With the penetration of managed care approaches in child welfare, residential treatment services have come under increased scrutiny. In these circumstances it is critical to understand the clinically indicated use of these expensive interventions. As part of a community-reinvestment strategy of reform within a state child welfare agency, a needs-based assessment of children and adolescents was undertaken. A review of cases revealed that although the level of mental health need for many was significant, a substantial proportion of children in residential placement were not at high levels of risk. On the basis of these data, a process of placement review was designed and implemented for more effective use of residential treatment.
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