Funding alternatives to inpatient psych wards

Peer respites and soterias–how do they get funded, and what threatens their funding?

A peer respite is a place, normally a house that feels like a normal home environment, where people who are going through a mental health crisis or substance use relapse can be cared for and recover for a short period of time, in an environment surrounded by peer workers–people who have had their own mental health or substance use challenges and have recovered or are in the process of recovery. The staff here do not administer medication or have the power to hold people against their will. A normal stay is a maximum of two weeks. 

A soteria is a place, normally a similarly homelike environment, where people can go through a first psychotic episode with minimal to no antipsychotic medication, and with the help of warm, open-minded and supportive people who do not have any specific mental health credentials. Soterias operate on a principle of ‘being with’ rather than ‘doing to’ and emphasize creating a safe and welcoming environment for whatever unusual experiences or behaviors may arise in the context of a psychotic experience. In the earliest soterias people could stay for up to six months, and were encouraged to return to continue to participate in the soteria community after leaving. 

People who advocate for peer respites and soterias consider them more humane alternatives to psych wards, which lock people inside and treat them primarily with medication, in a way that often feels alienating and dehumanizing. 

There is a small but passionate movement of people trying to start and maintain more of both types of places. However, project leaders often struggle to a) find enough funding to open them and b) protect them from closing due to funding gaps. What’s going on here?

What are the expenses associated with running a soteria or peer respite?

Even though they have different purposes, soterias and peer respites have similar basic costs. The major ones:

• Rent for a suitable house (with one bedroom per guest, normally)

• Salaries for enough house staff to have at least two on shift at a time (roughly 6-8 full time, with some casuals)

• An executive director, a house manager, and an administrative manager–the people to keep the house running smoothly, recruit staff, manage the staff and finances, seek and retain funding, smooth over issues with the local neighborhood and in general deal with issues that come up. 

• Miscellaneous costs like office supplies, food, paying for transport to and from the house, and other expenses that come up.

Peer workers and soteria workers, like many frontline mental health workers, don’t tend to get paid very high wages. It’s common to see these positions advertised for $17-22 an hour, with higher rates for overnight shifts. This comes out to $34-42K per year, which is not much in major cities, and is often associated with the high turnover common to almost all frontline mental health worker positions.

Having spoken to managers of a few of these places, and visited one, it is hard to imagine one running without at least three people in administrative roles–an executive director, an administrative manager, and a house manager, who may also work in the house. There are enough complexities in keeping the house running that any fewer than that would likely not be sustainable. 

Soteria Alaska ran with an operating budget of around $800,000USD per year. I’ve heard of other projects that run with a budget of around $1 million/year. This seems to be a good rule of thumb for a house that serves 5-7 people at a time. Some soterias were bigger, and had 8-10 people at a time, but in general houses tend to change in character dramatically once the total number of people in the house (including staff) is above 12, so most places keep below this. 

To understand potential rough costs, at $1 million/year budget¹:

• 5-guest peer respite: 130 guests a year, or $7,692/2-week stay.

• 7-guest peer respite: 182 guests a year, or $5,494/2-week stay.

• 5-guest soteria (6 month stays): 10 guests a year, or $100,000/6-month stay.

• 7-guest soteria (6 month stays): 21 guests a year, or $71,428/6-month stay.

Two things to consider:

• Locking someone in a hospital psych ward costs in the realm of $700-3K per day per patient, or $9,800-42,000 for a two-week stay². This is probably because there are a lot more people involved (including more administrators), more expensive people involved (including psychiatrists), licenses and credentials to maintain, medication and special hospital equipment to pay for, and the building is more expensive than a residential house.

• Whatever the cost of an individual stay, the biggest implicit factor in total costs is how likely the person is to need a stay at a peer respite/soteria or a psych ward again in the future. The government tends to end up footing the bill for future inpatient stays anyways, so they care about reducing the likelihood that someone will need similar help again, given this can be a bigger contributor to financial decisions than the cost of the initial stay itself. 

I’m not sure how many peer respites and soterias would be needed in order to largely replace the use of psych wards, but there is nowhere (as far as I know) where they are even close to contributing a significant chunk of the total public demand for out-of-home care during psychiatric crises. There is still lots of room for growth in new peer respites and soterias, and there are people currently trying to start more of them all over the US.

How do they get funded?

Some options:

• Convince state legislators to get it included as a line item in the state budget (which then gets passed as a state law)

  • Pros: 

    • Often extremely stable funding, if it gets passed. A project can get ongoing annual funding that is very reliable if this happens successfully. Soteria Alaska received $375,000 annually this way with very little risk of losing it.

    • It seems like these grants often have straightforward and comparatively simple requirements for compliance, amounting to ‘prove you ran the program you said you would’. 

  • Cons: 

    • Rarely will this fund the full cost of running a peer respite or soteria, which means the executive director is still on the hook to find the remaining funds. 

    • Sometimes legislators remove things from the budget that they don’t understand (this just happened to a peer respite I’m aware of); whether you can get the item included depends on how well you can make the key politicians understand the need for the program. 

• Seek funding for the program from the county

  • Pros:

    • It’s possibly easier to build ongoing relationships with county officials than state or federal officials, and convince them of the benefits of your program. 

  • Cons:

    • A program that does not generate its own revenue is always the most appealing to cut when the county needs to reduce its budget. This threatened a peer respite in California with closure, although it survived.

