Dear Julie,
Self-mutilation, in and of itself, does not necessarily require hospitalization, but such an intervention should be considered. One factor to consider is the extent of the mutilation, particularly if the lacerations pose threat of infection. The teen may require medical supervision around this. A second factor is the chronicity of the mutilating behavior, along with its progression (i.e., nature, frequency and severity over a course of time). A third factor is the teen's mental status and diagnosis. Self-mutilation can cut across diagnostic categories, though often teens who display such behavior evidence a mood disorder and borderline personality traits/disorder.
Outpatient therapy should certainly include individual therapy and, probably, medication. Group therapy, particularly dialectical behavior therapy (DBT), shoul be considered, though it is not widrly available for the adolescent population.
I have seen some instances where a child would want to mutalate themself. You must change the childs enviroment and daily routine. You have to change your immage also. Try tospend alot more time with your child. If he claims to not like it, do it anyway. Take trips away from things. Shopping, Shows, and TV don't count.