Effect of increased private share of inpatient psychiatric resources on jail population growth: Evidence from the United States

There is a strong connection between the mental health and criminal justice systems. This research empirically tested whether the privatization of the inpatient mental health system alters this relationship, contributing to jail population growth. Using state-level panel data on U.S. states and the District of Columbia for the years 1985-1998, this study analyzed the relationship between the size of jail populations and private share of hospital psychiatric beds, first for overall private beds and then separately by private for-profit and nonprofit. Empirical models controlled for changes in mental health financing and resources, variations in criminal justice practice, and demographic and socio-economic factors as well as state and year fixed effects. A method of instrumental variables was employed to make a stronger case for causal inference. Results show that a one-percentage point increase in the private for-profit share of psychiatric beds contributes to the growth of jail inmates by approximately 2.3% annually. A greater private nonprofit share of psychiatric beds does not appear to influence the size of jail populations. These findings suggest that the increased private for-profit share of inpatient psychiatric resources undermines the safety-net and some control function of the mental health system and leads to a greater number of jail inmates.