    • A program like a soteria that serves people having a very specific experience may be better built as a service for multiple counties, and it may be harder to assemble the funding for a multi-county project.

• Apply for an innovation grant from a federal agency like SAMHSA or the Center for Medicaid Services

  • Pros:

    • They have quite a lot of money.

    • They’re willing to fund things that are quite new or unproven with innovation grants.

  • Cons:

    • These grants often only include funds for a limited period of time to start the program, by design, so the executive director will need to find a different funding source once it runs out.

    • They seem to demand high-quality outcome data, which may be impossible to get if your project only serves 5-7 people at a time. 

    • Applying for and complying with grants can be very time-consuming for the executive director and other staff, and the terms of the grant may force you to change how you run your program away from its original mission. 

• Bill Medicaid

  • Pros:

    • This billing process is designed for ongoing programs; it won’t ‘run out’ like an innovation grant. 

    • Billing Medicaid as a partial source of funding creates a revenue stream that makes the program a more attractive budget item for state and county funders, because they only have to fund part of the program.

  • Cons:

    • Doing the continual paperwork required to submit requests for Medicaid reimbursement is its own special hell. It takes a long time, it’s confusing and boring, and it can get rejected for tons of idiosyncratic reasons. The sort of people who like working in a soteria to be with someone in the depths of psychosis do not enjoy doing this paperwork at all.

    • In many cases billing Medicaid forces you to parcel your treatments into seemingly arbitrary units of time or effort. It can be hard to translate the improvisational, responsive work that someone in a peer respite or soteria does into a particular billing code that Medicaid understands.

    • The billing codes for some kinds of work that takes place in a soteria or peer respite don’t exist in some states, and it takes effort and creativity to figure out what to bill for. Billing codes are created for services that are considered ‘evidence-based’ and some very helpful ways of supporting people in extreme states used in peer respites and soterias just don’t have enough research on them yet or don’t look good enough in experimental research to be considered ‘evidence-based’ treatments. 

Once a project gets funded, what risks are there that might lead to losing funding?

Leadership burnout

• These alternative projects are often started by very passionate, driven leaders. They have the tenacity to find the funding necessary to save a project from closing, and be persistent in chasing legislators, writing grants and talking to state officials. Eventually these people get tired, or want to prioritize other things, or when they leave they are replaced by leaders who don’t share the same intense drive, and who aren’t able to find new funding when previously secure funding disappears. Based on the projects I’m familiar with, this seems to be more likely around the 7-10 year mark.

Stakeholder indifference

• A governor needs to find an extra $1 million in his budget so he strikes a line item from a bill just as it goes to vote. A county mental health director who is supportive of peer respites or soterias retires and is replaced by a new director who doesn’t know or care about them, and closes the program. Many sources of funding rely on convincing someone important with lots of issues to prioritize to understand and prioritize this one, and that is often tenuous.

Funding pressure to switch to mainstream treatment strategies

• Many funders have a particularly narrow way of deciding what to fund, and in particular what to keep funding. They fund treatments that are ‘cost-effective’, which often means ‘cost-legible’, and ‘evidence-based’, which often means ‘has had the support of research for long enough to have a lot of fairly robust studies that show positive things’. Often this means funders pressure projects into using treatment strategies that operate like roughly everything else in the mental health field–short-term, legible, heavy on the medication, low on the use of soft skills and compassion. A project leader may find themselves being forced to choose between adopting the ‘old treatments’ they are trying to move beyond, or losing the funding their project depends on. 

What funding models do peer respites and soterias not tend to use?

• Most don’t take private insurance. Many of the people who most need to get care during a psychiatric crisis don’t have private insurance, although I don’t actually know what percentage does. Also, private insurers will generally not cover any sort of long-term residential treatment (longer than 1-2 months), so they would not cover a soteria stay, although theoretically they might cover the length of a peer respite stay.

• None ask patients or families to pay out of pocket. There are residential facilities that do charge out of pocket, but because their target market is quite affluent (we’re talking $150K for a six month stay), they tend to be branded as ‘retreats’, ‘rehabilitation facilities’, ‘recovery farms’ or something similar. They are in rural areas and have organic food and organized activities.

• None that I know of are funded primarily by private philanthropy, although some do take some public donations or supplement their main funding sources with grants from private donors. 

So what?

Psychiatric crisis care seems to have totally whack economics, and this is one avenue I’m exploring to figure out if there are ways it can be less whack. I’m interested in finding ways to help peer respites and soterias become more financially sustainable and as cost-effective as is reasonable without compromising the ways they actually help people. As far as I’m aware no one is doing this, although Live and Learn does do good related research on the industry.

If you run a peer respite or a soteria, I’d like to talk to you about your funding. I’d like to learn about your resources, the stability of your major funding sources, and what you do to mitigate the funding risks to your program. Email me at jess@psychcrisis.org to set up a time to have a conversation.

1. Edit: turns out this is a gross overestimate for the budgets of at least peer respites in the US. Of the 31 who responded to Live and Learn’s 2018 survey, only 8 had a budget of $500,000/year or more. Only one peer respite had a budget of over $1 million annually.

2. Take this figure with a laaaarge pinch of salt; I haven’t dived deep into the costs of inpatient psychiatry; it’s opaque and there’s a huge amount of variation. Some studies give figures around $1K/day. There are reports of much higher rates ($3.25K/day) but I wanted to be conservative since this post is mostly focused on peer respites and soterias and the inpatient experience very often sucks terribly anyways.