CEO Update - Competition in mental health services - be careful what you wish for

Competition in mental health services - be careful what you wish for

Two of the key recommendations of our pre-Budget submission this year are to urgently address the gaps opening up in the mental health service system, and to address unprecedented levels of funding uncertainly – which is holding back co-investment and undermining mental health workforce and development.

With this in mind, I have noticed a growing trend in our public reform discourse to suggest that where such problems exist, greater competition between services is the answer.

This seems to be especially true when we talk about NGO services, perhaps because so many other parts of the system are protected from competition by public funding (hospitals and related services), many clinicians (through Medicare privileges) and government departments (who are often monopoly funders).

The discourse often begins with the largely mythical history of NGO’s basking in overly generous block grants, delivering fragmented and inadequate services, and somehow pocketing, or otherwise wasting substantial surpluses. 

Enter competition. Primary Health Networks release tenders for services and only select the most efficient services – killing off the fat cats in the process. The NDIS places selection of services firmly in the hands of individual service users, yielding more efficient and effective services and programs.

Now let me say that as in any sector, some NGOs have performed badly. In almost all cases this could have been better managed if funders had actively monitored and managed their contracts. In too many cases, services and programs have not adequately met the needs of those who use them, but in many cases this is because individual and isolated governments, and government departments, purchase services in isolation from each other, and maintain barriers that do not allow NGOs to integrate programs from separate funders or collaborate properly with organisations that are not party to individual funding agreements.

But if we are placing the future quality and distribution of future services in the hands of competition alone, we need to be aware of some pitfalls.

Competition alone does not overcome the barrier of multiple, isolated funding streams.

Competition targeting NGOs alone cannot overcome the barriers to integration with clinical and publicly funded services.

Competition alone does not endow consumers with equal information and power, undermining the power of the consumer with what market economists call “information asymmetry”.

True competition would create a market in which shortages of high quality services demanded by consumers (both regionally and nationally) would yield an increase in price, but this part of competition is currently constrained by rationing.

If we are to improve service integration, our attention should be focussed closely on disintegrated funding streams, poor planning, short term and ad hoc agreements, poor contract monitoring and management, and destructive forms of rationing.

On our current trajectory I fear we risk throwing important NGO programs and workforce out with the proverbial bathwater. And to do so would deprive future consumers of the quality, choice and control to which they are rightly entitled.

Warm regards 

2017 Parliamentary Advocacy Day - The Hon Greg Hunt MP


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