The International Journal of Psychosocial Rehabilitation

Is Supported Employment Cost Effective?
A review

Justine Schneider
Centre for Applied Social and Community Studies
University of Durham
Elvet Riverside Building 2
New Elvet, Durham DH1 3JT
0191 374 2318

Schneider, J. (2003)  Is supported employment cost effective?  A review.
International Journal of Psychosocial Rehabilitation. 7, 145-156

Keywords:Employment, costs, cost-effective, review, mental health problems, IPS

There is a growing interest in supported employment within mental health services, reinforced by the importance placed on occupation by service users, and by the development of specialist inter-disciplinary teams with a remit to treat individuals holistically. One model of supported employment, Individual Placement and Support (IPS), has ample evidence for its effectiveness, and this is reviewed briefly here. However, information about the costs of IPS and their relation to outcomes is patchy and equivocal. This paper reviews some basic approaches to evaluating cost effectiveness, looks at what inferences can be drawn from previous studies, including those that span all disability groups, and describes the findings of costs studies focused on interventions for people with mental health problems. In relation to the latter, it summarises what is known, what is uncertain and areas for future research. It makes recommendations about how costs should be taken into account in the development of new employment interventions, and in the evaluation of existing schemes.

The aim of this paper is to describe and summarise evidence for the cost effectiveness of supported employment, highlighting the way forward for the development and evaluation of supported employment.
Supported employment is a model of occupational intervention that has attracted considerable interest, and the literature on its effectiveness for people with severe mental health problems is strong.The emphasis placed on occupation in the UK National Service Framework (Department of Health, 1999) and the widespread development of specialist teams practicing assertive outreach, early intervention and crisis resolution highlight the need for greater knowledge about effective employment interventions. Several reviews of this literature have been published. The greatest volume of literature is about the Individual Placement and Support (IPS) form of SE, whose characteristics Bond et al. (1997) list as:
 1. Competitive employment

 2. Rapid job search

 3. Integrated with mental health care

 4. Responds to user preferences

 5 Continuous and comprehensive assessment

 6. Time-unlimited support

Bond, Becker et al. (2001) “do not view Individual Placement and Support as a distinct supported employment model. Instead it is intended as a standardization of supported employment principles … so that supported employment can be clearly described, scientifically studied and implemented in new communities.” The same group of researchers has produced a fidelity scale that assists in this standardization and measurement (Bond, Evans et al., 2000; Bond, Vogler et al., 2001).

Another model of SE operating in the  UK  is known as User Employment (sometimes referred to as Pathfinder after the trust where it began). This is employer-initiated, through a policy of positive recruitment of people with personal experience of mental health problems. Support is offered in the workplace following the IPS approach (Perkins et al., 1997; Perkins, 2001).

Little doubt remains about the effectiveness of IPS. Here, we summarise the evidence very briefly. Bond et al. (1997) compared IPS to other forms of support aimed at employment, including vocational rehabilitation, the standard state-federal supported employment programme, day treatment and sheltered workshops. Overall, the authors conclude that IPS proved more effective with respect to employment outcomes than the other models, but it did not seem to affect non-vocational outcomes (e.g. symptoms, self-esteem). These findings have stood the test of subsequent reviews (Drake et al., 1999; Bond, 2001; Mueser, Bond et al., 2001) as well as from the Cochrane review of vocational rehabilitation by Crowther et al. (2001).

The findings demonstrating the effectiveness of supported employment in terms of work outcomes also gain support from four studies published since the Cochrane review that are described below (Mueser, Salver et al., 2001; Lehman et al., 2001; Bond et al., 2001; Dixon et al., 2002).

The first, the Hartford,  Connecticut, RCT compared IPS to a psychiatric rehabilitation centre (PRC) and standard care (Mueser et al., 2001). This found, at two year follow-up that the IPS group were significantly more likely to obtain any paid work (75%) than those in standard care (54%) or those in the PRC (34%) (Chi squared, 52.71 22.53 respectively, df 2, p<.001).

A second RCT published by Lehman et al. (2001) is important because it was carried out with a population that is relatively disadvantaged. The sample of service users had high levels of psychosis (75%), ethnic minority status (75%), and current substance abuse (40%). It also differed from most previous IPS trials because it did not recruit the sample through induction groups, which may tend to generate self-selected samples of people who are positively motivated to work.

