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Mental Health ReformSteps Toward Improvement 
 Joseph Coletti
OctOber 2008
poliCY RepoRt
 
Mental Health ReformSteps Toward Improvement 
 Joseph Colettiocbr, 2008
2 summary 3 Background4 hitory of Rform5 stat hoita6 lMe and Community-Bad Car8 Jai, Court and prion9 providr10 sumnta srvic11 Rcommndation12 Not13 About t Autor
The views expressed in this report are solely those o the author and do not necessarily refect those o the sta or board o the John Locke Foundation. For more inormation,call 919-828-3876 or visit www.JohnLocke.org. ©2008 by John Locke Foundation.
 
Smmar
Mental health reorm began in 2001, but hashad disappointing results. This paper examinesmajor areas o the mental health system – caremanagement, criminal justice, provider networks,supplemental services, and payment. It oers someevolutionary steps toward improvement:• Expand the 1915(b) waiver currently usedby Piedmont Behavioral Health to otherlocal management entities (LMEs).• Allow LMEs to compete and expand acrossgeographic boundaries.• Encourage more counties and LMEs toadopt crisis intervention teams as a wayto improve the community-care system,improve public saety, and allow jails to beused or other oenses.• Ease restrictions on scope o practice that limit the ability o nurses and other doctorsto provide access to psychiatric care inmore places at less cost.• Keep Dorothea Dix Hospital openindeinitely and adjust staing andtraining at state mental hospitals to theevolving role o hospitals as crisis centerswith some long-term patients.These steps change incentives or participantsin the system, not their behavior. These incentivesshould, however, redirect the state mental healthsystem’s ocuses to customers and outcomes ratherthan process and rules.Ater seven years o reorm, the state mentalhealth system has yet to provide the hoped-or im-provement in outcomes or those with serious mentalillness. There is plenty o blame to go around.• From the start,
legislators
tried to imposechanges in every aspect o the system at once,ailed to provide transitional unds, gave uncleardirectives to local mental health programs, andthen created new services and tinkered withpieces o reorm without considering the systemas a whole once reorm was in motion.• Some
local mental health programs
 dropped their crisis centers too soon without having alternatives in place, lost their care provi-sion sta in the process o dividing into two enti-ties, lost some o their ocus on the consumer asthey dealt with transitions, and did not developthe contract management skills needed to workwith private providers when that became theirocus as local management entities (LMEs).
Irci: A Lia  Cmlai
• The
Division of Mental Health
ailed toprovide appropriate measures o local per-ormance, ocused on creating new programswithout getting existing programs right, andmismanaged state mental hospitals.• State lawmakers and
Medicaid
set payment levels too low to keep existing psychiatricproviders and attract new providers into thesystem, set rates too high or poorly denedcommunity support services, costing the stateat least $400 million, according to one widelycited investigation. Community hospitalscontinued to close psychiatric beds, and otherprivate providers also let the system.• Gov. Mike Easley, Secretary o Health andHuman Services Carmen Hooker Odom, andMike Moseley in the Division o Mental Healthtogether let the system languish instead o expanding successul experiments statewide.
MentAL HeALtH RefoRM StepS towARd IMpRoveMent
 
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