The article "Seeking Cures for Costs of Mental Health" {Business, Jan. 1} perpetuates a myth that limiting inpatient mental health benefits is an automatic cure for saving dollars. In fact, many employers are finding that the costs of untreated or inadequately treated mental illnesses have a devastating impact not only on the individuals and families affected but on the workplace. Lost productivity, absenteeism and accidents are just some of the side effects.

Contrary to the article's assumption that inpatient benefits can be replaced by outpatient benefits alone, the vast majority of the patients seen in our more than 300-member specialty hospitals throughout the nation are under some form of outside review, whether pre-admission certification or concurrent review. In other words, independent reviewers have agreed that these patients require the structure, intensity and 24-hour supervision that only inpatient care can provide.

Psychiatric hospitals are employers, too. We recognize that managing health care costs must be a priority. But simplistic solutions that fail to consider what beneficiaries require clinically are short-sighted and ultimately costly.

ROBERT L. THOMAS Executive Director, The National Association Of Private Psychiatric Hospitals Washington Employers who attempt to control mental health expenditures by capping hospital days may feel they are on the right track, but the figures show otherwise.

Psychiatrists know how to fill in the blanks on insurance forms, and there is substantial evidence that placing a cap of 30 days on the amount of coverage for inpatient care often produces an average stay of 30 days. A 60-day cap invites 60 days of inpatient care, when outpatient services may be more effective and far less costly.

As an employee benefits consultant, I know employers would be better off using the managed care method of taming runaway mental health care and substance abuse costs. Managed mental health care firms have demonstrated they can save money for their clients by delivering primarily outpatient care. Some will guarantee savings of 20 percent or more and cost reductions of 40 percent to 50 percent are not unusual.

And the figures clearly show that managed care improves on-the-job performance by employees who are affected by stress, substance abuse and other personal problems and who use the employer-provided mental health benefits.

MAX W. FINE Bethesda