Nevertheless, it was found that the sample on IPS were more likely than those using standard psychosocial rehabilitation to attain employment (47/113 v 12/106,p<.0001; and more likely to be in open work (p<.001). In either group, for those people who achieved employment, hours worked and wages did not differ significantly. Overall rates of employment were relatively low even for IPS (42%) and very low for the comparison group (11%) which possibly reflects low levels of motivation in the participants.

Bond et al. (2001) perform secondary analysis on data from the RCT of IPS conducted in Washington, DC (Drake, McHugo et al., 1999). This study is innovative in its attention to effect size, which is an important topic in studies of interventions where clinical significance and statistical significance may not always coincide. The authors explore the non-vocational outcomes – self-esteem, quality of life and psychiatric symptoms, of four groups of service users: those who did a substantial amount of competitive work, those who did sheltered work, those who did a minimal amount of competitive work and those who did none.  Over 18 months, people in competitive employment had greater satisfaction with vocational services, finances and leisure activities when compared to the rest of the sample taken together. They also showed a greater improvement in self-esteem and psychiatric symptoms, none of which showed any improvement in people who did sheltered work or a minimal amount of open work. However, the ‘control’ group may have deteriorated through demoralisation or discouragement arising from failed employment, making the cause of the difference ambiguous. Two further inferences may be made from the analysis. The findings indicate that it is continued employment, rather than temporary exposure to employment, that has positive effects. Bond et al. also demonstrate that, contrary to the assumption of many clinicians and carers, working does not appear to lead to deterioration in psychiatric symptoms.

In a cost-effectiveness comparison over 18 , Dixon et al. (2002) compare IPS, which focused on competitive employment, with enhanced vocational rehabilitation (EVR), which offered paid training in sheltered settings as well as competitive employment, yields frustratingly equivocal results (Dixon et al., 2002). To overcome the technical difficulties of costs analysis (Gray et al., 1997), this study adopted the perspective of a single payer and used bootstrapping to generate estimates of incremental cost-effectiveness ratios (ICER; increase in effectiveness divided by increase in costs). In the context of this particular study, because the EVR group were also being paid, it was not possible to draw any firm conclusions in relation to the differential impact of IPS on total earnings from competitive and non-competitive sources. Yet employment outcomes were superior, and the authors conclude that “it is statistically highly likely that IPS both costs more and produces more competitive employment” (p 1123). This result highlights the importance of comprehensive evaluation of employment programmes. When an intervention is both more costly and more effective, a proper appraisal requires details about its social acceptability, and any indirect benefits and costs.

While IPS has considerable evidence in its favour when employment is the outcome of interest, there is only limited evidence of its effects on symptoms, self-esteem and other non-vocational outcomes. Questions remain, concerning the impact of working on mental health status and service use. We also need to compare the direct service costs of IPS to those of other mental health interventions, both those aimed at employment and those aimed at other aspects of recovery, to understand more fully the cost effectiveness of the model. Few studies of IPS report its immediate costs, and data on longer-term costs (as well as benefits) is even more limited.

Lacking evidence relating specifically to people with mental health problems, findings concerning supported employment for people with learning disabilities are included here. In the main body of this paper, available costs data are brought together in one place, drawing on reviews of costs studies, evidence from large-scale surveys in the United States, and, finally, costs studies of specific models of supported employment. First, three different approaches to costs analysis are set out, and some of their implications for the generation and interpretation of cost effectiveness information are discussed.

Perspectives on costs

The costs of occupational interventions can be assessed from the perspective of the individual service users, taxpayers or society at large. The simplified components of each of these perspectives are shown in Table 1. This is not a definitive list, but serves to highlight some differences between three approaches. In practice, there is scope for varying these elements according to what information is available as well as what is theoretically desirable. Studies also differ in the length of time over which they measure these elements (longitudinal versus cross-sectional) and in the ways of attaching costs to each of the elements listed.
Table 1: Perspectives for Costs Studies 
Individual perspective
Taxpayer perspective
Societal perspective
Net earnings minus welfare benefits foregone
Change in health or well-being

Tax revenue plus welfare benefits saved and savings on alternative programme inputs (e.g. day care) minus employment support to service users

Savings to the state from alternative programmes; increased productivity (earnings + tax minus baseline productivity plus employment support); and changes in health or well-being