnitude. Another limitation is that it was not possible to take into account changes in the cost of welfare benefits linked to unemployment benefits or changes in income tax contributions. For a cost-effectiveness analysis, these would be irrelevant as they are transfer payments, but they would be of interest to government that has to fund them.
When public bodies seek to introduce policies to improve employment rates among people with mental health needs, they do not tend to devote much attention to people with the most severe needs. This may be because of the comparatively small numbers of people involved, and perhaps because policy-makers do not believe much can be done at an affordable cost. However, this six-country European study paints a rosier picture.
This is not merely a case of helping people move from unemployment to employment, fundamentally important though that is, but of addressing needs of people facing long-term disadvantage. Employment is both a source of income and independence and a major contributor to social inclusion, self-determination, and recovery. IPS appears to provide an effective and cost-effective means of helping many people with a serious mental illness to come closer to achieving their employment goals.