Dollars and performance: treating alcohol misuse in Maine

Abstract

If public funds are aHocated efficiently, then an increase in funding should improve the performance of substance abuse treatment programs. In the data used in this paper, performance (measured as abstinence rates) and expenditures per patient are not positively correlated. One explanation is that funding is endogeneous, i.e. programs treating more difficult patients receive more funding. The data comes from aH Maine's outpatient drug-free prograrns that received public funding between 1991 and 1994. After controlling for endogeneity, this paper concludes that the marginal impact of expenditures per patient on abstinence rates is small and statistically insignificantly different from zero.

Substance abuse treatment, what do we know?

“…Machado [37] studied a sample of all publicly funded outpatient treatment programs in Maine for which the Office of Substance Abuse (OSA) collected standardized data on costs, outcomes, and patient and program characteristics. Interestingly, the data show a nonincreasing relationship between costs per patient and outcomes, which may be due to endogeneity of funds per patient.…”

“…Although abstinence and reduction in use are considered by most researchers the most important outcome variables (e.g., [36,37], the MATCH project 0 ). Others, however, have used altervative output measures such as treatment duration (e.g., [5]), relapse rates [8,35], and even labor market outcomes at  year follow-up [9].…”

“…This is, of course, wrong since patients receive different treatment intensities. Machado [37] and Ackerberg et al [], for example, rely on the only information on costs which is reported by agencies at the program level, which is based on expected number of patients and expected costs. The authors, however, try to obtain a more reliable measure of costs by using regression methods to control for different patient and program characteristics that may account for differences in total cost of treatment (on the problems with the use of standardized costs see also [64]).…”

“…Seventh, another approach is to consider marginal costs and marginal outcomes (e.g., [37,63]). This approach is relevant because it studies the impact of an additional dollar of expenditure on the outcome measure of choice.…”

“…As Machado [37] warns, it would be important to repeat the analysis for other outcome measures before reducing the funding for substance abuse programs in Maine.…”