Does the Impact of Managed Care on Substance Abuse Treatment Services Vary by Provider Profit Status?


  • Todd A. Olmstead,

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    • Address correspondence to Todd A. Olmstead, Ph.D., Associate Research Scientist, Yale School of Public Health, 60 College Street, PO Box 208034, New Haven, CT 06520-8034. Jody L. Sindelar, Ph.D., Professor, is with the Yale School of Public Health, New Haven, CT.

  • Jody L. Sindelar


Objective. To extend our previous research by determining whether, and how, the impact of managed care (MC) on substance abuse treatment (SAT) services differs by facility ownership.

Data Sources. The 2000 National Survey of Substance Abuse Treatment Services, which is designed to collect data on service offerings and other characteristics of SAT facilities in the U.S. These data are merged with data from the 2002 Area Resource File, a county-specific database containing information on population and MC activity. We use data on 10,513 facilities, virtually a census of all SAT facilities.

Study Design. For each facility ownership type (for-profit [FP], not-for-profit [NFP], public), we estimate the impact of MC on the number and types of SAT services offered. We use instrumental variables techniques that account for possible endogeneity between facilities' involvement in MC and service offerings.

Principal Findings.

We find that the impact of MC on SAT service offerings differs in magnitude and direction by facility ownership. On average, MC causes FPs to offer approximately four additional services, causes publics to offer approximately four fewer services, and has no impact on the number of services offered by NFPs. The differential impact of MC on FPs and publics appears to be concentrated in therapy/counseling, medical testing, and transitional services.

Conclusion. Our findings raise policy concerns that MC may reduce the quality of care provided by public SAT facilities by limiting the range of services offered. On the other hand, we find that FP clinics increase their range of services. One explanation is that MC results in standardization of service offerings across facilities of different ownership type. Further research is needed to better understand both the specific mechanisms of MC on SAT and the net impact on society.