When Donald Ray Williams, in the grip of a psychotic episode, torched the University Avenue Walgreens in Palo Alto on July 1, 2007, the act crowned a long criminal history involving mental illness and psychosis, according to federal court records.

Williams, 51, had been arrested and tried in prior arson cases but had been found incompetent and committed to mental hospitals, federal documents state. Williams suffers from bipolar disorder with psychotic episodes.

Prior to the Palo Alto fire, which destroyed the downtown building, he had not been taking medication to treat his mental illness, he told authorities. He said he did not like how the medicines made him feel and that he didn't believe that anything was wrong with him that required medication.

Williams was sentenced last May to 20 years in prison and ordered to pay $28.6 million in restitution. His situation, while extreme, illustrates a challenge that mental health providers and families of the mentally ill face. Absent forced hospitalization, people with severe mental illness are left to manage their complex and overwhelming illnesses through outpatient services. Sometimes, they choose not to participate, and they end up becoming mentally unstable or homeless or, for a few, even committing crimes. Other times, the services either do not help or are difficult for people to access.

What results, mental health professionals say, can be akin to a revolving door, in which a person seeks treatment for a time, lapses, falls into instability, experiences a catastrophic incident — which oftentimes affects more people than just the person with the psychiatric condition — and then must climb back to stability all over again.

In the late 1990s, when Santa Clara County Supervisor Joe Simitian was first on the Board of Supervisors, he was struck by the significant number of persons in jail who had mental illnesses, he said. Now returning after 12 years in the state legislature, Simitian said he has seen a change for the worse.

"The number has gone up dramatically. It was 10 percent a dozen years ago. Now it is closer to 20 percent. And those estimates are probably low," he said.

Palo Alto police reported taking in 168 people last year for psychiatric holds under section 5150 of the California Welfare & Institutions Code, which applies to people who are a danger to themselves or others or are "gravely disabled — they cannot feed, clothe or find shelter for themselves."

Most of those people have not committed any crime but fit the state's criteria for a psychiatric hold, Palo Alto police Lt. Zach Perron said.

Upwards of 800 patients were admitted to Stanford Hospital for psychiatric care in 2012, and nearly 250 were transferred to psychiatric hospitals. More than 1,500 psychiatric patients were admitted to Santa Clara Valley Medical Center in San Jose, the county's public hospital, with another 2,250 patients being transferred to a mental hospital, according to a report by the California Office of Statewide Health Planning and Development.

The majority of patients under psychiatric hold, however, are released within 72 hours, and in many cases much earlier, county mental health officials said.

What happens to them after being released depends in large part upon whether they participate in the continuum of services that the county government, as well as numerous nonprofit organizations, provide.

Describing its outpatient services as "wrap around," Santa Clara County strives to provide comprehensive mental health programs that range from outreach to post-hospitalization housing and treatment programs. The goal is to enable the person to live in the community with enough support so he or she can work and adapt to the social environment, county officials said. Ideally, the mental health services help people earlier in their illnesses and oversee their ongoing care and treatment.

Santa Clara County's medical system serves about 25,000 people per year for mental health-related issues, though not all need such comprehensive care, said Dr. Nancy Pena, director of Santa Clara County's Mental Health Department.

She estimated that at any time 10,000 to 12,000 adults are receiving outpatient mental health services. Add in children, and the number rises to 18,000. About 1,400 to 2,000 must be hospitalized.

"That's not a huge percentage, but it is extremely costly," she said.

The expenses run into the tens of thousands of dollars for even brief hospital stays.

In fiscal year 2011-12, Stanford Hospital admitted 641 patients with psychoses. In 2012, the average length of stay was 12 days, at a cost of nearly $94,000 or about $7,750 per day, according to a study by the Office of Statewide Health Planning and Development.

Santa Clara Valley Medical Center received almost 1,450 psychotic patients. A stay of 11 days cost about $28,700 per person, according to the study.

But full-service outpatient care, exclusive of hospitalization, costs about $15,000 to $22,000 per person per year, Pena said. That care can include medication, therapy and outpatient board-and-care facilities, where people receive supervision to keep their illness in check.

Funding for these services comes both from the county's General Fund and from 2004 voter-approved California Mental Health Services Act, which has provided counties with nearly $7.4 billion from 2006 to 2012. About 26 percent of Santa Clara County's $331,092,319 budget for mental health services comes from Mental Health Services Act funding, Pena said.

When it comes to the most severely mentally ill, the county's "Full Service Partnership" program each year serves 500 to 700 people of all ages. They are the ones who are experiencing significant psychiatric and social challenges, Pena said.

The results have been encouraging.

"We are seeing significant reductions in hospital use, involvement in criminal justice and homelessness," she said.

Clients have been able "to achieve their recovery goals, to obtain stable housing, and to reduce their need for emergency and institutional psychiatric care," Pena said.

Public mental health systems across the state are challenged to meet the demand for service, Pena said.

"Our greatest needs at the moment are for adult crisis-stabilization outpatient and residential services; for intensive case management and outpatient services, and for access to stable, supported low-cost housing for those who are ready to live in the community with adequate support. This is likely to become more of a challenge as those with new Medi-Cal health benefits begin to seek mental health and substance-use services," she said.

Santa Clara County has applied for a $7 million capital grant through state Senate Bill 82, the Investment in Mental Health Wellness Act of 2013. The bill makes Mental Health Services Act funds available for mobile crisis-support teams, crisis intervention and stabilization, and crisis residential-treatment services and rehabilitative services.

