Strengthening a System of Care


Multiple state and local systems serve children with complex behavioral needs. Most of the children and youth in the child welfare system, and those at risk of abuse and neglect, have an array of physical, mental, social, emotional, educational, and developmental needs.

In Colorado, multiple child-serving agencies pay for intensive mental health services, including costly inpatient and residential mental health treatment services.

In 2014, a report by the Colorado Department of Human Services and Colorado’s Trauma Informed System of Care (COACT) found that:

  • 4,020 children received over $95 million in residential or inpatient services in fiscal year 2010-2011.
  • The largest proportion of intensive services were paid by the child welfare system
  • Child welfare expenditures for these services were nearly $52 million.
  • The top 10 percent of children and youth accounted for almost 40 percent of the spending.
  • * Moreover, almost 42 percent of the clients in the child welfare system who received the most services became involved in the Division of Youth Services, relying on additional public systems and expenditures.

A “system of care” is a better approach to delivering services based on partnerships that create a broad, integrated process for meeting families’ complex needs. The federal government evaluated system of care outcomes in 2012 and found that the model led to improvements in the lives of children and youth, such as decreased behavioral and emotional problems, suicide rates, substance use, and juvenile justice involvement.

System of care also increases strengths such as school attendance and grades, and stable living environments. The financial return to investment for this approach is another meaningful indicator of how cost savings can dramatically impact state and local funding strategies.

States and communities that have adopted a system of care approach have improved behavioral health outcomes and realized cost of savings for both state and local governments: 

  • Georgia:A system of care approach with wraparound services was used for a demonstration waiver with the Centers for Medicare and Medicaid Services. In fiscal year 2011, the average cost to Medicaid for a youth in a psychiatric residential treatment facility was $78,406. During the demonstration, costs declined by 56 percent to $34,398, an annual savings of $44,008 annually per child.
  • Maine: After enrollment in a system of care approach using wraparound, overall mental health expenditures decreased by 28 percent compared with the pre-enrollment period, and expenditures for out-of-home treatment declined 44 percent.
  • Massachusetts: A study in Massachusetts found that youth receiving Wraparound services used lower intensity services and had substantial lower claims expense, particularly for inpatient hospitalization (a 74 percent decrease) and emergency department use (a 32 percent decrease).
  • New Jersey: From 2007-2010, the state reported a savings of $40 million by reducing the use of acute inpatient psychiatric services, while residential treatment was reduced by 15 percent during the same time and length of stay in treatment centers decreased by 25 percent.
  • Milwaukee: In Milwaukee, Wisconsin, Medicaid, child welfare, and other system funds are integrated to provide comprehensive services for children and youth. By blending funds into a collaborative service delivery model, the average cost per child is $3,403 per month. In comparison, monthly expenditures for residential treatment could cost nearly $10,000 and inpatient psychiatric hospitalization could cost at least $38,000.