Psychiatric Institution Adapts to Trend in Health Care : Merger: Connecticut facility was once a haven for mentally ill rich. But its focus has changed as outpatients outnumbered inpatients; it recently made plans to affiliate with a large hospital.

When the Hartford Retreat for the Insane opened in 1822, its first patients were a man suffering from “fanaticism” and a woman who broke down “from overtaxing the intellect with difficult studies.”

Renamed the Institute of Living in the 1930s, the institution took on a tonier image and became the place where actors, authors, athletes and the just plain rich came to play billiards, bowl and get help for mental problems.

“There was a period in our history when we became known as a kind of resort for the wealthy,” said Lee Monroe, an institute spokesman. “It’s a colorful image, but it hasn’t been true for many years.”

Today, new trends in health care, particularly a growing emphasis on outpatient services, have forced the psychiatric institution, the oldest hospital in Connecticut, to change again.

After running a deficit for three years, the institute agreed earlier this summer to surrender its independence, but not its name or campus, and merge with Hartford Hospital.

“We’re in that period right now of the transformation going on because we know we cannot continue to look like we used to look,” William A. Himmelsbach Jr., president and chief executive officer, said. “And we have to shape the way we’re going to look in the future.”

By becoming a subsidiary of Hartford Hospital, the institute will save money and gain access to more patients, the same reasons other specialty hospitals across the country are forming similar partnerships, Himmelsbach said.

The National Assn. of Psychiatric Health Systems in Washington confirmed that such partnerships are on the rise, but said it did not keep any statistics.

The forces driving the partnerships are the same as those leading community and general hospitals to link up with larger health care providers.

“Right now, our whole health care system seems so fragmented, and if you provide your services in a network arrangement the services are more cohesive and coordinated,” said Donna Gaidamak, spokesman for the American Hospital Assn. in Chicago.

Located on a 35-acre, tree-lined campus landscaped by Frederick Law Olmsted, architect of New York’s Central Park, the institute treats more patients today than it did in 1985. But the number of those being treated as inpatients has declined from about 400 a day to slightly more than 100 a day.

And patients who do stay are doing so for much shorter periods. In 1985, the average stay was six months; today, it is 13 days.

“While we’re growing so fast on the outpatient side, such as day treatments, outpatient care, 70% of our revenue still comes from the inpatient side,” Himmelsbach said. “It’s still the heavy expense side and predominant revenue side of the business.”

The institute, with 600 employees and an annual operating budget of $38 million, ran deficits of $1.2 million to $2.4 million over the last three years.

In a 1946 brochure, the institute boasted that it offered “the features of a hospital, a university and a country club.”

Early this century, small cottages were built on the grounds, following the latest European trend of treating patients in home-like settings. There was also a lane of small, Old English-style shops, including the Chez Nous beauty salon and the Huntington Club, which offered bowling and billiards.

Today, people of all economic and ethnic backgrounds, mostly from the Hartford area, are treated at the institute.

After getting the necessary approval from regulators, officials hope to implement the merger agreement by April.