Numerous nonprofits in Palo Alto and throughout the county work in tandem with the county to ease the effects of mental illness.

Palo Alto's Community Working Group, a nonprofit formed in 1998 to address homelessness, created the Opportunity Center, which offers a drop-in center on Encina Avenue that provides mental health and substance-abuse counseling, medical and psychiatric screening and referral, case management and legal assistance. Separately, the center's low-income housing provides apartments and support services.

The Donald A. Barr Medical Center offers psychiatric care along with internal medicine and assistance with accessing disability aid such as SSI and MediCal.

Momentum for Mental Health, the largest nonprofit mental health services provider in Santa Clara County, works with the most recalcitrant mentally ill persons. The organization, which has an office in Palo Alto, slowly builds relationships of trust and offers what the person wants, with the goal of getting the help they need without adding further trauma, CEO Paul Taylor said.

Momentum serves 3,800 people a year through numerous programs. Through board-and-care homes, it provides 24-hour crisis programs and long-term support in the form of therapy, medication and other services. It also offers outpatient services that include case management, rehabilitation and crisis intervention.

Like the county, its programs are designed to help reintegrate the recovering person into the community and to keep them stabilized with ongoing support, Taylor said.

This approach has helped 85 percent of people served in the crisis intervention program to move to less restrictive care, according to Momentum.

County and mental health officials have no illusions that comprehensive outpatient services will completely, or easily, stabilize all people with severe mental illnesses.

"In a lot of mental health cases, it's going to require a repeated effort over time to get services in place and get people to accept the services. It's going to require a long-term commitment, and a long-term commitment of funding," Simitian said.

He has gone out several times to a homeless encampment in San Jose, where doctors from Valley Medical offer health services in a van. Medical staff carry pocketfuls of energy bars as a way to break the ice with the camp residents. The snacks serve as the first line toward building relationships that will hopefully lead to treatment, he said.

"As I watched these folks, I saw how they learned to develop a rapport. It takes repeated visits before someone says, 'I'm going to come inside.' As painful as it is, failure is going to be part of the process," he said.

Santa Clara County Superior Court Judge Stephen Manley, a former Palo Alto resident, is on the front lines of trying to reduce recidivism among mentally ill convicts by bringing together sentencing with services. His Mental Health Treatment Court mandates treatment for persons in the judicial system.

In Manley's court, an interdisciplinary team of doctors, case managers and substance-abuse counselors evaluate offenders and come up with a treatment plan. Outpatient treatment becomes part of their probation or parole after prison. Most persons are referred by other judges, he said.

A separate court handles treatment for juvenile offenders.

Manley became interested in creating the mental health court after many years of seeing people fall through the cracks, he said. Those eligible for drug treatment were not allowed in the program if they were mentally ill, and residential treatment programs did not accept substance abusers who took mental illness medicines, he said.

"A large number kept cycling through. The homeless were repeatedly arrested. We needed to be more proactive," he said. "To say we have urgent care, to say we have psychiatric services, it's a good title, but is it real? Not really.

"People can be held for 72 hours. But if you ask me the number of people we've seen who are held anywhere near that long, it's far, far not seen. There's a backup of over 300 people who should be in state hospitals who are in jail or prison," he said.

Since most offenders have been through the justice system repeatedly, the district attorney, police, mental health and substance-abuse counselors in the judicial system can flag people with mental health problems as they come through the system, he said. Treatment plans can range from outpatient to residential treatment for serious cases.

Manley's program also helps move people beyond treatment.

"A lot of what we do is motivational. A lot of what we do is talk to people to encourage them to get schooling or into vocational programs. We help them to get benefits and teach them how to fill out paperwork," he said.

At any given time, 1,800 to 2,300 people are taking part in the program, and it has had significant success, he said.

"I've seen people who were on probation and were not able to talk to anyone who are able to get stabilized and out of custody and into community treatment," he said.

Manley is trying to eliminate hindrances that contribute to noncompliance with treatment, and he recognizes that the sooner people get support, the faster they will stabilize. For some people, making their way to a hospital or clinic to get treatment is difficult. Many people don't qualify for other programs, making it difficult to obtain the help they need, he said.

The court program is working to get everyone qualified for the Affordable Care Act. And this week, it started a drop-in clinic in the courthouse in San Jose, where a doctor can see people in the program.

"The one great challenge is, are they able to get access and treatment right away? Put the treatment where the people are, and they will get there," he said.

On Feb. 7, Manley referred four people to seek treatment and medication. They were able to walk out the courtroom door, visit the doctor and get a prescription filled before leaving the courthouse, he said.

Many people have multiple medical conditions that can contribute to their illness. Any policy discussion can't be isolated to mental illness, Manley said.

He estimated that more than 90 percent of people he sees who abuse alcohol or drugs have a mental illness. Manley gave the example of military veterans. That population is growing, as young Iraq and Afghanistan war veterans return with PTSD, or post-traumatic-stress disorder, he said. They come in with domestic violence and drunk-driving convictions, he said.

"Unless you take into account co-occurring disorders you will never have success," he said.

Medication is only part of the treatment through Manley's court. Program participants are referred to talk and cognitive-behavioral therapies, which help patients to understand and regulate emotions and feelings.

"We need to have people learn how to be out in the community," he said.

The county doesn't have a study of cost savings related to the program, Manley said, but the results are tangible.

"In our county, the Department of Corrections can rent acute-care beds in their jail to other counties. I know of no other county that has done that," he said.

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Staff Writer Sue Dremann can be emailed at [email protected]