In this paper, we perform many-electron dynamics using the time-dependent configuration-interaction method in its reduced density matrix formulation (ρ-TDCI). Dissipation is treated implicitly using the Lindblad formalism. To include the effect of ionization on the state-resolved dynamics, we extend a recently introduced heuristic model for ionizing states to the ρ-TDCI method, which leads to a reduced density matrix evolution that is not norm-preserving. We apply the new method to the laser-driven excitation of H(2) in a strongly dissipative environment, for which the state-resolve lifetimes are tuned to a few femtoseconds, typical for dynamics of adsorbate at metallic surfaces. Further testing is made on the laser-induced intramolecular charge transfer in a quinone derivative as a model for a molecular switch. A modified scheme to treat ionizing states is proposed to reduce the computational burden associated with the density matrix propagation, and it is thoroughly tested and compared to the results obtained with the former model. The new approach scales favorably (∼N(2)) with the number of configurations N used to represent the reduced density matrix in the ρ-TDCI method, as compared to a N(3) scaling for the model in its original form.